Country of origin

Subject: Economy

Context:

• With more stringent rules coming into effect from September 21, an exporter’s certificate for ‘country of origin’ alone, which was sufficient earlier, will not be admissible.
• The concessional Customs duties, including zero duty, under free-trade agreements (FTAs) would be available to importers only if they can prove that products have undergone value addition of at least 35 per cent in the countries of origin

Concept:

• Investigation into FTA imports in the last few years has revealed that the rules of origin, under respective FTAs, were not being followed in the true spirit. This practice has been rampant in electronic items particularly.
• The FTA partner countries have been exporting these goods without having the necessary technological capacity to achieve required value addition. Moreover, rules of origin were flouted even in products like aggarbatti, arecanut, black pepper, etc.
• The Certificates of Origin were freely issued by the agencies in the country of exports without any accountability and if verification was initiated, these agencies either do not respond or respond casually.
• The ASEAN FTA allows imports of most of the items at nil or concessional basic customs duty rate from the 10 ASEAN member countries.
• Major imports to India come from five ASEAN countries — Indonesia, Malaysia, Thailand, Singapore and Vietnam. The benefit of concessional customs duty rate applies only if an ASEAN member country is the country of origin for the goods.
• This means that goods originating from China and routed through these countries will not be eligible for customs duty concessions under ASEAN FTA.
• The country of origin is determined by application of certain set of conditions as prescribed in the FTA agreement itself. In respect of goods, other than natural products native to these countries, the required condition is that minimum value addition of the export value of goods must have been contributed by the ASEAN member country.