Local Value Add in India-Singapore FTA Down to 35% from 40%

·    India Implements Second Review Protocol

India and Singapore implements the second protocol amending the Comprehensive Economic Cooperation Agreement (CECA), which will boost bilateral trade, with both sides agreeing to expand the coverage of tariff concessions.

"Both sides agreed to expand the coverage of tariff concessions, liberalize the Rules of Origin, rationalize Product Specific Rules and include provisions on Certificate of Origin and Cooperation on its verification.

"These measures will further facilitate trade between India and Singapore and also improve utilization of CECA," the statement issued by the Commerce Ministry said.

The provisions of the Second Protocol came into effect from September 14, 2018.

"The two countries are exploring the possibility of launching the 3rd Review of India-Singapore CECA in September 2018," an official statement said here.

The conclusion of the Second Review of CECA was announced during the state visit of Prime Minister Narendra Modi to Singapore on June 1, 2018.

Singapore is the second largest trading partner of India within ASEAN, while India is the largest trading partner of Singapore in South Asia, with a bilateral trade of $17.7 billion in 2017-18.

Singapore's trade with India constitutes about 21.8 percent of India's total trade with ASEAN and 2.3 per cent of its global trade.

The CECA was the first comprehensive agreement covering trade in goods, services and investments, which India had signed with any of its trading partners. The CECA was signed on June 29, 2005 and its first review was concluded on October 1, 2007.

[Notification No. 79/2018 - Customs (N.T.) dated 14 September 2018]

In exercise of the powers conferred by sub-section (1) of section 5 of the Customs Tariff Act, 1975 (51 of 1975), the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby makes the following rules further to amend the Customs Tariff Determination of Origin of Goods under the Comprehensive Economic Cooperation Agreement between the Republic of India and Republic of Singapore Rules, 2005, namely:-

1. Short title and Commencement- (1) These rules may be called the Customs Tariff Determination of Origin of Goods under the Comprehensive Economic Cooperation Agreement between the Republic of India and Republic of Singapore (Amendment) Rules, 2018.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. (1) In the Customs Tariff Determination of Origin of Goods under the Comprehensive Economic Cooperation Agreement between the Republic of India and Republic of Singapore Rules, 2005, (hereinafter referred to as the said rules),-

(2) In the said rules, in Rule 5, in paragraph 1,-

(i)  in clause (i) of sub-paragraph (a) for the figure “60, the words “sixty-five per cent.” shall be substituted;

(ii) in clause (ii) of sub-paragraph (a) for the words “four digit”, the words “six-digit” shall be substituted.

(3) In the said rules, after Rule 5, the following rule shall be inserted, namely:-

“5A. De Minimis

1.    A good that does not undergo a change in tariff classification pursuant to Rule 5 and Annex B in the final process of production shall be considered as originating if:

(a) for all goods except those falling within chapters 50 through 63 of the Harmonised System:

(i)  the value of all non-originating materials used in its production, which do not undergo the required change in tariff classification, does not exceed ten per cent. of the FOB value of the good; and

(ii) the good meets all other applicable criteria set forth in the rules for qualifying as an originating good; and

(b) for goods falling within chapters 50 through 63 of the Harmonised System:

(i)  the total weight of non-originating basic textile materials used in its production, which do not undergo the required change in tariff classification, does not exceed seven per cent. of the total weight of all the basic textile material used; and

(ii) the good meets all other applicable criteria set forth in the rules for qualifying as an originating good.

2. The value of such non-originating materials shall be included in the value of non-originating materials for any applicable local value added content requirement for the good.”.

(4) In the said rules, in Rule 16,-

(i)  after the words “the government of the exporting Party”, the brackets and words “(referred to herein as “the Issuing Authority”)” shall be inserted;

(ii) the brackets and words “(referred to herein as “the certifying Authority”)” shall be omitted.

(5) In the said rules, in Rule 17,-

(i)  in paragraph 2, for the words “the customs administration”, the words “the Customs Authority” shall be substituted;

(ii) in paragraph 2, for the words “the certifying authority”, the words “the Issuing Authority” shall be substituted;

(iii) in paragraph 3, for the words “the certifying authority”, the words “the Issuing Authority” shall be substituted.

