India Defines Proof of Origin Rules to Ease Trade
In a significant move aimed at enhancing trade facilitation and ensuring smoother compliance processes, the Indian government has introduced a detailed framework for determining the ‘proof of origin’ of imported goods under its free trade agreements (FTAs). The step is expected to cut delays at customs and reduce disputes related to tariff concessions, thereby boosting ease of doing business.
The Central Board of Indirect Taxes and Customs (CBIC) has now explicitly laid out the nature of documentation required to establish the origin of goods imported into the country. The clarification comes under the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR), which have often posed procedural ambiguities for businesses importing under FTAs.
Under the revised norms, importers are now required to maintain verifiable documents that support the origin criteria claimed in their Certificate of Origin (CoO). These can include “invoices issued by the manufacturer, cost break-up of the goods, production flow chart, certificates issued by the manufacturer or supporting manufacturers, and purchase orders.”
This step addresses concerns previously raised by importers and customs officials alike about the lack of clarity around what constitutes acceptable ‘proof.’ Ambiguity in documentation had led to repeated queries, longer clearance times, and, in some cases, denial of preferential tariff benefits.
A CBIC official clarified, “This will bring uniformity in procedures across ports and make it easier for importers to furnish evidence during verification.”
The move is also being seen as a preemptive tightening of procedures amid increasing scrutiny over alleged misuse of tariff benefits under FTAs. India has been particularly vigilant in cases where goods are rerouted or undergo minimal processing in partner countries solely to claim concessional duty rates, especially under agreements like the ASEAN-India FTA.
Trade experts believe this measure will bring India closer to aligning with international standards on Rules of Origin while safeguarding the interests of domestic manufacturers. “The list is only illustrative, but gives an idea of the types of evidence that can be provided during verification,” noted another official.
Importers are advised to ensure that their paperwork is well-documented and accessible, as customs may now demand these proofs more stringently before extending FTA-related benefits. This, in turn, could significantly reduce the number of disputes and foster faster clearances at ports.
Overall, this move reinforces India’s intent to simplify cross-border trade and ensure that benefits under trade agreements are granted only when due diligence is met—benefiting legitimate traders and curbing unfair practices.
