Countervailing duty

  • It is imposed to safeguard domestic industry against unfair trade subsidies provided by local governments of exporting nations.
  • It is basically country specific.
  • It is generally equal to excise duty paid by manufacturers when same product is produced in home country.
  • It is mainly levied to neutralize effect of subsidies in exporting country on price and domestic market of importing country.
  • For instance: If Rs 100 subsidy is paid by China government to reduce the cost of some product by Rs 100 and Indian producer has to pay excise duty of Rs 20 on same product. Then, Indian government might impose countervailing duty of Rs 120 on Chinese products to bring cost of Chinese import of the product same of India’s product.
  • Why in news? India has imposed CVD on Chinese Steel products



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