The Commerce Ministry is working on a template for rules of origin (ROO) — criteria that determine the national source of a product — which would be more nuanced and flexible so that they work to the best advantage of Indian exporters in future Free Trade Agreements (FTAs) that are negotiated, sources have said.
IIFT Kolkata is collecting inputs on the various ROO options preferred by specific industry sectors to evolve a set of Product Specific Rules (PSR) to prepare a ROO template for negotiating future trade pacts.
Determining eligibility
“ROOs are very important in an FTA as they determine what items should qualify as originating from an FTA partner country and hence be eligible for duty concessions. While general ROO can be applied to all products, Product Specific Rules help to capture the individual need of a particular sector. The Commerce Ministry is trying to create a ROO template that will meet the needs of individual sectors,” a person tracking the matter told businessline.
So far, in many of the FTAs entered into by India, the rules of origin have been very simple and based primarily on wholly obtained criteria or 35 per cent value added method, the source said. “But ROOs can be intricate as well to the extent of being different for different products in a particular agreement and varying across agreements. This has been observed in other FTAs such as ones between Canada and the EU, Mexico and the EU. India could look at such intricate ROOs if they suit exporters’ interests,” he added.
Making choice
Exporters have been asked to make a choice from a variety of options for their particular sector such as regional value content at specific levels ranging between 35 per cent and 70 per cent, change in tariff sub-heading (which would require an item to be transformed to the extent that the tariff classification changes), wholly obtained, change in tariff and change in chapter.
They have also been asked to share problems faced by them in undertaking exports due to the ROOs already implemented in the existing FTAs.
With developed countries bringing in new terminologies in description of ROOs, exporters have also been asked to cite their opinion on such new terms.
India recently concluded an FTA with the UAE and an Economic Cooperation and Trade Agreement with Australia and is working on pacts with several partners including the UK, the EU, Canada and New Zealand. The country hopes to get into multiple FTAs with its trade partners as it could help it achieve its ambitious export target of $2 trillion of goods and services by 2030.