India’s ‘Proof of Origin’ Amendment - What It Means for Importers & Global Trade

[DrJoshua Ebenezer]

The Indian government has recently made a critical change to its Rules of Origin framework under Free Trade Agreements (FTAs). Through an amendment to Section 28DA of the Customs Act, 1962, the term ‘Certificate of Origin’ (CoO) has been replaced with ‘Proof of Origin’. While this might seem like a minor wording change, it carries major implications for importers and international trade compliance.

Previously, 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 served as proof that the goods met the origin criteria of the trade agreement.

Now, with the amendment, Customs can demand additional proof beyond just the CoO. This could include invoices, production records, cost sheets, or other supporting documents to verify the actual origin of goods.

 India has been tightening its rules on FTA-based imports to prevent misuse and strengthen compliance. Two key reasons stand out:

1. Preventing Misuse of FTAs: India has faced cases where goods from non-FTA countries were routed through FTA member countries just to claim duty benefits. For example, Chinese goods were being re-labeled and exported through ASEAN nations under the ASEAN-India FTA.
2. Shifting the Burden of Proof to Importers: Earlier, once an importer submitted a CoO, Customs had to prove any misdeclaration. Now, importers must proactively provide sufficient evidence to justify preferential duty claims.

 This shift has direct and serious implications for businesses relying on FTA benefits:

Importers must ensure that their suppliers provide detailed origin-related documents beyond just a CoO. Which might result in higher compliance requirements. If Customs is not satisfied with the proof, preferential duty can be denied, and importers may be required to pay full duty along with penalties. Expect more delays at ports, especially for high-value or sensitive goods. Customs officers now have broader powers to challenge origin claims.

Example:  

Imagine an Indian importer buys electronic chips from Vietnam under the ASEAN-India FTA, which allows a 5% duty (instead of 20%). Earlier, a CoO from Vietnam was enough. Now, if Customs suspects these chips were originally made in China, they can demand additional proof such as:

1. Manufacturing details from the Vietnamese supplier
2. Raw material invoices
3. Production cost sheets

If the importer fails to provide these, preferential duty will be denied, and the full 20% duty will apply.

Legal & Global Trade Implications

India’s move 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 there is strong suspicion of fraud. India’s stricter stance, inspired by its Atmanirbhar Bharat (Self-Reliant India) policy, is unique and could impact FTA-based trade flows.

What Should Businesses Do?

Every importer using FTA exemptions are now expected to work closely with suppliers to maintain proper origin documentation.  Be Prepared for Customs Queries while crossing the border or post clearance, keep supporting evidence ready in case Customs challenges an FTA claim.  

This amendment represents a fundamental shift in India’s trade compliance landscape. While it helps curb FTA misuse, it also increases compliance costs and risks for legitimate importers. The key to adapting lies in proactive planning, better documentation, and enhanced supply chain transparency.

How do you see this impacting your business? Do share your feedback to  [email protected]