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 21st 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.