Duty-Free Quota-Free Scheme (DFQF)

Under the World Trade Organisation (WTO), India provides a duty-free quota-free (DFQF) scheme to least-developed countries (LDCs).
According to the LDC Group, around 85% of the products given by India remain unutilized under the DFQF scheme.

World Trade Organisation (WTO)
Establishment	The World Trade Organisation (WTO) was created on January 1, 1995, as a result of the Uruguay Round of Negotiations, which took place from 1986 to 1994.
Nature	The World Trade Organisation (WTO) is the only global intergovernmental organisation committed to regulating trade laws between nations.
Successor to GATT	It is the replacement for the General Agreement on Tariffs and Trade (GATT), which existed from 1948 to 1994.
Objectives	To make international trade more fluid, predictable, and unrestrained.
Working Principles	Based on the MFN and national treatment principles, assuring equitable and non-discriminatory treatment.
Member-Driven Organization	It is governed by its member countries, and decisions are determined by consensus among them.
Special and Differential Treatment for Developing Countries	The World Trade Organisation (WTO) grants certain flexibilities and rights to least developed countries (LDCs) and developing countries.

The WTO Hong Kong Ministerial Meeting in 2005 first approved on DFQF access for LDCs.
In 2008, India was the first developing country to offer this opportunity to LDCs, offering preferential market access on 85% of its total tariff lines.
In 2014, the scheme was expanded to provide LDCs with privileged market access on approximately 98.2% of India’s tariff lines.

(1) Tariff Line Utilisation Data

According to WTO data from 2020, 85% of the tariff lines supplied by India under the DFQF scheme are underutilised.
China’s utilisation rate for identical tariff lines is 64%, with only 8% of the lines utilising more than 95%.
Beneficiary LDC usage rates vary widely, with Guinea and Bangladesh reporting low rates (8% and 0%, respectively), while Benin has the highest utilisation rate of 98%.

(2) Non-Preferential Tariff Route

Similarly to China, although being included under the Indian preference scheme, considerable amounts of LDC exports reach India via the non-preferential (most favoured nation) tariff method.
The report emphasises the significance of preference margins, which indicate possible tariff savings.
Fixed vegetable oil sent from Bangladesh to India, for example, has a preference margin of 77.5 percentage points, implying a possible tariff savings of $74 million if the preference plan were used.

According to the research, the poor utilisation of the preference scheme by LDCs is attributable to existing impediments that impede the effective use of preferences more than a lack of exporter awareness.
The article makes no mention of the specific impediments stopping LDCs from fully utilising the scheme.

Source: https://unctad.org/system/files/non-official-document/aldc_2021_eif_dfqf_pptII_lao_en.pdf