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 or import tax is a duty (tax), duty imposed by a national Government, government, customs territory, or supranational union on imports of goods and is paid by the importer. Exceptionally, an export tax may be levied on exports of goods ...

scheme provided by the

Government of India The Government of India (ISO 15919, ISO: Bhārata Sarakāra, legally the Union Government or Union of India or the Central Government) is the national authority of the Republic of India, located in South Asia, consisting of States and union t ...

for the

least developed countries The least developed countries (LDCs) are developing countries listed by the United Nations that exhibit the lowest indicators of socioeconomic development. The concept of LDCs originated in the late 1960s and the first group of LDCs was listed b ...

(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 less-developed industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. There is also no clear agreeme ...

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 List of countries and dependencies by population, eighth-most populous country in the world and among the List of countries and dependencies by ...

Bhutan Bhutan, officially the Kingdom of Bhutan, is a landlocked country in South Asia, in the Eastern Himalayas between China to the north and northwest and India to the south and southeast. With a population of over 727,145 and a territory of , ...

Maldives The Maldives, officially the Republic of Maldives, and historically known as the Maldive Islands, is an Archipelagic state, archipelagic country in South Asia located in the Indian Ocean. The Maldives is southwest of Sri Lanka and India, abou ...

and

Nepal Nepal, officially the Federal Democratic Republic of Nepal, is a landlocked country in South Asia. It is mainly situated in the Himalayas, but also includes parts of the Indo-Gangetic Plain. It borders the Tibet Autonomous Region of China Ch ...

under the South Asia Free Trade Arrangement, and to

Laos Laos, officially the Lao People's Democratic Republic (LPDR), is the only landlocked country in Southeast Asia. It is bordered by Myanmar and China to the northwest, Vietnam to the east, Cambodia to the southeast, and Thailand to the west and ...

and Bangladesh under the

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

Background

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

developed countries A developed country, or advanced country, is a sovereign state that has a high quality of life, developed economy, and advanced technological infrastructure relative to other less industrialized nations. Most commonly, the criteria for eval ...

, and

developing countries A developing country is a sovereign state with a less-developed Secondary sector of the economy, industrial base and a lower Human Development Index (HDI) relative to developed countries. However, this definition is not universally agreed upon. ...

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 (26 September 1932 – 26 December 2024) was an Indian economist, bureaucrat, academician, and statesman, who served as the prime minister of India from 2004 to 2014. He was the fourth longest-serving prime minister after Jaw ...

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

New Delhi New Delhi (; ) is the Capital city, capital of India and a part of the Delhi, National Capital Territory of Delhi (NCT). New Delhi is the seat of all three branches of the Government of India, hosting the Rashtrapati Bhavan, New Parliament ...

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 headquartered in Geneva, Switzerland that regulates and facilitates international trade. Governments use the organization to establish, revise, and enforce the rules that g ...

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 ha ...

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 ...

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 legally binding agreement. The concept is similar to a heads of agreement, term she ...

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 the Earth, global intergovernmental organization established by the signing of the Charter of the United Nations, UN Charter on 26 June 1945 with the stated purpose of maintaining international peace and internationa ...

, 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