Why in News ?

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). Country of origin Guidelines Come Into Force. 

• Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR, 2020), notified on August 21, shall come into force from September 21.

What is Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR, 2020) ?

• CAROTAR, 2020 applies to import of goods into India where the importer makes a claim of preferential rate of duty in terms of a trade agreement.
  • Preferential rate of duty means rate at which customs duty is charged in accordance with a trade agreement.
• A list of minimum information, which the importer is required to possess, has also been provided in the rules along with general guidance.
• An importer would now have to enter certain origin related information in the Bill of Entry, as available in the Certificate of Origin.
• For instance :
  • ASEAN (Association of Southeast Asian Nations) FTA allows imports of most items at nil or concessional basic customs duty.
  • The benefit of concessional customs duty rate applies only if an ASEAN member country is the country of origin of goods.
  • This means goods originating from China and routed through these countries will not be eligible for customs duty concessions under the ASEAN FTA.
• Properly claim the concessional duty and assist customs authorities in smooth clearance of legitimate imports under FTAs.

How CAROTAR 2020 Rules Helpful ?

• In the budget speech itself had mentioned the need to protect domestic industry from misuse of free trade agreements.
• Country of origin Guidelines under CAROTAR 2020 helps eliminating en-routing of the products for getting tariff benefits.
• By en-routing and getting tariff benefits it hurts the local industries.

FTA significantly reduce or eliminate import/customs duties on the maximum number of goods traded between them.

Source : The Hindu

Topic

GS II : Government policies and interventions for development in various sectors and issues arising out of their design and implementation

GS III : Effects of liberalization on the economy, changes in industrial policy and their effects on industrial growth

Current Affairs Compilation : 21 September 2020