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The Indian government has recently introduced a significant change to its Rules of Origin framework under Free Trade Agreements (FTAs). An amendment has been made to Section 28DA of the Customs Act, 1962. The term ‘Certificate of Origin’ (CoO) has been replaced with ‘Proof of Origin’.
While this may seem like a small wording change, it has major implications for importers and international trade compliance.
📦The Amendment
Earlier, importers claiming preferential duty under an FTA only needed to submit a Certificate of Origin (CoO) issued by an official body in the exporting country. This certificate was sufficient to prove that the goods met the origin criteria under the FTA.
Now, with the amendment, Customs can demand additional proof beyond the CoO. Importers may be required to provide:
✅ Invoices
✅ Production records
✅ Cost sheets
✅ Other supporting documents to verify the actual origin of goods.
📌 Major Reasons for this Change
India has been strengthening its trade compliance to prevent misuse of FTAs and ensure fair trade practices. Two major reasons stand out:
Preventing Misuse of FTAs
Some businesses have been routing goods through FTA member countries just to claim duty benefits. For example, Chinese goods were being re-labeled and exported via ASEAN nations under the ASEAN-India FTA to avoid higher duties.
Shifting the Burden of Proof to Importers
Previously, once an importer submitted a CoO, the responsibility was on Customs to prove any misdeclaration. Now, the importer must proactively provide sufficient evidence to justify preferential duty claims.
🔗 Impact on Importers
✅ Higher Compliance Requirements: Importers must ensure suppliers provide detailed origin-related documents, not just a CoO.
✅ Risk of Preferential Duty Denial: If Customs is not satisfied with the proof, importers may have to pay full duty along with penalties.
✅ Possible Delays at Ports: Customs officers now have more power to challenge origin claims, leading to longer clearance times for shipments.
Legal & Global Trade Implications
India’s new approach aligns with WTO Article XXIV, which allows FTAs but requires strict origin verification to prevent misuse. However, most countries still accept a CoO as valid proof unless fraud is suspected.
India’s move, influenced by its Atmanirbhar Bharat (Self-Reliant India) policy, is unique and could impact FTA-based trade flows globally.
Tips for Businesses
✔️ Work closely with suppliers to maintain proper origin documentation.
✔️ Be prepared for Customs queries by keeping supporting evidence ready for FTA claims.
✔️ Plan proactively to avoid delays and penalties due to non-compliance.
Conclusion
This amendment represents a major shift in India’s trade compliance landscape. While it helps curb FTA misuse, it also increases compliance costs and risks for genuine importers. Businesses must now adapt by improving documentation, enhancing supply chain transparency, and staying updated on regulatory changes.