(6) In the said rules, in Annex A,-

(i)  in Rule 1, for the brackets, word and figure “(Attachment 1, the brackets and word “(Attachment)” shall be substituted;

(ii) in Rule 7,-

(a) in paragraph (b), for the word and figure “Appendix 1”, the word “Attachment” shall be substituted;

(b) after paragraph (e), the following paragraphs shall be inserted, namely:-

“(f) In all cases, the number and date of the commercial invoice shall be indicated in the box reserved for this purpose in the Certificate of Origin.

     (g) The Certificate of Origin shall bear the signature and official seal of the Issuing Authority. The signature and official seal may be applied electronically.”

(iii) in Rule 13, for paragraph (a), the following shall be substituted, namely:-

“(a) Certificate of Origin shall be submitted to the Customs Authority of the importing Party within its validity period, together with the documents required at the time of customs clearance of the goods for the importation in accordance with the laws and regulations of the importing Party;

(aa) If a claim for preferential treatment is made without producing the Certificate of Origin, the Customs Authority of the importing Party may deny preferential treatment and request a guarantee in any of its modalities or may take any action necessary in order to preserve fiscal interests, as a pre-condition for the completion of the importation subject to and in accordance with the laws and procedures of the importing Party. The guarantee shall be refunded to the importer if a Certificate of Origin is subsequently produced by the Importer in accordance to the laws and procedures of the importing Party.”;

(iv) for Rule 15, the following shall be substituted, namely:-

“(va) RETROACTIVE CHECKS

RULE 15

(a) The Customs Authority of the importing Party, may initiate a retroactive check relating to the authenticity of a certificate, as well as the veracity of the information contained therein, in accordance with the procedures established in the Rules, in cases of doubt or on random basis.

(b) In cases where the Customs Authority of the importing Party deems it necessary to seek a retroactive check from the Issuing Authority of the exporting Party, it shall specify whether the verification is on random basis or the veracity of the information is in doubt. In case the determination of origin is in doubt, the Customs Authority shall provide detailed grounds for the doubt concerning the veracity of Certificate of Origin.

(c) The Customs Authority of the importing Party may suspend the provisions on preferential treatment while awaiting the result of verification. However, it may release the products to the importer subject to any administrative measures deemed necessary, provided that they are not held to be subject to import prohibition or restriction and there is no suspicion of fraud.

RULE 15A

Any request made pursuant to rule 15 shall be in accordance with the following procedure, namely:

(a) The Customs Authority of the importing Party shall make a request for retroactive check by providing a copy of the Certificate(s) of Origin.

(b) The Customs Authority shall specify whether it requires a verification of the genuineness of the Certificate of Origin to rule out any forgery, or seeks to verify the determination of Origin.

(c) In cases where the Customs Authority of the importing Party seeks to verify the determination of origin, it shall send a questionnaire to the competent authorities of the exporting Party, which shall be passed on to the exporter/producer/manufacturer, for such inquiry or documents, as necessary.

(d) The Issuing Authority of the exporting Party shall provide the information and documentation requested, within:

(i)  fifteen days of the date of receipt of the request, if the request pertains to the authenticity of issue of the Certificate of Origin, including the seal and signatures of the Issuing Authority;

(ii) ninety days from the date of receipt of such request, if the request is on the grounds of suspicion of the accuracy of the determination of origin of the product. Such period can be extended through mutual consultation between the Customs Authority of the importing Party and Issuing Authority of the exporting Party for a period no more than sixty days.

(e) On receiving the results of the retroactive check pursuant to clause (d), if the Customs Authority of the importing Party deems it necessary to request for further information, the Customs Authority of the importing Party shall communicate the fact to the Issuing Authority of the exporting Party within thirty days. The term for the presentation of additional information shall be not more than ninety days, from the date of the receipt of the request for the additional information.”.

(7) In the said rules, for the Annex B, the following Annex shall be substituted, namely:-

[Click here for Annexure B – Product Specific Rules]