India’s Duty Free Tariff Preference (DFTP) Scheme for Least Developed Countries (LDCs)

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The Decision to provide Duty Free Quota Free (DFQF) access for LDCs was an outcome of the WTO Hong Kong Ministerial Meeting, held in December 2005. This decision as given in Annex F of the Hong Kong Ministerial Declaration inter alia requires all developed-country Members, and developing-country Members declaring themselves in a position to do so, to:

(a) Provide duty-free and quota-free market access on a lasting basis, for all products originating from all LDCs by 2008 or no later than the start of the implementation period in a manner that ensures stability, security and predictability;

(b) Members facing difficulties should provide market access for at least 97 per cent of products originating from LDCs defined at the tariff line level, by 2008 or no later than the start of the implementation period. In addition, these Members shall take steps to progressively achieve compliance with the obligations set out above, taking into account the impact on other developing countries at similar levels of development, and, as appropriate, by incrementally building on the initial list of covered products ; 

(c) Developing-country Members are permitted to phase in their commitments and shall enjoy appropriate flexibility in coverage ; 

(d) Preferential rules of origin applicable to imports from LDCs are required to be transparent and simple, and contribute to facilitating market access

Duty Free Tariff Preference (DFTP) scheme of 2008: 

Under this WTO Decision, India became the first developing country to extend this facility to Least Developed Countries (LDCs). India announced the Duty Free Tariff Preference (DFTP) Scheme for LDCs in the year 2008. The Scheme was announced to give support to the LDCs in their trade initiatives.

In 2008, the Prime Minister of India announced the Duty Free Tariff Preference Scheme for Least Developed Countries at the India–Africa Forum Summit (New Delhi, 8 April). The scheme entered into force on 13 August 2008 and was notified to the World Trade Organization on 5 September 2011. Annex 1 contains this notification. 

The Duty Free Tariff Preference Scheme is a unilateral non-reciprocal tariff preference scheme for the least developed countries. It was launched with the following benefits (for items at the Harmonized System 6-digit level of classification): 

1. Elimination of customs duties over a period of five years through equal annual reductions on 4,430 items, which constituted 85 per cent of total tariff lines; 

2. Reduction of duties on the basis of a prescribed margin of preference over a period of five years through equal annual reductions on 468 items, which constituted 9 per cent of total tariff lines; and 

3. No reductions on 326 items, which constituted 6 per cent of total tariff lines. 

By 2012, under the scheme, for exports from the least developed countries, 85 per cent of India’s total tariff lines were duty free, 9 per cent of tariff lines had a margin of preference ranging from 10 to 90 per cent and 6 per cent of total tariff lines were retained in an exclusion list with no duty preferences. 

In 2014, the scheme was revised to further facilitate the exports of the least developed countries. Product coverage under the scheme was expanded and margins of preference were increased. Annex 2 contains the notification advising of this change. In addition, procedural matters related to the rules of origin provisions under the scheme were simplified. Annex 3 contains the notification providing these provisions. The changes made with regard to product coverage, margins of preference and rules of origin are discussed in chapters 3 and 4 of this handbook.

Ministry of Commerce and Industry, UNCTAD

Relevance: 

WTO flags poor utilisation of India scheme for least developed countries - Business Standard

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