India creates legroom to sign UK, EU FTAs with Customs Act amendments

NEW DELHI : To create legroom for signing free trade agreements (FTAs) with developed nations such as the UK and European Union, the Union Budget 2024 has introduced amendments in the Customs Act, liberalising compliance with value-addition norms that typically guard against misuse of concessions agreed in a trade pact.

Value addition norms guided by ‘rules of origin’ assume special significance at a time when India is signing a slew of FTAs. Rules of origin are the criteria needed to determine the national source of a product. While trade agreements help boost trade volumes with partner countries, it often risks a third country benefiting from the concessions resulting in a loss of revenue if rules of origin are breached. The government on Tuesday amended Section 28DA of the Customs Act, 1962 substituting ‘certificate’ of origin with ‘proof’ of origin. The fine prints of the Budget defined “Proof of origin” as a “certificate” or “declaration” in accordance with a trade pact.

Tax experts explained that the amended Customs Act now enables the acceptance of “proof” of origin (if India decided so in an agreement) which is a wider term that includes a certificate of origin as well as a self-declaration in line with global Customs norms. However, they also expressed concerns over the implementation as allowing self-certification could result in a breach and require a high degree of integrity in the exporting country without which India could lose Customs revenue.

Source : The Indian Express