India-UK Comprehensive Economic and Trade Agreement: Rules of Origin
The Rules of Origin under the India-UK Comprehensive Economic and Trade Agreement were notified on July 3, to be effective from July 15. These rules are crucial for exporters to claim duty concessions, necessitating compliance with origin criteria and proper documentation.
Key Requirements for Exporters
- Tariff Classification: Exporters must identify the tariff classification and refer to Annexure A for applicable product-specific rules.
- Originating Goods: Goods can qualify as originating if they are:
- Wholly obtained.
- Produced entirely from originating materials.
- Sufficiently produced using non-originating materials.
- Product-Specific Rules: May require:
- Change in tariff classification at the chapter, heading, or subheading level.
- Qualifying Value Content (QVC).
- Specified production process, or a combination of these tests.
Qualifying Value Content (QVC) Calculation
- Methods:
- Build-Down Method: Deducts non-originating materials from the product's value.
- Build-Up Method: Measures originating materials directly.
- Standard Requirements: For Standard QVC:
- Build-down requires at least 40% of the ex-works price or 45% of the FOB value.
- Build-up requires 35% of either value.
Flexibility and Compliance
- Bilateral Cumulation: UK-originating materials used in India may be treated as Indian-originating, and vice versa.
- Tolerance: Allows limited use of non-originating materials.
- Non-Qualifying Operations: Simple operations cannot confer originating status.
Procedures for Indian and UK Exports
- Indian Exports to UK:
- Preference claimed through an origin declaration, certificate by a designated authority, or UK importer’s knowledge.
- Self-certification through DGFT’s Common Digital Platform.
- Maintain documentation for five years.
- UK Exports to India:
- Supported by an origin declaration by exporter or producer.
- Register with HMRC and send declaration for authentication.
Importer Responsibilities
- Identify applicable product-specific rules.
- Confirm the origin criterion declared by the exporter.
- Fulfil obligations under CAROTAR, 2020.
- Establish liability for duty, interest, and penalties in case of origin claim failures.
To mitigate issues, importers and exporters should align their operations, conduct origin reviews, and prepare thoroughly before preferential consignments begin.
