Stringent checks for imports under FTA from September 21

In what will further curb misuse of Free Trade Agreements by China or Asean nations like Thailand, Vietnam, Malaysia and Indonesia, the government will closely monitor Rules of Origin norms for imports of goods like mobile, white goods, set-top box, agarbatti, camera and other electronic products from September 21st.

The customs department will ensure that Rules of Origin norms are satisfied so that importers can claim eligibility of duty concessions under FTA.  The customs department will seek supporting documents and will adhere to strict timelines for verification from exporting countries.

In the last five years, the customs have detected fraudulent claims under FTA to the tune of Rs 1,200 crore.

The government is of the view that irregular imports under FTAs have caused serious injury to the domestic industry and hence misuse of FTAs must be stopped.

Amidst the pandemic, unrest along LAC has pushed the Modi government to review its trade policies with not just its neighbour but also its other trade partners. The Modi government has been making noises about mutually beneficial trade to all partner countries while giving a clarion call for a more self-reliant Bharat. The governments Atmanirbhar Bharat push is aimed at pushing domestic manufacturing and curbing imports.

The government is of the view that India’s exports to FTA partner countries have remained almost flat under major FTAs even as imports rose rapidly and the trade deficit widened.

In the case of Asean countries, the merchandise trade gap has risen from $5 billion in 2010, when Asean FTA was implemented, to more than $22 billion now. This steep increase in trade deficit has become a serious cause of concern for the country.

From the position of a surplus of $2 billion with Vietnam, at the start of FTA in 2010, India now has a trade deficit of about $3 billion with it. Same is the case with Singapore and trade deficit with Singapore stands at more than $4 billion. The trade gap has widened with Malaysia, Thailand and Indonesia.

The Finance Minister while presenting this year’s Budget had announced that undue claims of FTAs benefits have posed threat to domestic industry and that such imports require stringent checks.

A new provision was introduced during the budget session in February this year in the Customs Act for strict verification of rules of origin of imports under FTAs to ensure that FTA benefits are taken correctly.