TaxTMI 
TaxTMI 
TaxTMI 
These three duties—Anti-Dumping Duty (ADD), Safeguard Duty (SGD), and Countervailing Duty (CVD)—are all trade defence measures used by governments, including India, to protect domestic industries from unfair trade practices, such as dumping, subsidies, or surges in imports. However, each duty serves a different purpose and is applied under different circumstances. Here's a breakdown of their differences:
1. Anti-Dumping Duty (ADD)
- Purpose: Anti-Dumping Duty is imposed to counteract the practice of dumping. Dumping occurs when a foreign company exports goods to India at a price lower than the normal value in the exporting country, often due to subsidies or unfair trade practices, which harms or threatens to harm the domestic industry.
- When It is Imposed:
- When it is found that a foreign exporter is selling goods at less than their fair market value (i.e., 'dumping').
- The goods must cause or threaten to cause injury to domestic producers.
- Calculation:
- The duty is typically the difference between the export price (price at which goods are sold to India) and the 'normal value' (domestic price or cost of production in the exporter’s country).
- The purpose is to raise the import price of the dumped goods to a fair level.
- Example: India imposes anti-dumping duties on certain steel products imported from China, which were being sold at below market prices.
2. Safeguard Duty (SGD)
- Purpose: Safeguard Duty is designed to protect domestic industries from serious injury caused by a sudden surge of imports. Unlike anti-dumping measures, safeguard duties are applied to all countries and are not limited to unfair trade practices.
- When It is Imposed:
- When there is a sudden and unexpected increase in imports that harms or threatens to harm the domestic industry.
- The surge must be the result of the increase in imports, not due to other factors like technological changes or inefficiencies in the domestic industry.
- Calculation:
- The duty is usually determined based on the amount of import surge and its impact on the domestic industry, but it can vary and may be applied as a percentage of the import price or a fixed amount.
- Duration: Safeguard duties are generally temporary and are reviewed periodically to assess whether the conditions justifying the duty still exist.
- Example: India imposed safeguard duties on solar cells and modules in 2018 due to the rapid increase in imports, which threatened domestic manufacturers.
3. Countervailing Duty (CVD)
- Purpose: Countervailing Duty is imposed to counteract the effect of subsidies provided by foreign governments to their exporters, which make the exported goods cheaper and can harm the domestic industry in India.
- When It is Imposed:
- When it is determined that the foreign government is providing subsidies to its exporters, and these subsidies are distorting trade and causing harm to Indian producers.
- The subsidy must be specific to the product and can involve direct financial assistance, tax incentives, or low-interest loans.
- Calculation:
- The duty imposed is generally equivalent to the amount of the subsidy provided by the foreign government to the exporter, so that the subsidized goods are priced fairly in the Indian market.
- Example: India has imposed countervailing duties on products from countries like China, where it found that subsidies on aluminium products resulted in artificially low prices in India.
Summary of Key Differences:
Aspect | Anti-Dumping Duty (ADD) | Safeguard Duty (SGD) | Countervailing Duty (CVD) |
Purpose | To counteract dumping (selling below fair market value). | To protect against injury caused by a sudden surge in imports. | To counteract the effect of subsidies provided by foreign governments. |
Condition for Imposition | When goods are sold at unfairly low prices (dumping). | When imports surge unexpectedly and harm domestic industries. | When foreign governments subsidize exports to harm domestic industries. |
Applies to | Specific countries or products that are found to be dumped. | All countries—imposed universally when an import surge occurs. | Specific countries whose goods benefit from subsidies. |
Duration | Temporary, reviewed annually or at intervals. | Usually temporary and reviewed periodically. | Temporary, reviewed at intervals based on the subsidy. |
Calculation Basis | The difference between the export price and normal value. | Based on the import surge and the injury caused. | Equivalent to the subsidy amount granted by the foreign government. |
Conclusion:
Each duty serves to protect Indian industries from specific trade-related issues:
- Anti-Dumping Duty addresses unfair pricing (dumping).
- Safeguard Duty addresses sudden increases in imports that could harm domestic industries.
- Countervailing Duty tackles the effects of foreign government subsidies that distort the price of imports.
India applies these duties as a part of its trade defence measures, based on investigations by the Directorate General of Anti-Dumping and Allied Duties (DGAD), and in accordance with World Trade Organization (WTO) rules.