How to protect indian manufacturer

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Sumit kaushik (Querist)
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03 October 2015 [9/26, 5:31 PM] Sumit Kaushik: Sir cvd on subsidiesed article ka kya treatment hota h
[9/26, 5:31 PM] Sumit Kaushik: Treatment k according jitni subsidy exporter ki country deti utne tak ki duty import goods par lg jati h
[9/26, 5:31 PM] Sumit Kaushik: To protect domestic manufaturer
[9/26, 5:31 PM] Sumit Kaushik: But mera doubt y h ki suppose kro subsidy jitni duty lgane k bad bhi agar manufacturer ko protect nhi kr pa rhe ho to use protect further kese kiya jayga

Sumit kaushik

Sumit kaushik (Querist)
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03 October 2015 ReGarding custom

Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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28 July 2024 To protect domestic manufacturers in India from unfair competition due to subsidies provided by foreign governments, there are several mechanisms and measures that can be employed. The central focus is on addressing the issues of subsidized imports and ensuring a level playing field for domestic industries. Here’s a detailed approach to protect domestic manufacturers:

### **1. Understanding Countervailing Duty (CVD)**

**Countervailing Duty (CVD)** is a tax imposed on imports that are subsidized by foreign governments. The purpose is to neutralize the price advantage that these subsidized imports might have over domestic products.

- **Calculation of CVD:** The amount of CVD is determined based on the subsidy provided by the exporting country. It is intended to bring the price of the subsidized imports up to the level of domestic products, thereby protecting domestic industries from unfair competition.

### **2. Steps for Protecting Domestic Manufacturers**

**1. **CVD Application and Enforcement:**
- **Filing a Petition:** Domestic manufacturers can file a petition with the Directorate General of Trade Remedies (DGTR) if they believe that imports are being subsidized unfairly.
- **Investigation:** DGTR will investigate the allegations to determine if countervailing duties should be imposed. This involves assessing whether the subsidy is provided, its amount, and its impact on the domestic industry.
- **Imposition of CVD:** If the investigation concludes that the domestic industry is being harmed by subsidized imports, CVD will be imposed to offset the subsidy and protect the domestic market.

**2. **Additional Safeguard Measures:**
- **Anti-Dumping Duty:** If subsidized imports are also priced below the fair market value, an anti-dumping duty may be imposed in addition to the CVD.
- **Safeguard Measures:** In cases where there is a surge in imports causing serious injury to the domestic industry, safeguard measures can be imposed. These are temporary measures intended to provide relief to domestic manufacturers.

**3. **Government Policies and Support:**
- **Policy Framework:** The government can introduce policies that support domestic manufacturers, such as subsidies, tax incentives, or export promotion schemes.
- **Trade Agreements:** Ensure that trade agreements are fair and do not put domestic industries at a disadvantage. Negotiate clauses that address unfair trade practices.

**4. **Legal Recourse:**
- **WTO Dispute Resolution:** If the measures taken by the foreign government are in violation of World Trade Organization (WTO) rules, India can file a complaint with the WTO Dispute Settlement Body.

**5. **Industry Collaboration:**
- **Industry Associations:** Domestic manufacturers should collaborate with industry associations to collectively address issues related to unfair competition and subsidies.
- **Awareness and Training:** Provide training and awareness programs for domestic manufacturers about their rights and the procedures for filing complaints or petitions.

### **3. Addressing Situations Where CVD is Insufficient**

If countervailing duties are imposed but domestic manufacturers still face difficulties, additional measures can be taken:

**1. **Review and Adjustment of CVD Rates:**
- **Regular Review:** Regularly review the effectiveness of CVD rates and adjust them if necessary to ensure they adequately address the level of subsidy provided by foreign governments.

**2. **Enhanced Support Measures:**
- **Financial Assistance:** Provide financial support to domestic industries, such as low-interest loans or grants, to help them compete more effectively.
- **Technological Upgradation:** Support technological upgradation and modernization of domestic industries to improve their competitiveness.

**3. **Promote Domestic Demand:**
- **Marketing and Branding:** Encourage domestic industries to focus on marketing and branding to increase domestic demand for their products.

**4. **Seek Bilateral or Multilateral Support:**
- **Diplomatic Channels:** Use diplomatic channels to address trade imbalances and unfair practices with foreign governments.

### **4. Example Scenario:**

Suppose Indian manufacturers of a particular product are facing competition from imports that are heavily subsidized by the exporting country. Despite imposing CVD, if the domestic manufacturers are still struggling, the following additional actions could be considered:

- **Review the Impact:** Analyze the impact of the CVD and determine if the rate needs adjustment.
- **Government Support:** Seek additional government support for affected industries, such as subsidies for innovation or export promotion.
- **Legal Action:** Consider legal action under international trade laws or seek intervention from trade organizations.

### **Conclusion**

Protecting domestic manufacturers from unfair competition due to foreign subsidies requires a multi-faceted approach, including the imposition of countervailing duties, additional safeguard measures, and government support. Regular review and adjustment of policies, along with industry collaboration, are crucial to ensuring that domestic industries remain competitive and resilient against unfair trade practices.

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