Duty Free Tariff Preference (DFTP) Scheme

[YAGAY andSUN]

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.  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.

India’s Duty Free Tariff Preference (DFTP) Scheme is a trade initiative aimed at promoting exports from Least Developed Countries (LDCs) by offering them preferential access to the Indian market. This scheme is designed to support the economic growth of LDCs by providing duty-free or reduced-duty access for a wide range of products exported from these countries to India. It is part of India’s commitment to fostering trade with LDCs and supporting their integration into the global economy.

Overview of India’s DFTP Scheme:  The DFTP Scheme was introduced in 2008 and provides duty-free or preferential tariff treatment for products imported from LDCs into India. It is aimed at helping LDCs increase their exports to India by making their products more competitive in the Indian market through tariff preferences.

Key Features of India’s DFTP Scheme

1. Duty-Free Access to Indian Market:  Under the DFTP scheme, products from LDCs are eligible for duty-free access to the Indian market. This means that goods from LDCs can enter India without being subject to regular customs duties, provided they meet certain criteria.
2. Eligible Countries:
   • The DFTP scheme is available to all LDCs recognized by the United Nations. India offers this preferential access to around 48 countries classified as LDCs, including countries in Africa, Asia, and the Pacific.
3. Eligible Products:A wide range of products from LDCs can benefit from the DFTP scheme. These include:
   • • Agricultural products: Fruits, vegetables, spices, and grains.
     • Textiles and garments: Clothing, fabrics, and textiles made in LDCs.
     • Handicrafts and traditional goods: Handwoven textiles, jewelry, and locally produced crafts.
     • Leather goods: Leather garments, bags, and accessories.
     • Minerals and metals: Products like gold, diamonds, and other raw materials.

However, there are some exceptions, such as products related to sensitive sectors (e.g., some agricultural products) that may not be fully included under the scheme.

4. Rules of Origin:
   • To qualify for the DFTP preferences, the goods must meet specific rules of origin. These rules ensure that the products are genuinely sourced from LDCs, not from third-party countries.
   • The key rules of origin typically require that a certain percentage of the product’s value or transformation must originate in the LDC for it to be eligible for duty-free treatment in India.
5. Preferential Tariff Treatment:  In addition to duty-free access, the scheme also provides preferential tariff rates for certain goods, making Indian imports from LDCs more cost-competitive compared to imports from non-LDC countries.
6. Certificate of Origin: To benefit from the DFTP scheme, exporters from LDCs must provide a Certificate of Origin (COO) to prove that the goods meet the required origin criteria and are eligible for preferential treatment. The COO is a critical document for clearing customs and claiming the duty-free status under the scheme.

Benefits of India’s DFTP Scheme for LDCs

1. Enhanced Market Access: The DFTP scheme offers LDCs an opportunity to access the Indian market without the burden of tariffs. This creates a significant competitive advantage for LDC exporters who might otherwise face high tariffs when exporting to other countries.
2. Economic Development: By providing preferential access to the Indian market, India’s DFTP scheme contributes to the economic development of LDCs. Increased exports from LDCs can help generate employment, reduce poverty, and stimulate industrial and agricultural growth.
3. Support for Diversification: The scheme encourages LDCs to diversify their export products by giving them access to a large, emerging economy like India. This reduces LDCs’ dependence on a few export markets and promotes greater trade diversity.
4. Strengthening Bilateral Relations:  The DFTP scheme helps strengthen trade ties between India and the LDCs, fostering closer economic cooperation and partnership in regional and global trade.
5. Promotion of Sustainable Development:  The preferential trade treatment under the DFTP scheme supports the sustainable development goals (SDGs) of LDCs by promoting inclusive growth and reducing the barriers to entry for LDC products.

