New Rules of Origin against the spirit of FTA and EPA towards the world; might hinder FDI, ODA from Japan  

NEW DELHI: A recent Indian Finance Ministry (Department of Revenue) notification asking the importers to disclose the production process undertaken of the imported good in the country of origin including the costing of each component/ingredient of exporters’ confidential information used in producing the imported product seems is all set to irk many countries.  

And it seems to make the obligation of exporting country ministry shift to Indian importer of the private sector.

Issued on August 21, the notification specifying “Rules of Origin” makes it mandatory for the companies in India to disclose details of the material they are importing with the bifurcation of the origin of the components used in producing the imported detailing.

As per the notification No. 81/2020, the new “Rules of Origin” comes into effect from September 21, 2020.

Nobuhiro Takahashi, Advisor, Suggestions Committee, Japan Chamber of Commerce and Industry in India (JCCII) registered his own concern with the Prime Minister office (PMO) seeking its intervention to roll back the directive issued on August 21. He said that the new move would not only affect the economic ties with ally countries like Japan,  the attitude of economic distrust to an ally will also be detrimental to the defence and security concerns of India. He also has urged the PMO to move the Supreme Court against the notification and get it reversed.

He said that the Revenue department’s notification was in clear contravention of the spirit of EPA signed between Indian and Japan.

As per the new ruling, to claim preferential rate of duty under a trade agreement, the importer or his agent shall, at the time of filing bill of entry make a declaration in the bill of entry that the goods qualify as originating goods for a preferential rate of duty under that agreement.

Also, they will have to indicate in the bill of entry the respective tariff notification against each item on which preferential rate of duty is claimed, and produce the certificate of origin covering each item on which preferential rate of duty is claimed, and prepare the evidence of exporter’s confidential information details of the certificate of origin in the bill of entry.

Takahashi registered his own concern on the day when Prime Minister Narendra Modi and Japan’s outgoing PM Shinzo Abe signed the key defence agreement on Thursday, September 10.

“Unfortunately on August 21, the Notification of Procedure FTA and EPA was issued by Department of Revenue, and all Japanese Companies in India were surprised to the strict internal obligation of Indian Importer, we can say, not-believing the credibility of Japan Issued Country Origin at all,” Takahashi wrote to the PMO.

He stated that India-Japan EPA and India’s bilateral FTA treaty was enhancing the economic relationship for Supporting India’s Economy with the concept of mutual trust.

“The revenue department notification might act against the Indian National Policy of Open market economy, and hindrance to invite FDI and ODA to India. The purpose of notification could be said as the intention of distrust of the compliance of Exporting Country, including Japan, with forcing Indian importing side to take confidential information of exporting countryside, like Japan,” Takahashi stated in his letter to PMO.

While expressing his concern, Takahashi said that the notification has come at a time when the EU, USA, and Japan investment was trying to escape from China, shifting to some countries. Even OECD investor is considering shifting from China to ASEAN or India.

“At this moment, declaring the distrust on exporter in EPA and FTA towards all over the world through the notification will mislead the understanding of India’s National Policy, and it is feared that the FDI might go to ASEAN, not coming to India anymore. Obvious distrust attitude by the notice No81/2020 to the Foreign exporter’s compliance of data for the Country Origin toward the world, including Japan, would cause, no country to recognize India as ease of doing business and deregulation with Open Market Economy,” said Takahashi in his letter to the PMO.