Rule 13 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A subsidy does not lead to countervailing duty unless the subsidised imports injure, or threaten to injure, an Indian industry. Rule 13 sets the requirement for a finding of injury. Annexure I sets out the principles for that examination, and Annexure II lists the principles for deciding whether a subsidy is conferred on a limited number of persons, a question tied to rule 11.
This article reads the rules as amended up to Notification No. 51/2024-Customs (N.T.) dated 23 July 2024 (rule 23A, in force 24 July 2024). Later notifications should be checked before you rely on the current text.
Under rule 13, for imports from specified countries the designated authority records a further finding that imports cause or threaten material injury or materially retard an industry. Annexure I requires positive evidence and an objective examination of volume, price effects and impact on producers. Imports from several countries are assessed cumulatively only if the subsidy from each is more than one per cent ad valorem and the volume is not negligible. Injury from other known factors must not be attributed to subsidised imports.
Rule 13: the injury finding
Rule 13(1): in the case of imports from specified countries, the designated authority gives a further finding that the import of the article into India causes or threatens material injury to any industry established in India, or materially retards the establishment of an industry in India.
Rule 13(2): except where a finding is made under sub-rule (3), the authority determines the injury, threat of injury, material retardation and the causal link between the subsidised import and the injury, taking into account, inter alia, Annexure I.
Rule 13(3): in exceptional cases the authority may give a finding of injury even where a substantial portion of the domestic industry is not injured, if (i) there is a concentration of subsidised imports into an isolated market and (ii) the subsidised imports are causing injury to the producers of almost all of the production within that market. This is the situation referred to in the proviso to rule 2(b); see our article on Rules 1 to 5.
Annexure I: principles for injury
Paragraph 1: volume, price and impact
| Sub-para | Principle |
|---|---|
| 1(1) | Determination based on positive evidence and an objective examination of (a) volume of subsidised imports and effect on prices in the domestic market for like products, and (b) the consequent impact on domestic producers |
| 1(2) | Volume: whether there has been a significant increase in subsidised imports, in absolute terms or relative to production or consumption in India |
| 1(3) | Price: whether there has been significant price undercutting compared with the price of a like article in India, or whether the effect is otherwise to depress prices to a significant degree or prevent price increases that would otherwise have occurred |
| 1(4) | Cumulative assessment, only if the amount of subsidisation for each country is more than one per cent ad valorem and the volume from each country is not negligible, and cumulation is appropriate in light of competition conditions |
| 1(5) | Impact on the industry: all relevant economic factors and indices |
The factors in 1(5) include actual and potential decline in output, sales, market share, profits, productivity, return on investments or utilisation of capacity; factors affecting domestic prices; actual and potential negative effects on cash flow, inventories, employment, wages, growth and ability to raise capital investments; and, in the case of agriculture, whether there has been an increased burden on government support programmes. The last point has no counterpart in the anti-dumping annexure.
The cumulation threshold differs from anti-dumping. The CVD annexure prints one per cent ad valorem and "not negligible"; the anti-dumping annexure prints two per cent of export price and three and seven per cent import shares. Compare our article on Rule 11 and Annexures II and III of the anti-dumping rules.
Paragraph 2: causation and the narrowest group
- 2(1): it must be demonstrated that the subsidised imports, through the effects of subsidies, are causing injury, on all relevant evidence. The authority also examines known factors other than subsidised imports that at the same time injure the domestic industry; their injury must not be attributed to the subsidised imports. Relevant factors include volumes and prices of non-subsidised imports, contraction in demand or changes in consumption patterns, trade restrictive practices of and competition between foreign and domestic producers, developments in technology, and the export performance and productivity of the domestic industry.
- 2(2): the effect is assessed in relation to domestic production of the like product when data allow separate identification (by production process, producers' sales and profits); if not, by the narrowest group or range of products that includes the like product for which the information can be provided.
Paragraph 3: threat of material injury
A threat finding rests on facts, not allegation, conjecture or remote possibility; the change in circumstances must be clearly foreseen and imminent. Factors to consider, inter alia: (i) the nature of the subsidies and likely trade effects; (ii) a significant rate of increase of subsidised imports; (iii) sufficient disposable or imminently and substantially increasing capacity of the exporter, taking into account other export markets; (iv) import prices that will significantly depress or suppress domestic prices and likely increase demand for further imports; and (v) inventories of the product. Item (i) on the nature of the subsidy is specific to the CVD annexure.
Annexure II: when a subsidy is conferred on a limited number of persons
Annexure II ties to rule 11(1)(c). It lists principles for deciding whether a subsidy has been conferred on a limited number of persons engaged in making or producing an article:
| Para | Principle |
|---|---|
| 1(a) | Whether the granting authority, or its legislation, explicitly limits access to certain enterprises. But where objective criteria or conditions govern eligibility and amount, the subsidy is not treated as limited, provided eligibility is automatic, criteria are strictly adhered to, clearly spelt out in law, regulation or official document and capable of verification. Objective criteria are neutral, do not favour certain enterprises over others, are economic in nature and horizontal in application, such as number of employees or size of enterprises |
| 1(b) | Even then, if the authority has reason to believe the subsidy is in fact conferred on a limited number, it may consider other factors: use of the programme by a limited number or predominant use by certain enterprises; disproportionately large amounts to certain enterprises; and the manner in which discretion was exercised. It takes into account the diversification of economic activity in the jurisdiction and how long the programme has operated |
| 1(c) | A subsidy limited to certain persons located in a designated geographical region within the jurisdiction of the granting authority is treated as conferred on a limited number of persons |
An example: a government scheme lets any manufacturer below a stated number of employees claim an input subsidy automatically, under criteria set out in a published regulation. Under Annexure II 1(a), that can mean the scheme is not treated as limited. But if in practice a handful of firms use almost all of the funds, 1(b) allows the authority to look at predominant use and disproportionate amounts.
Why it matters in practice
Domestic producers must be ready to supply evidence on each Annexure I indicator, and to show that other causes of injury are not driving the result. Importers and exporters can use paragraph 2(1) to point to other factors, such as falling demand or technology change. Our legal consultation team can help you assess where an injury case is strong or weak.
Next steps in a case are in Rules 14 to 18, and the subsidy side is covered in our article on Rules 11 and 12.
Need help with an injury case?
Injury is often the decisive issue in a countervailing duty case. Our legal consultation team can help producers marshal the Annexure I evidence, and help importers test the causation and cumulation arguments.
Key takeaways
- Injury covers material injury, threat and material retardation, with a causal link to subsidised imports.
- Annexure I needs positive evidence and an objective examination of volume, prices and impact.
- Cumulation requires more than one per cent ad valorem subsidy from each country and non-negligible volume.
- Other known causes of injury must not be attributed to subsidised imports.
- A threat finding needs facts and a clearly foreseen, imminent change.
- Annexure II tests whether a subsidy is limited to certain persons, including regionally limited subsidies.
Read next
- Rules 11 and 12 and Annexures III and IV: countervailable subsidies and their amount
- Rules 14-18: preliminary findings, provisional duty, undertakings and disclosure
- Anti-dumping: injury and the non-injurious price
- Safeguard and countervailing duty explained
Disclaimer: Based on the Customs Tariff Act rules named above as published on the CBIC Tax Information Portal or in the Gazette, with the 2024 amendment to the countervailing duty rules read through a TaxClue consolidated reading text (no official consolidated text exists), as consulted on 3 October 2026. Later notifications, duty notifications and the Customs Tariff Act, 1975 should be checked. This article is general information, not legal advice; check the official text before acting.