The UK Government has confirmed two important changes under the Developing Countries Trading Scheme (DCTS), affecting trade with India and Bhutan. Although the changes follow different routes, both require UK importers to review commodity-level tariff treatment and origin evidence rather than assume existing preference arrangements will continue unchanged.
India: two preference routes during the transition
The UK-India Free Trade Agreement entered into force on 15/07/2026. India will remain within the DCTS for a two-year transition period, ending on 14/07/2028, before leaving the scheme on 15/07/2028.
During the transition, eligible goods may potentially qualify for preference under either the DCTS or the UK-India FTA. This is not a free choice between two tariff rates. Each arrangement has its own product-specific origin requirements and proof of origin rules, and the evidence used for one regime cannot simply be used for the other.
Importers should therefore compare the position at commodity-code level. The assessment should consider the tariff rate available, the relevant rule of origin, how the product is manufactured and which supporting evidence the exporter can provide.
Existing DCTS goods-graduation measures add another consideration. Standard Preferences are already suspended for specified Indian product chapters during the 2026 to 2028 graduation period. For affected goods, remaining within the DCTS does not necessarily mean that a preferential DCTS duty rate is available.
The Government has also confirmed that certain DCTS countries in the Asian regional cumulation group may continue using qualifying Indian-origin inputs after India leaves the scheme, provided the relevant inputs are duty-free and quota-free under the UK-India agreement.
Bhutan: preference tier changes from December
A separate Government notice confirms that Bhutan will move from DCTS Comprehensive Preferences to Enhanced Preferences from 14/12/2026.
The change follows Bhutan’s graduation from UN Least Developed Country status and the end of its three-year DCTS transition period. The proportion of product lines receiving duty-free access will reduce from 99.8% to 92%.
That does not mean every import from Bhutan will face a new tariff. The impact depends on the individual commodity code. Importers should identify the lines they use now, confirm the current preference and recheck the UK Trade Tariff before goods arrive on or after 14/12/2026.
What businesses should do
For manufacturers and importers sourcing from India or Bhutan, the immediate task is to map preference against the actual product and supply chain. Businesses importing regularly from India may benefit from a product-level preference matrix comparing DCTS and FTA treatment, origin rules and the evidence available from suppliers.
Importers should also ensure procurement, finance and customs teams understand which preference is being claimed and why. Origin declarations, supplier information and classification records should be retained with the customs evidence trail.
TVCC’s International Trade team can support businesses with rules of origin, preference reviews and wider customs compliance through its Customs Helpline and Consultancy services.
For support, contact 01753 870560 or trade@tvchamber.co.uk.
Government notices:
India DCTS graduation: India DCTS graduation notice
Bhutan preference-tier graduation: Bhutan DCTS preference-tier notice
DCTS goods graduation 2026-2028: DCTS goods graduation notice
