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Business News/ Politics / Policy/  India opens up services market to least developed countries
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India opens up services market to least developed countries

Decision to provide preferential treatment in services trade to LDCs comes ahead of the Nairobi ministerial meet of WTO countries in December

Trade minister Nirmala Sitharaman told reporters on the sidelines of an event that giving preferential market access to LDCs is a commitment that India had always made. Photo: Pradeep Gaur/MintPremium
Trade minister Nirmala Sitharaman told reporters on the sidelines of an event that giving preferential market access to LDCs is a commitment that India had always made. Photo: Pradeep Gaur/Mint

New Delhi: Taking the lead among developing as well as developed countries, India on Wednesday opened up its services market to least developed countries (LDCs) by waiving business and employment visa fees for applicants from such countries.

The Cabinet decision to provide preferential treatment in services trade to LDCs comes ahead of the Nairobi ministerial meet of World Trade Organisation countries in December where the decision is expected to be notified.

At the Eighth Ministerial Conference in 2011, WTO members had adopted a waiver to voluntarily allow preferential treatment for services and service suppliers from LDCs.

The 2013 Bali ministerial decision established various steps to encourage WTO members to make use of this waiver.

Under this, India will also provide market access, technical assistance and capacity building to such countries. “The preferences will be bound with validity for 15 years from the date of notification by India," a government statement said.

India has already made a generous offer to LDCs in the area of trade in goods in the form of a duty free tariff preference (DFTF) scheme.

India has already provided duty free market access in about 96% of traded goods and preferential duties to another 2.2%, for a total of about 98.2%.

“An equally generous offer in Trade in Services will help India preserve and consolidate its leadership position on LDC issues. Further, given the development dimension of the Doha Round of the WTO, it is important that India makes liberal offers to LDCs in trade in services also. Moreover, several of the LDCs are located in South Asia while majority are in Africa with whom India maintains special relations," the statement added.

India’s preferential treatment to the LDCs in trade and services will involve a cost of 6.5 crore annually on account of waiver of visa fees and 2.5 crore to 3 crore a year to provide training in management and technical consultancy courses to LDC applicants.

Although the government may face political backlash domestically for allowing in job seekers from LDCs such as Bangladesh, it is a bold move, said Biswajit Dhar, professor of economics at Jawaharlal Nehru University.

“India now can tell the developed countries who are yet to give market access to LDCs even in goods that trade negotiations should not be done purely from market access perspective rather keeping the larger perspective of development in mind which is key to the languishing Doha round of negotiations," he added.

Trade minister Nirmala Sitharaman told reporters on the sidelines of an event that giving preferential market access to LDCs is a commitment that India had always made. India has taken the lead in it.

“Extending such kind of benefit to them just shows India is committed to the principles of equal development for everybody and principles upon which we are looking for multilateralism in trade," she said.

India has also promised market access in the categories of contractual service suppliers (CSS) and independent professionals (IP) in engineering services; integrated engineering services; computer and related services; management consulting services (excluding all services relating to legal consultancy); project management services other than for construction; hotel and other lodging services; travel agency and tour operator services; tourist guides conversant in a foreign language other than English.

India proposed an exclusive quota of 250 tourist guides from LDCs.

Market access for all these categories would be subject to requisite visa, entry regulations and other requirements such as educational requirements and duration of temporary entry stay that would be inscribed in the commitments.

India proposed to earmark at least 25% out of all technical assistance and capacity building opportunities currently offered by the foreign ministry exclusively for the LDC members.

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Published: 09 Sep 2015, 11:46 PM IST
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