The commerce ministry is examining the possibility of extending unilateral tariff concessions to least developed countries to facilitate greater market access.
The ministry had commissioned UNCTAD to file a report on the issue. The report says extending zero duty concessions to all the 49 LDCs (as identified under the World Trade Organisation) would cost the government an annual revenue loss of only Rs 250 crore (Rs 2.5 billion) while extending the benefits to only the African LDCs would cost Rs 100 crore (Rs 1 billion).
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"Moreover, if one excludes agricultural items from the list of concessions -- our sensitivities in the area -- the revenue loss would be still lower at only around Rs 30 crore (Rs 300 million)," a senior government official told Business Standard.
"The idea is two-fold: grant LDCs preferential access in the Indian market and recognise their sensitive products," officials said adding that if required the ministry would seek Cabinet clearance for the proposal.
Such a policy would grant LDCs more benefits than those available under the most favoured nation clause.
Under the MFN clause of the World Trade Organisation, a member country has to grant similar duty benefits to all other member countries. The average applied MFN in India is around 30 per cent.
Officials pointed out that since India's trade with the LDCs is very marginal, granting them preferential access would not hurt domestic producers.
Moreover, preferential access to the Indian market would in turn open up these markets for Indian exports which is needed in view of an ambitious target of doubling India's share in global trade from the present 0.7 per cent to around 1.5 per cent within the next five years.
Already several developed countries have passed legislation providing improved, access to LDCs for various products.
For instance, the US has enacted the African Growth Opportunities Act in May 2000 and the European Union has granted the Everything But Arms scheme in March 2001.
Similarly, New Zealand (in July 2001), Norway (in 2002) and Australia (in July 2003) have also granted LDCs duty-free access to their markets for all products.
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