India Tightens Customs Rules to Curb FTA Misuse

Recent amendments to India's customs rules aim to tighten checks on goods imported under FTAs to prevent misuse. While this move increases compliance costs, it targets goods from non-FTA countries rerouted via FTA members, raising concerns about conflicts with existing agreements and potential impacts on importers.

India is tightening customs rules to prevent the misuse of Goods imported under free trade agreements (FTAs), potentially increasing compliance costs for businesses. This move addresses the rerouting of goods from non-FTA countries like China through FTA members such as Vietnam to exploit preferential tariffs.

On March 18, the Ministry of Finance amended the Customs Rules, replacing 'Certificate of Origin' with 'Proof of Origin' in the CAROTAR framework. According to the Global Trade Research Initiative, this change might complicate concessional tariff imports and conflict with some existing FTAs.

Electronics and auto components from ASEAN countries could face stricter scrutiny. Importers will now need comprehensive supporting documents to prove the origin of goods, leading to higher compliance burdens and potential diplomatic issues, GTRI warned.