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New rules of origin approach for India-Asean FTA by mid-July

Business Standard, India

New rules of origin approach for India-Asean FTA by mid-July

Our Regional Bureau / Ahmedabad

22 June 2005

India is set to finalise new Rules of Origin (ROO), the criteria that determine the country of origin of the product, for the India-Asean Free Trade Agreement (FTA) by July 15, 2005.

At present, tariff concessions under the FTA are available only if the products satisfy the ROO as agreed between the member countries of FTA.

"The government will draw the new approach based on the consultations with the domestic industry. The new rules of origin approach for India-ASEAN FTA will be finalised by mid-July. The need for new approach arose because ASEAN has rejected the general approach that India has followed for rules of origin in its various FTAs," said P R V Ramanan, chairman of expert group on preferential rules of origin constituted by Ministry of Commerce and Industry and former member of Central Board of Excise and Customs (CBEC), while addressing interactive session on ’Rules of Origin Issues in India-ASEAN FTA’ organised by FICCI in Ahmedabad on Tuesday.

At present, the general approach of ROO that India is following in existing FTAs is the ’twin criteria’.

This ’twin criteria’ involves mainly two methods to determine the origin of the product. One method is the value addition, under which a minimum percentage of total value addition should be achieved with the help of domestic inputs.

The second method is change in tariff heading (CTH), under which origin is granted if the exported product falls into a different heading to any imported inputs that are used in its production.

This approach is used in the majority of current preferential trade agreement and features in both EU agreements and NAFTA.

Besides these two methods, India also specifies a range of operations, ’non-qualifying operations’ that are deemed to be insufficient working or processing to confer origin.

Typically these include processes like simple packaging, operations, such bottling, placing in boxes, bags, cases, and simple fixing on cards and boards, simple mixing of products and simple assembly of parts, and operations to ensure the preservation of products during transport and storage.