New Delhi, Sep 23 The government is investigating into the possibility of imposing safeguard duty on import of caustic soda— a move that would benefit domestic players like Reliance Industries and Aditya Birla Chemicals.

Caustic soda is mainly used in manufacture of paper, newsprint, staple fibre and aluminium.

After examining the application filed by the domestic producers association Alkali Manufacturers Association of India (AMAI), Directorate General of Safeguards (DGS), the apex investigation body under the finance ministry, has initiated probe to impose safeguard duty.

"The application and information received have been examined and it is found that prima facie increased imports of caustic soda are causing/threatening to cause serious injury to the domestic producers. Accordingly, it has been decided to initiate an investigation, "an official said.

AMAI has contended that "the increased imports are at a price at which it is not possible to produce and sell without incurring losses", the official said, adding, the basic customs duty on imports of the chemical is 7.5 per cent

Thirteen units, including Reliance Industries and Aditya Birla Chemicals, account for the manufacturing of 65 per cent of the total domestic production of caustic soda in India.

The imports touched 25,866 tones in July from just 3,499 tones in the whole fiscal of 2005-06.

Unlike safeguard duty, which is levied in a uniform way, anti-dumping duty varies from product to product and country to country.