Challenges and Considerations:  While the DFTP scheme offers significant benefits, there are also some challenges and considerations for both LDC exporters and Indian importers:

1. Compliance with Rules of Origin:  Exporters from LDCs need to ensure that their products meet the rules of origin to avoid issues with customs clearance in India. This requires proper documentation and sometimes a more detailed understanding of the production process.
2. Quality Standards:  Goods imported from LDCs may need to meet specific quality standards and regulations set by Indian authorities. This can be a barrier for LDC exporters if their products do not comply with these standards.
3. Logistical and Infrastructure Constraints: Some LDCs may face challenges related to infrastructure, logistics, and transportation that could affect the efficiency of exports to India. Delays in shipping or customs clearance can sometimes undermine the benefits of the DFTP scheme.
4. Limited Awareness and Capacity:  Some exporters in LDCs may not be fully aware of the opportunities available under the DFTP scheme, or they may lack the capacity to meet the regulatory and documentation requirements needed to take advantage of the preferential treatment.

Country Coverage : As of June 2023; Thirty-Five (35) LDCs have been notified as beneficiaries to the scheme*. These countries include the following: 

S. No.	Country name	S. No.	Country name	S. No.	Country name
1	Benin	13	Liberia	25	Togo
2	Burkina Faso	14	Madagascar	26	Zambia
3	Burundi	15	Malawi	27	Afghanistan
4	Chad	16	Mali	28	Bangladesh
5	Comoros	17	Mozambique	29	Cambodia
6	Central African Republic	18	Niger	30	Timor Leste
7	Eritrea	19	Rwanda	31	Lao PDR
8	Ethiopia	20	Senegal	32	Myanmar
9	Gambia	21	Somalia	33	Haiti
10	Guinea	22	Sudan	34	Yemen
11	Guinea Bissau	23	Uganda	35	Sierra Leone
12	Lesotho	24	Tanzania

*Those LDCs which have graduated out of UN list of LDCs have been deleted from this list 

Implementing Notification of the DFTP Scheme and Notifications of Accessions 

The relevant Indian customs notifications pertaining to the DFTP Scheme are:   

