Why is it in the News?

India has launched an anti-dumping investigation into the import of solar glass from China and Vietnam following a complaint from domestic players.

What is Anti-Dumping Duty?

• Anti-dumping duty is a tariff levied on imports from foreign countries when their prices are lower than the fair market value of similar goods in the domestic market.
• It's implemented by governments to counteract the practice of "dumping," where foreign goods are sold at unfairly low prices in the domestic market, posing a threat to local businesses.
• The primary objective of anti-dumping duty is to safeguard domestic industries from unfair competition and restore fair trade practices.
• This measure is permitted by the World Trade Organization (WTO) to address instances where dumping causes genuine harm to domestic industries.
• To impose anti-dumping duties, governments must provide evidence of dumping, quantify its extent in terms of costs, and demonstrate the resulting injury or threat to domestic markets.
• While aimed at protecting local industries, anti-dumping duties can sometimes lead to increased prices for consumers within the country.

About Countervailing Duty (CVD):

• Countervailing duty (CVD) is a type of tariff imposed by a government to offset the adverse effects of import subsidies on domestic producers.
• It serves as an import tax applied by the importing country on subsidised products from abroad.
• CVD is imposed to address situations where foreign governments provide subsidies to their producers, lowering the cost of their goods and potentially disrupting fair competition.
• To prevent the influx of subsidised products into their markets, importing countries levy CVD, effectively neutralising the price advantage enjoyed by these imports.
• The imposition of CVD is permitted by the World Trade Organization (WTO) to help maintain fair trade practices among its member countries.

Difference Between Anti-dumping Duty and Countervailing Duty:

• Anti-dumping duty is enacted to safeguard domestic markets from the harmful effects of low-priced foreign goods, while CVD targets products benefiting from government subsidies, resulting in artificially low prices.
• The amount of Anti-dumping duty is determined by the margin of dumping, whereas CVD is calculated based on the subsidy value granted to foreign goods.