Proof of origin documents will increase compliance burden on importers
The customs department has been witnessing several instances where goods originating from non-FTA countries—such as China—were rerouted through FTA member countries like Vietnam or Singapore to exploit preferential duty benefits
Chennai: In order to curb misuse of preferential trade agreements, the government has mandated that importers should furnish ‘proof of origin’ documents instead of ‘certificate of origin’ to avail preferential tariffs. However, this could increase the compliance burden on importers.
The customs department has been witnessing several instances where goods originating from non-FTA countries—such as China—were rerouted through FTA member countries like Vietnam or Singapore to exploit preferential duty benefits.
In order to curb this, the customs department has widened the scope of acceptable proof. They must ensure access to comprehensive supporting documents that establish the origin of the goods. However, this is not always feasible, especially when exporters are reluctant to share sensitive trade data like raw material invoices or production costs.
According to GTRI, the compliance burden will increase, as there is no strict definition of what constitutes adequate proof. “Customs officers may demand a combination of supplier invoices, raw material purchase records, production cost breakdowns and manufacturing process documentation. If not satisfied, Customs can deny preferential tariffs, effectively imposing full duties and penalties,” said Ajay Srivastava, founder, GTRI.
Importers may be compelled to share sensitive commercial information, which not only raises privacy and confidentiality concerns, but may also subject them to arbitrary or inconsistent treatment. Such discretionary powers could foster subjective decision-making and even corruption, particularly in field-level clearances.
“It gives Customs officials the power to demand detailed production records, invoices, and cost breakdowns—information that many foreign suppliers are unwilling to share due to commercial sensitivities,” he said.
This level of scrutiny, critics argue, could lead to delays at ports, higher legal risks, and greater discretion in Customs enforcement, increasing the potential for harassment and corruption.
Electronics, white goods, and auto components—often shipped through ASEAN countries—are likely to face heightened scrutiny. Pharmaceuticals, while relatively low-risk, could still be affected, especially for raw material imports.
“The government should publish a detailed framework outlining what qualifies as acceptable proof of origin, and provide redress mechanisms for importers facing unjustified denials of preferential tariff claims,” said GTRI.
