India has initiated a probe into an alleged increase in imports of a chemical, which is used to make dyes and insecticides, from South Korea following complaints by domestic firms.

According to a notification issued by the Directorate General of Trade Remedies (DGTR), IG Petrochemicals Ltd and Thirumalai Chemicals Ltd have alleged that increase in imports of Phthalic Anhydride from South Korea is causing severe injury to them.

India has a free-trade agreement with South Korea.

The DGTR has said that after determining that there are prima facie evidence to justify initiation of the safeguard investigation, “the Director-General considers appropriate to initiate the investigation“.

In the probe, it would determine whether the imports of the chemical from Korea constitute increased imports and whether that have caused or is threatening to cause serious injury to the domestic industry.

The two companies that have filed the application account for a major share of the total production in the country.

In the probe, if it was established that the increase in imports had impacted domestic players, the directorate would recommend imposition of safeguard duty on the imports.

The finance ministry will take the final call to impose the duty.

The safeguard duty is imposed as part of trade remedy measures, and it is permitted under the global trade rules of the World Trade Organization. India and Korea both are members of this organisation.

The duty helps in providing a level-paying field to the domestic industry in terms of pricing of the chemical in the domestic market. Pricing is a crucial component after the quality of products in any market.

The bilateral trade between the two countries increased to USD 21.5 billion in 2018-19 from USD 20.1 billion in the previous fiscal. The trade balance is highly in favour of Korea.