Sops mulled for backward nations

With an eye on multilateral negotiations, India is planning to give preferential access to goods imported from the Least Developed Countries (LDC).

The commerce and industry ministry is working on a proposal to formulate a policy aimed at LDCs, granting them benefits higher than those given under Most Favoured Nation (MFN) clause. The details of the scheme have not been worked out.

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.

"The idea is two-fold. We want to grant LDCs preferential access in the Indian market and recognise their sensitive products," a senior government official told Business Standard. If required, the ministry would seek Cabinet clearance for the proposal.

India has bilateral trade agreements with neighbouring LDCs like Nepal and Bangladesh. The new policy would be aimed at the other LDCs in regions like sub-Saharan Africa.

Officials said that since India's trade with the LDCs was 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. This was needed in view of an ambitious target of doubling India's share in global trade from 0.7 per cent at present 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 enacted the African Growth Opportunities Act in May 2000. The European Union launched the Everything But Arms (EBA) scheme in March 2001.

Trade experts said by granting preferential access to LDCs, India would be able to negate attempts by the US and the EU, which try to win over the support of poorer countries in multilateral talks through trade concessions.