The Free Trade Agreement (FTA) between India and the UK which was concluded on May 6 has now introduced a groundbreaking coequal rule under product-specific-origin norms. This action is taken with the interest of creating trade flexibility against the misuse of tariff concession with tightening safeguards.
Under this provision now producers can qualify for FTA benefits by meeting any one of multiple origin criteria. A few of the criteria under this provision include wholly obtained goods, value-addition thresholds, or tariff transformation. This calculated move aligns with the global value chain complexities as it prevents the evasion and dumping of mediocre goods.
Key Highlights
Bipin Sapra, partner at EY, highlighted the coequal system supporting the duty concessions of both markets, without exploiting any. Adding to this, the agreement also includes digital exchange of certificates of origin on a self-certification basis. This has made Rule India one of the first FTAs, that is backed by compliance checks based on risk parameters.
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Once ratified, 99% of India’s exports to the UK, particularly labor-intensive sectors like textiles, marine products, toys, and leather, will enjoy zero-duty access. The UK will eliminate tariffs on 90% of product lines, with 85% becoming duty-free within a decade. The coequal framework may also influence the ongoing India–EU FTA negotiations, especially in textiles.
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