As part of a campaign to prevent the exploitation of free trade agreements, India is building a new system that will enable customs authorities here and their counterparts in free trade partner nations to generate and share crucial documentation before goods reach their borders. The proposed system enables customs officials to produce and exchange “country of origin” certificates, a crucial document used to determine whether importers are eligible for duty exemptions provided by Free Trade Agreements (FTAs) and whether those exemptions are really given. As a result, the receiving country’s customs authority won’t need to check the legitimacy of the document that importers submit in order to receive duty exemptions. It will accelerate.
One of the two people mentioned above stated that the processing of shipments. The new approach will also stop FTAs from being abused because businesses won’t be able to fake documents and send goods from other countries through countries that are trade deal partners in order to take advantage of duty savings.
According to the person, the Central Board of Indirect Taxes and Customs (CBIC) is working to implement the system in 2023 as part of a deal for improved customs cooperation signed with South Korea last September. They also said India will start talking to other FTA partners, starting with Australia.At the time of publication, the finance ministry had not responded to an email requesting comments on the article that was received on Friday.
The South Korean government had before made it possible for India to use a database to obtain the nation of origin certificates and confirm their validity. In the case of the Free Trade Agreement with Asean, CBIC has seen several suspected cases of the latter kind and is looking into them. They were found after a macro study revealed that the essential raw components for those items were imported, negating the level of value addition claimed by importers. According to the person who was stated above, using such imports for manufacturing does not result in the necessary value addition in those products.
The government has observed that, in certain instances, the country of origin certificate indicates that the value addition standard has been satisfied, but the cost factors that are utilised to calculate value addition are extremely high. The second mentioned individual, who also spoke on the condition of anonymity, claimed that the claims were overblown. By forcing the importer to provide the documentation required to support the value addition claims made under the CAROTAR (Customs Administration of Rules of Origin under Trade Agreements) Rules, which were implemented in 2020, the customs officials hope to stop such erroneous claims. The second individual also stated that India would include language in new FTAs stating that imports may be subject to these regulations when necessary.
