Duty Free Tariff Preference (DFTP) is a

unilateral __NOTOC__ Unilateralism is any doctrine or agenda that supports one-sided action. Such action may be in disregard for other parties, or as an expression of a commitment toward a direction which other parties may find disagreeable. As a word, ''un ...

non-reciprocal preferential

tariff A tariff is a tax imposed by the government of a country or by a supranational union on imports or exports of goods. Besides being a source of revenue for the government, import duties can also be a form of regulation of foreign trade and poli ...

scheme provided by the

Government of India The Government of India (ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, c ...

for the least developed countries (LDCs). The scheme was officially introduced on 13 August 2008. India was the first

developing country A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...

to introduce a preferential tariff program for the LDCs. 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. India also provides preferential market access to

Bangladesh Bangladesh (}, ), officially the People's Republic of Bangladesh, is a country in South Asia. It is the eighth-most populous country in the world, with a population exceeding 165 million people in an area of . Bangladesh is among the mos ...

Bhutan Bhutan (; dz, འབྲུག་ཡུལ་, Druk Yul ), officially the Kingdom of Bhutan,), is a landlocked country in South Asia. It is situated in the Eastern Himalayas, between China in the north and India in the south. A mountainous ...

Maldives Maldives (, ; dv, ދިވެހިރާއްޖެ, translit=Dhivehi Raajje, ), officially the Republic of Maldives ( dv, ދިވެހިރާއްޖޭގެ ޖުމްހޫރިއްޔާ, translit=Dhivehi Raajjeyge Jumhooriyyaa, label=none, ), is an archipelag ...

and

Nepal Nepal (; ne, नेपाल ), formerly the Federal Democratic Republic of Nepal ( ne, सङ्घीय लोकतान्त्रिक गणतन्त्र नेपाल ), is a landlocked country in South Asia. It is mai ...

under the South Asia Free Trade Arrangement, and to

Laos Laos (, ''Lāo'' )), officially the Lao People's Democratic Republic ( Lao: ສາທາລະນະລັດ ປະຊາທິປະໄຕ ປະຊາຊົນລາວ, French: République démocratique populaire lao), is a socialist ...

and Bangladesh under the

Asia-Pacific Trade Agreement ThAsia-Pacific Trade Agreement (APTA) previously known as thBangkok Agreementand renamed 2 November 2005, was signed in 1975. It is the oldest preferential trade agreement between countries in the Asia-Pacific region. The APTA covers market for 2 ...

Background

The World Trade Organization Hong Kong Ministerial Declaration of December 2005 required all

developed countries A developed country (or industrialized country, high-income country, more economically developed country (MEDC), advanced country) is a sovereign state that has a high quality of life, developed economy and advanced technological infrastruct ...

, and

developing countries A developing country is a sovereign state with a lesser developed industrial base and a lower Human Development Index (HDI) relative to other countries. However, this definition is not universally agreed upon. There is also no clear agreem ...

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). Prime Minister

Manmohan Singh Manmohan Singh (; born 26 September 1932) is an Indian politician, economist and statesman who served as the 13th prime minister of India from 2004 to 2014. He is also the third longest-serving prime minister after Jawaharlal Nehru and Indir ...

announced the introduction of the Duty Free Tariff Preference scheme at the first India–Africa Forum Summit in

New Delhi New Delhi (, , ''Naī Dillī'') is the capital of India and a part of the National Capital Territory of Delhi (NCT). New Delhi is the seat of all three branches of the government of India, hosting the Rashtrapati Bhavan, Parliament House ...

on 8 April 2008. The scheme was officially introduced on 13 August 2008, and was notified to the

World Trade Organization The World Trade Organization (WTO) is an intergovernmental organization that regulates and facilitates international trade. With effective cooperation in the United Nations System, governments use the organization to establish, revise, and e ...

on 5 September 2011.

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 The Harmonized Commodity Description and Coding System, also known as the Harmonized System (HS) of tariff nomenclature is an internationally standardized system of names and numbers to classify traded products. It came into effect in 1988 and has ...

6-digit level of classification), reducing duties on the basis of a prescribed margin of preference 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%. Following consultations with beneficiary countries, the

Ministry of Commerce and Industry A Ministry of Trade and Industry, Ministry of Commerce, Ministry of Commerce and Industry or variations is a ministry that is concerned with a nation's trade, industry and commerce. Notable examples are: List *Algeria: Ministry of Industry and M ...

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%.

Beneficiary countries

In order to become a beneficiary under the DFTP scheme, a prospective beneficiary country must provide a

letter of intent A letter of intent (LOI or LoI, or Letter of Intent) is a document outlining the understanding between two or more parties which they intend to formalize in a contract, legally binding agreement. The concept is similar to a Heads of agreement ( ...

and specimen seals and signatures of the officials authorised to issue the

certificate of origin A Certificate of Origin or Declaration of Origin (often abbreviated to C/O, CO or DOO) is a document widely used in international trade transactions which attests that the product listed therein has met certain criteria to be considered as origina ...

Previous beneficiaries

Countries cease to become DFTP beneficiaries when they are no longer designated as LDCs by the

United Nations The United Nations (UN) is an intergovernmental organization whose stated purposes are to maintain international peace and international security, security, develop friendly relations among nations, achieve international cooperation, and be ...

, 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. Maldives graduated from LDC status in 2011 and was removed from the DFTP scheme in 2015. 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.

Notes

References