Foreign Trade Agreements - Shift from 'Certificate of Origin' to 'Proof' of Origin

India's 'Proof of Origin' amendment, as outlined in the Customs (Administration of Rules of Origin under Trade Agreements) Amendment Rules, 2025, carries significant implications for importers and the broader global trade landscape. Here’s an overview of what the amendment means for businesses and international trade:

1. Shift from 'Certificate of Origin' to 'Proof' of Origin:

• Current Status: Under the previous rules (Customs Rules of Origin, 2020), importers would typically be required to present a certificate of origin (CoO) to claim preferential tariff treatment under free trade agreements (FTAs).
• New Amendment: The term 'certificate' has now been replaced with 'proof'. This change essentially broadens the types of documentation or evidence that can be accepted to demonstrate the origin of goods.

2. Impact on Importers:

• Flexibility: Importers may now present a wider variety of documents to prove the origin of goods, not necessarily limited to a traditional certificate of origin. This could include invoices, declarations, or other supporting documents provided by exporters or manufacturers.
• Simplification: The shift from 'certificate' to 'proof' could simplify the process for proving origin, reducing reliance on specific formal certificates, which may sometimes be costly or difficult to obtain, especially in the case of small and medium-sized enterprises (SMEs).
• Easier Compliance: Importers might find it easier to comply with rules of origin under trade agreements, as they now have more leeway to provide various forms of evidence that goods meet the required criteria for preferential duty treatment.

3. Broadening of Evidence Options:

• The amendment suggests that proof of origin could be more varied, offering the possibility of documents that may be simpler to procure than a certificate. For instance, a declaration from the exporter or supporting commercial documents could be sufficient, offering greater flexibility and reducing administrative burdens.
• Proof of origin may involve:
  • Invoices
  • Exporter's Declaration
  • Manufacturing details
  • Other records that indicate the origin status of goods

4. Implications for Global Trade:

• Alignment with International Standards: Many countries and trading partners are increasingly focusing on flexibility in how origin is demonstrated in line with modern trade practices. This amendment could bring India’s rules in alignment with international norms and practices, particularly those outlined in trade agreements like RCEP or FTAs with countries like the EU, Japan, or the U.S.
• Streamlining Trade Agreements: As India moves toward simplified rules of origin and more flexible proof systems, it could make it easier for Indian companies to claim preferential duty treatment under trade agreements, fostering more robust global trade.

5. For Global Exporters:

• Exporters to India will need to be aware of this change in terminology. They might no longer need to issue a formal certificate of origin but rather provide any acceptable documentation that serves as proof of origin.
• Easier documentation requirements for exporters in trading partners might help facilitate smoother trade flows and reduce costs for businesses.

6. Customs and Enforcement:

• Verification Process: While the rules offer flexibility to importers, customs authorities will continue to verify proof of origin. This means that businesses must ensure that the documents provided meet the criteria outlined in trade agreements and can withstand scrutiny in case of audits or disputes.
• Reduced Documentation Burden: Customs authorities may have to process a variety of documentation and will likely adjust their verification processes to accommodate the new, broader definition of proof of origin.

7. Specific Changes to Form I:

• In Form I (used for proof of origin), 'CoO' (Certificate of Origin) is replaced with 'proof of origin'. This change reflects a broader range of evidence that can be provided to establish the origin of goods for duty preferences under trade agreements.

8. Long-term Effects:

• Over time, the flexibility in documentation could encourage more businesses to engage in international trade by reducing barriers related to cumbersome origin certification processes.
• Potential for New Trade Partnerships: As India adapts its rules to be more in line with global practices, it may see increased trade with partners who also value flexibility in demonstrating origin.

Conclusion:

The “Proof of Origin” amendment in India’s customs rules signals a significant step toward simplifying and modernizing trade documentation requirements. For importers and global trade, this change can:

• Reduce red tape, making it easier for businesses to claim preferential tariffs.
• Encourage smoother cross-border trade, benefiting importers, exporters, and customs authorities alike.
• Promote trade growth by aligning India’s processes with international best practices.

It’s important for both importers and exporters to stay informed about the new requirements and ensure their documentation is in line with the amended rules to avoid delays or disputes in customs clearance.

NOTIFICATION NO. 14/2025- CUSTOMS (N.T.) dated 18th March, 2025