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The government of India on 21st August 2020 notified guidelines for the enforcement of ‘Rules of Origin’ through Section 28DA in the Customs Act. This section is an enabling provision for ensuring that the Rules of Origin under Free Trade Agreements are complied with.
The preferential rules of origin will safeguard the misuse of goods through a third country and only the countries from where the goods have originated will be able to enjoy the preferential treatment.
Hence, this measure will ensure that products of the contracting countries satisfy the Rules of origin criteria and aims to prevent goods of third parties from getting the benefit of the concession by routing their goods through the contracting parties. This notification and circular apply to all FTAs/PTA’s.
Prior to this India was basically accepting these certificates without any independent verification. While the industry is fully motivated to manufacture under the “Make in India Scheme”, it was affected by cheap imports and misuse of the Trade Agreements. Hence, with the enforcement of new rules, the industry will be able to accomplish the ‘Atmanirbharta’ status.
However, this notification may create difficulty for genuine importers. The importers will be requiring information relating to regional value addition, comprehensive product details etc. to obtain the certificate. The supplier may not be willing to provide the details due to confidentiality.
“The FTAs were never in favor of India and the signing of them was not at an appropriate time. They were signed with similar economies like ours and they took advantage of the same and thrived while our economy shrunk.
Therefore, these norms will help the authorities to check on any misuse of any third country routing their goods through preferential agreement. This will encourage domestic manufacturing and ‘Atmanirbharta’ for the industry” said Pankaj Mohindroo, Chairman, India Cellular and Electronics Association (ICEA).