Why in news?
India’s Duty‑Free Tariff Preference scheme has come back into focus after the World Trade Organisation credited it for boosting exports from the world’s poorest nations. The scheme allows products from least‑developed countries to enter India without paying customs duties, which helps these countries earn more from trade. Recent WTO assessments show that India offers some of the most generous duty‑free access among major economies.
Background
The DFTP scheme was launched by India in 2008 with the aim of supporting economic development in Least Developed Countries (LDCs). Under this initiative India offers duty‑free or reduced‑duty access to goods imported from about 48 LDCs in Africa, Asia and the Pacific. The scheme covers roughly 94 percent of India’s tariff lines, making it one of the broadest preferences in the world. Eligible products range from agricultural produce and textiles to leather goods and minerals. By providing preferential margins averaging around 15 percent and even higher for farm goods, the programme encourages exporters from these countries to diversify their products and enter the Indian market.
Key features
- Wide coverage of goods: The scheme extends duty‑free access to a broad range of products including fruits, vegetables, spices, grains, clothing, hand‑woven textiles, leather items and semi‑processed minerals.
- Eligible countries: All nations classified as LDCs by the United Nations can benefit from the scheme. India is a major market for exporters from countries such as Bangladesh, Nepal, Ethiopia, Tanzania and Cambodia.
- High preferential margins: Average tariff reductions of about 15 percent are offered across all products, while agricultural goods enjoy reductions of nearly 30 percent. This makes Indian tariffs significantly lower than the general rates faced by other trading partners.
- Enhanced market access: The duty‑free treatment helps exporters from LDCs compete against suppliers from developed and emerging economies. India has become one of the top five export destinations for these countries by value.
- South–South cooperation: The scheme reflects India’s commitment to mutual growth among developing nations. It complements other initiatives such as lines of credit and capacity‑building programmes aimed at strengthening economic ties with the global south.
Significance
- Boosting LDC economies: Easier access to the Indian market allows small producers in LDCs to earn foreign exchange, create jobs and reduce poverty.
- Diversifying India’s imports: Duty‑free imports introduce new varieties of goods and raw materials, which can support industries within India.
- Strengthening diplomatic ties: By opening its market, India deepens relations with partner countries and projects itself as a leader in South‑South cooperation.
- Alignment with global trade goals: The programme supports the United Nations’ Sustainable Development Goals by promoting inclusive economic growth and fostering global partnerships.
Conclusion
The Duty‑Free Tariff Preference scheme is not only a trade arrangement but also a tool of diplomacy and development. By continuing to widen product coverage and simplify procedures, India can ensure that the poorest nations benefit fully from increased trade opportunities while its own industries gain access to diverse inputs.
Source: Livemint