Context: Recently, the Finance Ministry has said that the Importers will have to do their due diligence to ensure that imported goods meet the prescribed ‘rules of origin’ provisions for availing concessional rate of customs duty under free trade agreements (FTAs).
Key Points

• The Customs Administration of Rules of Origin under Trade Agreements Rules, 2020 (CAROTAR, 2020), will come into force from September 2020.
• Under the rules, the importer has to possess all relevant information related to country of origin criteria, including the regional value content and submit the same to the proper officer on request.
• Also, an importer would now have to enter certain origin related information in the Bill of Entry, as available in the Certificate of Origin.

CAROTAR, 2020

• The Department of Revenue has notified the ‘Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020.
• CAROTAR 2020 comprises of norms for the enforcement of ‘rules of origin’ provisionsfor allowing preferential rate of customs duties on products imported under free trade agreements.
• Under this provision, a country that has inked an FTA with India cannot dump goods from some third country in the Indian market by just putting a label on it.
• The new norms have been framedwith a view to checking inbound shipments of low quality products and dumping of goods by a third country routed through an FTA partner country.
• Preferential rules of origin ensure that only goods originating in participating countries enjoy tariff or other preferences.
• CAROTAR 2020 supplements the existing operational certification procedures prescribed under different trade agreements.
• India has inked FTAs with several countries, including Japan, South Korea, Singapore, and ASEAN members.
• Under such agreements, two trading partners significantly reduce or eliminate import/customs duties on the maximum number of goods traded between them.

Additional Facts

• ASEAN (Association of Southeast Asian Nations) FTA allows imports of most items at nil or concessional basic customs duty from the 10-nation bloc.
• 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 of goods.