Enhancing Fair Trade: Guidelines and Policy Changes in the Developing Countries Trading Scheme : Will India’s International Trade be benefited

India’s international trade can potentially benefit from the guidelines and policy changes implemented in the Developing Countries Trading Scheme (DCTS), particularly with the focus on more objective graduation criteria and the adjustment of tariff rates.

Exporter Eligibility

The exporter must operate in a beneficiary country listed under the DCTS.

Maintain Records

The exporter must maintain appropriate commercial accounting records regarding the production and supply of goods eligible for preferential tariff treatment.
Readiness to Provide Documents: The exporter should be prepared to provide, upon request by customs or other competent governmental authorities of the exporting country, all supporting documents or written statements from producers and suppliers that validate the claim that the goods originate from the beneficiary country.

Regarding the new policy changes

Graduation Criteria

Goods from DCTS Standard Preferences countries (currently only India and Indonesia) are subject to graduation based on Harmonized System (HS) chapters rather than Generalized System of Preferences (GSP) sections.

Objective Graduation

This change aims to make graduation more objective, as HS chapters categorize products more uniformly. It avoids “overshoots” in graduation, ensuring that preferences are not removed from products simply because they are grouped with other highly competitive products. By basing graduation on Harmonized System (HS) chapters rather than Generalized System of Preferences (GSP) sections, the policy ensures a more equitable treatment of Indian exports. This approach reduces the risk of preferences being removed from Indian products solely due to their grouping with highly competitive items from other countries.

Optimized Tariff Rates

While some Indian exports, such as textiles, may continue to benefit from preferential tariff rates, others like leather may move to the UK Global Tariff (UKGT) rate due to their competitiveness in the UK market. This adjustment aims to align tariff rates with market realities, potentially opening up new opportunities for Indian exporters to diversify their product offerings and target different market segments.

Impact on Imports

The policy change affects imports from India and Indonesia. Certain products, such as textiles for India and animal and vegetable oils for Indonesia, remain graduated. However, some products, like leather for India and musical instruments for Indonesia, move to the UK Global Tariff (UKGT) rate as they are considered highly competitive in the UK market. Less competitive exports, such as India’s metal exports, move to the DCTS Standard Preferences rate.

Streamlined Trade Processes

The guidelines for making origin declarations under the DCTS provide clarity and transparency for Indian exporters, facilitating smoother trade transactions. By maintaining proper records and being prepared to provide necessary documentation, Indian exporters can ensure compliance with the scheme’s requirements, thereby reducing administrative burdens and enhancing trade efficiency.

An origin declaration must

• Be made out on an invoice or any other commercial document that describes the goods in sufficient detail to enable them to be identified
• include the following data elements:
  • Exporter’s name and business address.
  • Date of direct shipment to the UK.
  • Other references, for example, purchase order number.
  • Consignee’s name and business.
  • Purchaser’s name and address (if not the consignee).
  • Country of transshipment.
  • Country of origin of the goods. If the shipment includes goods of different origins, enter details against the data element.
  • Transportation details.
  • Terms of sale.
  • Currency.
  • Number of packages.
  • Specification of commodities (kind of packages, marks and numbers, general description and characteristics, such as grade, quality).
  • Quantity.
  • Unit price.
  • Total price.
  • Net weight.
  • Gross weight.
  • Invoice total.
• Include the text in the ‘Origin declaration wording’ section, incorporating the information required by the footnotes

Outcome

Overall, the change results in £748 million of Indian exports graduating off the preferential rate, compared to £791 million under GSP.

These guidelines and policy changes aim to streamline trade processes, ensure fair competition, and optimize preferences for both exporters and importers within the framework of the Developing Countries Trading Scheme.