But industry says importers may not get the required documents from exporters.
Harpreet Singh, partner, KPMG, said: “With these rules, onerous obligations are cast upon importers. To name a few, submitting multiple documents, giving undertakings, correctly filling up forms, possessing relevant information etc. are some of the key requirements.”
This may entail insights into the manufacturing process, which the Indian importer may not have.
Ajay Sahai, director general and chief executive officer, Federation of Indian Export Organisations (FIEO), said while broadly the new rules should not result in delay in clearing shipments, it needed to be seen how it was operated.
“In some cases, exporters may not like to provide additional detailed documents the customs authorities ask for,” said Sahai.
Finance ministry sources said misuse had been rising for the past few years. Domestic industry, suspecting foul play, has repeatedly asked the government to review FTAs and take action.
Finance ministry officials said FTAs were expected to be mutually beneficial to all partner countries, but this was not the case.
“While India’s exports to FTA partners remain almost flat, imports
have risen rapidly, widening the trade deficit,” the official said.
In the case of Asean (Association of Southeast Asian Nations), the merchandise trade gap had risen from $5 billion in 2010, when the Asean FTA was implemented, to more than $22 billion at present.
“Our merchandise trade surplus with Vietnam and Singapore has reversed in the past three to four years. From a surplus of $2 billion with Vietnam, at the start of the FTA in 2010, India now has a trade deficit of about $3 billion with it,” a source said.
The same is the case with Singapore and the trade deficit with the country stands at more than $4 billion. The trade gap has also widened with Malaysia, Thailand, and Indonesia.
An investigation has found that TVs, mobiles, set-top boxes, telecom network products, and metals from FTA countries did not meet the prescribed origin criterion. Last year, the Directorate of Revenue Intelligence detected a large-scale fraud by which areca nut from a non-FTA country was imported into India from an FTA partner, duly covered by incorrect certificates of origin.
Over the past five years, the Customs authorities have detected fraudulent claims of Rs 1,200 crore.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.