9.7. Various Duties

♤ Import Duty: Import duty is a tax that the importer has to pay to bring foreign goods into his or her country. Import duty is also known as customs duty, tariff, or import tariff. Import duty can be ad valorem, i.e. based on the value of the goods, or it can be specific, i.e. based on weight, dimensions, or other units of measure.

♤ Export Duty: Export duties consist of general or specific taxes on goods or services that become payable when the goods leave the economic territory or when the services are delivered to non-residents; profits of export monopolies and taxes resulting from multiple exchange rates are excluded.

♤ Countervailing duties: Tariffs levied on imported goods to offset subsidies made to producers of these goods in the exporting country. Countervailing duties (CVD) are meant to level the playing field between domestic producers of a product and foreign producers of the same product who can afford to sell it at a lower price because of the subsidy they receive from their government. If left unchecked, such subsidized imports can have a severe effect on domestic industry, forcing factory closures and causing huge job losses. As export subsidies are considered to be an unfair trade practice, the World Trade Organization (WTO) – which deals with the global rules of trade between nations – has detailed procedures in place to establish the circumstances under which countervailing duties can be imposed by an importing nation.

Difference between ECB and Masala Bonds

In Masala Bonds, the currency risk lies with investor and not the issuer, unlike external commercial borrowings.

While ECBs help companies take advantage of the lower interest rates in international markets, the cost of hedging the currency risk can be high.

In the case of Masala bonds, the cost of borrowing can work out much lower.

♤ Anti-Dumping Duty: It is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value. If a company exports a product at a price lower than the price it normally charges on its own home market, it is said to be “dumping” the product. The WTO agreement (GATT) allows governments to act against dumping where there is genuine (“material”) injury to the competing domestic industry.