Definition
Countervailing Duty
Countervailing duty is a tariff imposed to neutralise the benefit of subsidies given by a foreign government to its exporters.
If an exporting country subsidises its producers, their goods can undercut Indian manufacturers unfairly. A countervailing duty (CVD) offsets the amount of that foreign subsidy, restoring fair competition. Like anti-dumping duty, it follows an investigation establishing both the subsidy and resulting injury.
CVD is a WTO-consistent trade remedy distinct from ordinary tariffs. The term has also historically been used for an additional customs levy equivalent to excise, though that usage largely faded after GST subsumed most domestic indirect taxes.
Related terms
- Customs DutyCustoms duty is the tax levied on goods imported into, or in some cases exported from, India, administered under the Customs Act.
- Basic Customs DutyBasic customs duty is the primary tariff levied on imported goods as a percentage of their assessable value, forming the core of India's import tax.
- Anti-Dumping DutyAnti-dumping duty is a protective levy imposed on imports priced below their normal value to shield domestic industry from unfair foreign competition.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.