Trade and Commerce with Madagascar
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Rules of Origin and Duty Free Tariff Preference Scheme simplified

Attention is drawn to India’s Duty Free Tariff Preference (DFTP) Scheme for the Least Developed Countries (LDCs) as part of India’s commitment under the WTO Hong-Kong Ministerial Declaration (HKMD) of December 2005 of which Madagascar & Comoros are beneficiaries. This Scheme has been effective since 2008 and was further expanded in April 2014. Under this scheme, India is providing duty-free market access on about 96% of India’s tariff lines (at HS 6 digit level of classification) and 2.2% of the lines are under preferential duties to LDCs. Only 1.8% of the tariff lines have been retained in the Exclusion List, with no duty concessions.

2. The following provisions related to the Rules of Origin of the DFTP Scheme have been simplified in March 2015 to make it easier for the LDCs to utilize the DFTP scheme for exports to India:

i)  Change in the origin criteria to Change in Tariff Sub Head (CTSH) + 30% value addition instead of the earlier criteria of Change in Tariff Head (CTH) + 30% value addition.

ii) Allow the option for calculation of value addition based on ex-works price of the goods also instead of FOB value only in the earlier Scheme;

iii) Allowing the Certificate of Origin (COO) in A4 size paper of white colour in the prescribed format, instead of the requirement of blue coloured COO under DFTP scheme.

The range of commodities which fall under Duty Free Tariff Preference Scheme is provided under ‘Economic and Commercial Relations’ of the website of Embassy of India. The Embassy strongly urges the Malagasy and Comorian businessmen to take advantage of above measures for more balanced bilateral trade between both the countries.


Economic and Commercial Relations India-Madagascar

Following the installation of popularly elected government and subsequent international recognition, the Indian companies are showing renewed interest in investing in Madagascar. 

Confederation of Indian Industry (CII) and the International Trade Board of Madagascar (ITBM) have signed a Memorandum of Understanding (MOU) on 18th March 2014 in New Delhi to enhance economic relations.

A market survey on the Pharmaceutical, Agribusiness and Investment sectors to assess opportunities in both trade and investments for Indian companies was conducted by the Embassy and a report was published in March 2014.  A Catalogue Show was also arranged in the same month where Indian companies who have already invested in Madagascar participated.

A 21-member Pharmexil delegation visited Madagascar from 16-20 March and the Embassy organized an inaugural conference and B2B meetings which were very productive. The Pharmexil delegation called on the Secretaries General of Health and Trade and also on the Prime Minister.

The Mission organized a series of events to mark the diamond jubilee of diplomatic ties between India and Madagascar starting with a ‘Showcase India event’ on 15-16 February 2014 and an Indian Business Promotion event exhibition on 26 March 2014. The event on 26th March was organized in partnership with the Malagasy Chamber of Commerce and Industry, Economic Development Board, the International Trade Board of Madagascar and the Malagasy-India Chamber of Commerce and Industry. It was well received by both the invitees, participant businessmen and the visitors. Two Make in India events were also organized in October and November 2014.

Apollo Hospitals group have signed a MoU with the Malagasy Ministry of Health in the month of May 2014. The MoU would allow the treatment of government sponsored and private patients in India at viable economic costs, train the accompanying Malagasy doctors in India and give follow up treatment to the patients in Madagascar once in three months.

A 7-member pharma delegation comprising health officials, hospital authorities, members of pharmaceutical companies and journalist from Madagascar participated in the International Expo for Pharmaceuticals and Health products from 21-23 May 2014, Mumbai, India.

 

           Bilateral trade between India and Madagascar has been steadily growingThe bilateral trade figures for the last three years are as follows:

In millions and in US$

 

2011-12

2012-13

2013-14

2014-15 (Apr – Sept)

India’s exports

123.63

154.52

238.74

93.30

India’s imports

82.75

72.88

52.84

40.93

Source:DGFT

 

The main items of exports from Madagascar to India are Coffee, Tea, Spices, Edible Vegetables, Salt, Sulphur & Earth, Essential Oils, Base Metals, Precious and Semi-precious Stones, etc.. The major imports from India are Cereals, Apparel Products, Iron & Steel, Cotton, Pharmaceutical Products, Products of the Milling Industry, Sugar and Sugar confectionery, etc.

 

Indian investments: The major Indian investments amounting to approximately $11.85 million by Indian companies were in the mining, oil and gas sectors, telecom sector and health sectors. Airtel is the main player in mobile telephony and Dr. Aggarwal’s Eye Hospital in the health sector.  Other Indian companies which invested but yet to commence operations due to the crisis include the Tatas, Essar, Varun Industries, GIMPEX Osho Ventures, Sahara (India), Diamond Cement, Jindals etc..

DUTY FREE TARIFF PREFERENCE SCHEME

APPLIED FOR MADAGASCAR  


            To improve the market access and to promote exportation to India, this emerged country announced a special scheme for least developed countries, which is the Duty Free tariff Preference Scheme (DFTS), under the WTO (World Trade Organization).  This tariff came into effect in August 2008 with tariff reductions spread over five years, for various items being exported to India.

 The scheme provides for duty free items on about 85% of India’s total tariff lines (traded products). Applied customs duty would be removed over a period of 5 years with 20% reduction each year. In addition, the Scheme also grants preferential market access as per margin of preference which is available on about 9% of tariff lines (458 items). The MOP ranges from 10% to 100% on different items and is available on the applied rate of duty as on the date of imports.

 Actually, for duty free items and the positive list containing 458 items, four tranches of reductions have already been effected since August 2008. Last and final reduction were completed in 2012. Since then, the tariff for the traded products included in the positive list of this scheme is cut to zero.

 As for example, the zero tariffs are applicable to items such as dry beans like lentils, chick peas beans, white pea beans; synthetic fibres, textile materials, leguminous vegetables, seafood products (prawns, fish), etc. This zero tariff is beneficial for Madagascar but so far the Malagasy businessmen have not yet utilized this advantage.

 It is noted that duty free and the positive list cover about 92.5 of global exports of least developed countries. Products of immediate interest to Madagascar which are covered in the preferential market access on tariff lines, include also cotton, cocoa, aluminium ores, copper ores, cashew nuts, ready-made garments, fish-fillets and non-industrial diamonds.

Only 6% of tariff lines are under the exclusion list composed of 326 items, on which no tariff preference is available. This scheme excludes fruits and vegetables, milk products, rice in husk, wheat, coffee, maize, flour.

 Ties between India and Madagascar would benefit from the Duty Free tariff Preference Scheme. It will boost the volume of trade between the two countries for mutual benefits. According to figures from Institute of National Statistic, the volume of exports to India is increasing every year, for the last four years. In 2008, the value of exports was around 40 billion Ariary to reach almost 149 billion Ariary (CAF price) last year. As far as imports from India are concerned, they were decreasing from 2009 to 2010 and in the last years, they are on the rise, as it is shown in the tables below.

 Export from Madagascar is still less compared to imports from India and hence the export should increase to get more balanced international trade and the Malagasy businessmen should take advantage of the Duty Free tariff Preference Scheme of the Government of India.

 For further details, please visit: http://commerce.gov.in/trade/international_tpp_DFTP.pdf

      


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