News Excerpt:

The U.S. and the European Union have imposed Countervailing Duties (CVDs) on four Indian products, as a retaliation against the Remission of Duties and Taxes on Export Products (RoDTEP) scheme. 

About the news:

•  Duties have been imposed on paper file folders, common alloy aluminum sheets, forged steel fluid end blocks by the U.S., and certain graphite electrode systems by the European Commission (EC). 
• The Indian government and the affected exporters have defended against subsidy allegations at both the Central and State levels.
•  India may consider approaching the WTO Dispute Settlement mechanism if the issue is not resolved bilaterally.
• The move reflects ongoing trade tensions and concerns over fair competition in the global market.

Remission of Duties and Taxes on Export Products (RoDTEP):

• The scheme has been made effective for exports from 2021.
• RoDTEP is based on the globally accepted principle that taxes and duties should not be exported, and taxes and levies borne on the exported products should be either exempted or remitted to exporters.
• The RoDTEP scheme rebates/refunds the embedded Central, State, and local duties/taxes to the exporters that were so far not being rebated/refunded. 
• This does not only include the direct cost incurred by the exporter but also the prior stage cumulative indirect taxes on goods.

Countervailing duty (CVD):

•  It is a specific form of duty that the government imposes to protect domestic producers by countering the negative impact of import subsidies.
• CVD is thus an import tax by the importing country on imported products.
• The duty nullifies and eliminates the price advantage (low price) enjoyed by an imported product when it is given subsidies or exempted from domestic taxes in the country where they are manufactured.
• The duty raises the price of the imported product, bringing it closer to its true market price. In this way, the government can provide a level playing field for domestic products.