Suspend new Customs Rules of Origin CAROTAR 2020, Review terms of EPA, FTA

Seeking intervention of PMO, MOC, the Japanese industry have suggested the Indian government it should not hesitate to amend the verification process of goods in the bilateral treaty through the diplomatic channel with related countries and ensure a uniform standard of International Treaty and Indian Domestic law.

Sanjeev K Ahuja On Nov 3, 2020

NEW DELHI: Fearing adverse impact on foreign investment inflow and bilateral trade with Japan, and other ASEAN countries, the Japanese industry has urged the Indian government to put on hold the new Customs Rules of Origin (CAROTAR 2020) for the time being, and review the terms of Economic Partnership Agreement (EPA) and Foreign Trade Agreement (FTA) entered into with the partner countries.

It is also feared that the deteriorating situation could benefit China and gradually it would become difficult for India to reduce its dependency on it.

Seeking intervention of the Prime Minister Office (PMO) and Ministry of Commerce (MOC), the Japanese industry present in India have suggested, if required, the Indian government should not hesitate to amend the verification process goods in the bilateral treaty through the diplomatic channel with related countries and ensure a uniform standard of International Treaty and Indian Domestic law.

The CAROTAR 2020 – Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 implemented vide notice No. 81/2020 from 21^st September, this year makes it compulsory for the importers to not only declare the country of origin of imported goods but also the cost of components used therein to avail low duty customs benefits, thus putting at risk the confidentiality of the exporters.

In a letter to the PMO recently, Nobuhiro Takahashi, Advisor of Suggestion Activities, Japan Chamber of Commerce and Industry in India (JCCII) stated that the Japanese Government has opened a diplomatic channel with the Indian Government through the Indian embassy in Tokyo to apprise it of the difficulties being faced by the industry.

According to reliable sources in Japan, the Director of the Ministry of Economy Trade and Industry (METI), Japan has written a letter to the Indian embassy in this regard.

“Currently, suspension of CAROTAR notice No. 81/2020 seems to be the only solution is the ongoing problem. We suggest that the MOC Minister and PMO should intervene in the matter and review the terms of EPA and FTA for the verification process. If required, India should amend the verification process in the treaty with the related countries through diplomatic channels, and maintain a single standard of International Treaty and Indian Domestic law,” stated Nobuhiro Takahashi.

Takahashi feared that the adverse impact of CAROTAR notice would work against the National Policy of India and create a national economic crisis as it might hinder FDI inflow as well as the influx of foreign companies to India.

“If the conflict of trade between India and OECD including Japan triggered by the CAROTAR, this will benefit China that is already trying to strengthen its position under the garb of various projects like One Belt One Road Initiative to realize the direct connection to the Indian Ocean, through China-Pakistan, China-Bangladesh, and China-Myanmar Industrial Corridor,” said Nobuhiro Takahashi, in his letter to the PMO.

All such problems came to the fore during a big webinar conducted jointly by the Embassy of Japan in India, Japan External Trade Organization (JETRO), and Japan Chamber of Commerce and Industry in India (JCCII) on October 27, Tuesday. More than 600 Japanese companies turned up during the webinar which is a clear indication of the severity of the problems related to the implementation of the provisions of new Rules of Origin laid under CAROTAR 2020.

JETRO was represented by Yasuyuki Murahashi, Chief Director-General, and Japan embassy by Yuichi Koshikawa, Second Secretary, Economic Section.

Earlier, JCCII Advisor of Suggestions Committee too took up the issue with the PMO on four occasions and alerted the Indian government of the adverse impact of the CAROTAR 2020 on the Indo-Japan bilateral economic relations and trade.