Notification No.	Date	Title
23/2022 - Customs	30-Apr 2022	Seeks to amend the various Customs Tariff notifications in order to align the HS Codes of the said notifications with the Finance Act, 2022, w.e.f. 01.05.2022
60/2021-Cus	30-Dec2021	Seeks to amend FTA/PTA notification to align with HSN 2022 w.e.f. 1.1.2022
50/2021-Cus	22-Oct 2021	Seeks to amend notification No. 96/2008- Customs dated 13.08.2008 to include Sierra Leone
26/2021-Cus	08-Apr 2021	Seeks to amend customs notifications to make changes consequential to enactment of Finance Act, 2021
16/2021-Cus	05-Feb 2021	Seeks to amend notification Nos. 96/2008-Customs, 57/2009-Customs, 101/2007-Customs and 50/2018-Customs consequential to imposition of Agriculture Infrastructure and Development Cess (AIDC)
36/2019-Cus	30-Dec 2019	Seeks to amend Customs Tariff notifications so as to align them with amended Customs Tariff.
68/2017-Cus	27-Jul2017	Seeks to amend Notification No. 96/2008-Customs dated 13th August 2008 to insert S. No. 35-Republic of Niger and S. No. 36 Republic of Guinea in the Schedule to the notification.
02/2017-Cus	27-Jan 2017	Seek to further amend Notification No. 96/2008-Customs dated 13.08.2008 so as to prescribe a Margin of Preference of 60% for all goods falling under sub-heading [0802 80] under the Duty Free Tariff Preference (DFTP) scheme.
67/2016-Cus	31-Dec 2016	Seeks to amend Notification No.105/1999- Customs; 75/2005- Customs; 74/2005-Customs; 28/1995- Customs; 76/2003-Customs; 21/2012- Customs; 72/2005- Customs; 24/2005- Customs; 101/2007-Customs; 12/2012- Customs; 26/2000- Customs; 73/2005- Customs; 10/2008- Customs; 96/2008- Customs; 57/2009-Customs; 72/2005- Customs; 151/2009- Customs;  85/2004- Customs;
46/2016-Cus	23-Aug 2016	Seeks to further amend Notification No. 96/2008-Customs dated 13.08.2008 so as to include ‘Republic of Guinea-Bissau’ in the list of countries eligible for preferential tariff under the said notification.
39/2016-Cus	21-Jun 2016	Seeks to further amend Notification No. 96/2008-Customs dated 13.08.2008 so as to include Republic of Togo’ and Republic of Chad’ in the list of countries eligible for preferential tariff under the said notification.
34/2016 -Cus	19-May 2016	Seeks to further amend notification No. 96/2008-Customs dated 13.08.2008, so as to carry out the following changes: to omit ‘Samoa’ and ‘Maldives’ from the list of countries eligible for preferential tariff under the said notification; to amend the name of ‘Republic of East Timor’ as ‘Democratic Republic of Timor-Leste’.
12/2015- Cus	10-Mar 2015	Seeks to amend notification No. 96/2008 Customs, dated the 13th August, 2008
29/2015-Cus (N.T.)	10-Mar 2015	Customs Tariff (Determination of Origin of Products under the Duty Free Tariff Preference Scheme for Least Developed Countries) Rules, 2015.
08/2014-Cus	01-Apr 2014	Seeks to amend Notification No. 96/2008Customs, dated 13-08-2008 (DFTP scheme for LDCs )
33/2013-Cus	19-Jun 2013	Seeks to amend the notification No. 96/2008-Customs, dated 13th August, 2008 so as to include “Republic of Haiti” in the list of Least Developed Countries
19/2013-Cus	02-Apr 2013	Seeks to amend the notification No. 96/2008-Customs, dated 13th August, 2008 so as to include “Republic of Yemen” in the list of Least Developed Countries eligible to avail of the benefit of duty free tariff preferences (DFTP) scheme
56/2012-Cus	01-Oct 2012	Seeks to amend notification no. 96/2008Customs dated 13th August 2008, so as to provide deeper concessions under DFTP scheme for Least Developed Countries (LDCs).
113/2011 –Customs	23-Dec 2011	Amends Notification No. 96/2008-Customs, dated the 13th August, 2008
90/2011 – Customs	16-Sep 2011	Seeks to amend Notification No. 96/2008 Customs dated 13th August 2008, to provide deeper concessions under DFTP scheme for Least Developed Countries (LDCs).
45/2011 – Customs	01-Jun 2011	Seeks to amend notification no. 96/2008 Customs, dated 13.08.2008 so as to include Islamic republic of Afghanistan” as one of the beneficiaries to DFTP scheme”
121/2010 – Customs	01-Dec 2010	Amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue), No. 96/2008-Customs, dated the 13th August, 2008
95/2010 – Customs	15-Sep 2010	Amends Notification No. 96/2008-Customs, dated the 13th August, 2008
67/2010 – Customs	08-Jun 2010	Amends Notification No. 96/2008-Customs, dated the 13th August, 2008
64/2010 – Customs	14-May 2010	Amends Notification No. 96/2008-Customs, dated the 13th August, 2008
63/2010 – Customs	13-May 2010	Amends Notification No.96/2008-Customs, dated the 13th August, 2008
86/2009 – Customs	06-Aug 2009	Amends Notification No. 96/2008-Customs, dated the 13th August, 2008
59/2009 – Customs	09-Jun 2009	Amends Notification No. 96/2008-Customs, dated the 13th August, 2008
45/2009 – Customs	04-May 2009	Amends notification No. 96/2008-Customs, dated the 13th August, 2008
24/2009 – Customs	20-Mar 2009	Amending Notification published vide number G.S.R. 590(E), dated the 13th August, 2008.
07/2009 – Customs	19-Jan 2009	Amends Notification No. 96/2008-Customs, dated the 13th August, 2008
113/2008-Cus	31-Oct 2008	Uganda, Rwanda and Madagascar – Exemption to imports therefrom – Amendment to Notification No. 96/2008Cus.
99/2008 – Customs	28-Aug 2008	Amendments in the notification No. 96/2008-Customs, dated the 13th August, 2008
96/2008 - Customs	13-Aug 2008	Regarding Duty free tariff preference for Least Developed Countries

Conclusion: India’s Duty Free Tariff Preference (DFTP) scheme provides a valuable opportunity for Least Developed Countries (LDCs) to access the Indian market on preferential terms, thus helping these countries increase their exports and foster economic development. By offering duty-free access and preferential tariffs on a wide range of products, India is supporting LDCs in their efforts to integrate more effectively into global trade. For LDC exporters, it is crucial to understand the eligibility requirements, rules of origin, and required documentation (such as the Certificate of Origin) to benefit fully from the scheme.