Duty Free Tariff Preference

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Duty Free Tariff Preference (DFTP) is a unilateral non-reciprocal preferential tariff scheme provided by the Government of India for the least developed countries (LDCs). The scheme was officially introduced on 13 August 2008. India was the first developing country to introduce a preferential tariff program for the LDCs. [1] [2]

Contents

Under the DFTP scheme, 98.2% of product categories originating from LDCs are offered duty free and preferential treatment. Only 1.8% of product categories imported into India from LDCs are subject to regular duties. As of March 2018, 31 LDCs benefit from the scheme. India made US$ 9.93 billion worth of imports from LDCs in 2016. [3]

India also provides preferential market access to Bangladesh, Bhutan, Maldives and Nepal under the South Asia Free Trade Arrangement, and to Laos and Bangladesh under the Asia-Pacific Trade Agreement. [3] [4]

Background

The World Trade Organization Hong Kong Ministerial Declaration of December 2005 required all developed countries, and developing countries who declared themselves in a position to do so, to extend duty-free and quota-free market access for products originating from the least developed countries (LDCs). [5]

Prime Minister Manmohan Singh announced the introduction of the Duty Free Tariff Preference scheme at the first India–Africa Forum Summit in New Delhi on 8 April 2008. [6] The scheme was officially introduced on 13 August 2008, and was notified to the World Trade Organization on 5 September 2011. [3]

Benefits

When the DFTP scheme was introduced in 2008, India committed to eliminating customs duties on over 85% of tariff lines (for items in the Harmonized System 6-digit level of classification), reducing duties on the basis of a prescribed margin of preference [lower-alpha 1] for 9% of tariff lines, and maintaining duties on the remaining 6% tariff lines over a period of 5 years. India had successfully met its pledge by 2012. The margin of preference granted for the 9% of tariff lines ranged from 10-90%. [6]

Following consultations with beneficiary countries, the Ministry of Commerce and Industry revised the scheme in April 2014 to further boost exports from LDCs by eliminating tariffs on 98.2% of all tariff lines imported from LDCs. As a result, only 1.8% of tariff lines imported into India from LDCs are subject to duties. The most common items on the excluded list are vegetables and vegetable products, which accounted for 37% of the excluded items list, and prepared foodstuffs which accounted for 33%. [6] [7]

Beneficiary countries

In order to become a beneficiary under the DFTP scheme, a prospective beneficiary country must provide a letter of intent and specimen seals and signatures of the officials authorised to issue the certificate of origin. [5]

No.CountryDate joined
1Cambodia13 August 2008 [8]
2Tanzania13 August 2008 [8]
3Ethiopia28 August 2008 [8]
4Mozambique28 August 2008 [8]
5Samoa28 August 2008 [8]
6Malawi28 August 2008 [8]
7Laos28 August 2008 [8]
8Uganda31 October 2008 [8]
9Rwanda31 October 2008 [8]
10Madagascar31 October 2008 [8]
11Benin19 January 2009 [8]
12Myanmar19 January 2009 [8]
13Eritrea19 January 2009 [8]
14Burkina Faso20 March 2009 [8]
15Gambia20 March 2009 [8]
16Sudan4 May 2009 [8]
17Senegal9 June 2009 [8]
18Lesotho6 August 2009 [8]
19Mali6 August 2009 [8]
20Somalia13 May 2010 [8]
21Bangladesh14 May 2010 [8]
22Burundi15 May 2010 [8]
23East Timor8 June 2010 [8]
24Zambia8 June 2010 [8]
25Central African Republic1 December 2010 [8]
26Afghanistan1 June 2011 [8]
27Comoros1 January 2012 [8]
28Liberia1 January 2012 [8]
29Yemen2 April 2013 [8]

Previous beneficiaries

Countries cease to become DFTP beneficiaries when they are no longer designated as LDCs by the United Nations, although the transition is not immediate and countries often continue to receive LDC benefits for a period even after they graduate from LDC status. Samoa and Equatorial Guinea which graduated in 2015 and 2017 continue to be beneficiaries. [3]

Maldives graduated from LDC status in 2011 and was removed from the DFTP scheme in 2015. [8] However, under article 12 of the South Asia Free Trade Agreement, Maldives is accorded LDC status in the agreement and in any subsequent contractual undertakings. [9]

Notes

  1. ↑ The margin of preference is the percentage difference between the most favoured nation (MFN) rate of duty and the preferential rate of duty

See also

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References

  1. ↑ "India's Duty Free Tariff Preference (DFTP) Scheme for Least Developed Countries (LDCs)" (PDF). Lesotho Revenue Authority. November 2015. Retrieved 5 October 2021.
  2. ↑ "Utilising India's Duty Free Preference Scheme for LDCs: Analysis of the Trade Trends". researchgate.net. Centre for WTO Studies. Retrieved 5 October 2021.
  3. 1 2 3 4 Scelta, Gabriella. "Preferential Market Access: India's Duty Free Tariff Preference Scheme for LDCs". United Nations. Retrieved 5 October 2021.
  4. ↑ Tavares, Marcia. "Preferential market access for goods | LDC Portal". United Nations. Retrieved 5 October 2021.
  5. 1 2 "India's Duty Free Tariff Preference (DFTP) Scheme for Least Developed Countries (LDCs)" (PDF). Ministry of Commerce. 9 October 2017. Retrieved 5 October 2021.
  6. 1 2 3 "HANDBOOK ON INDIA'S DUTY-FREE TARIFF PREFERENCE SCHEME for least developed countriesfor least developed countries" (PDF). UNCTAD. Retrieved 5 October 2021.
  7. ↑ "India increases duty free tariff line to African exports up to 98 percent". International Centre for Trade and Sustainable Development. Retrieved 5 October 2021.
  8. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 "INDIA'S DUTY FREE TARIFF PREFERENCE SCHEME FOR LDCs" (PDF). International Trade Centre. 2015. Retrieved 5 October 2021.
  9. ↑ Tavares, Marcia. "Preferential market access for goods | LDC Portal". United Nations. Retrieved 5 October 2021.
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