Page 482 - MANUAL OF SOP

Countervailing Duty Investigations

market access presumed to flow from a bound tariff reduction is undercut
by subsidization.

SIGNIFICANCE
20.21 Countervailing Duties are the import measures, imposed to offset the
adverse effects of concessions and/or subsidies granted by the government of an
exporting country to its exporters/ manufacturer. This duty is typically referred to
as countervailing duty (“CVD”) or anti-subsidy duty. Imposition of a countervailing
duty is an attempt to bring the imported price of subsidized goods to its true market
price, and thus provide a level playing field to the importing country’s producers.
Taken as a whole, the main object and purpose of the SCM Agreement is to
increase and improve the GATT disciplines relating to the use of both subsidies and
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countervailing measures .
20.22 In terms of Rule 19 of the CVD Rules, countervailing duty investigation, is
carried out to examine the following to reach a conclusion for recommendation
of duty which if levied, would be adequate to remove the injury to the domestic
industry:

(i) Subsidization: whether imports of PUC from the subject country/countries
are subsidized and the nature and quantum of such subsidy;
(ii) Injury: whether there is a material injury or a threat of material injury to an
industry established in India or whether there is a material retardation to the
establishment of an industry in India; and
(iii) Causal link: whether subsidized imports are causing this injury, taking into
account the principle laid down in Annexure I of the Rules.

OPERATING PRACTICE

PRE-INITIATION

20.23 An application, pursuant to Rule 6 read with Rule 2(b) of the CVD Rules,
has to be filed by or on behalf of domestic industry in India representing major
proportion of total domestic production of the like product. No investigation shall
be initiated if the domestic producers expressly supporting the application account
for less than twenty-five percent of the total production of the like product .
15
14 Panel Report, Brazil – Export Financing Programmes for Aircraft, WTO Doc. WT/DS46/AB/R, (Apr. 14, 1999).
15 Customs Tariff (Identification, Assessment and Collection of Countervailing Duty on Subsidized Articles and for
Determination of Injury) Rules, 1995, Rule 6(3) (India).

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