 "exports, imports, trade, FTA")
Indian traders should follow seven steps, including knowing trade policy and rules of origin of respective products in Australia in order to take full advantage of the recently implemented free trade agreement, according to a study by GTRI.
The India-Australia free trade agreement came into effect on December 29, 2022.
The Global Trade Research Initiative (GTRI) said India-Australia Economic Cooperation and Trade Agreement (ECTA) offers many concessions to exporters and importers of both countries, but the concessions are product-specific, and firms must check if their products benefit from the pact.
We have suggested a seven-step process to ensure that the firms do not miss critical details while exporting or importing under ECTA, it said.
Utilisation rate of India's free trade agreements (FTAs) is low and one of the factors is low awareness about the process and its benefits, it said adding these steps can help Indian companies make full use of the trade agreement.
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The steps include knowing the correct HSN codes in the documents as the tariff classification of the same product may differ in India and Australia.
In trade parlance, every product is categorised under an HSN (Harmonised System of Nomenclature) code. It helps in systematic classification of goods across the globe.
The 'rules of origin' provision prescribes minimal processing that should happen in the FTA country so that the final manufactured product may be called originating goods in that country.
Under this provision, a country that has inked an FTA with India cannot dump goods from some third country in the Indian market by just putting a label on it. It has to undertake a prescribed value addition in that product to export to India. Rules of origin norms help contain dumping of goods.
Indian exporters must know the export policy of India and the import policy in Australia for its product. India does not allow the import of items like wild animals and ivory products on public health, safety, and moral grounds, GTRI said adding trade agreements merely provide duty concession and do not give relaxation on import policy provisions.
It added that no imports are allowed if a product falls under the prohibited list of imports.
GTRI also said Indian firms must also compare the MFN (most favoured nation) duty and trade agreement duties for a product as a company benefits from an agreement only when the customs duty under that pact is lower than the MFN duty.
MFN is a WTO (World Trade Organization) term indicating that a country must charge the same import duty from all countries for a product. When two countries do a trade pact, they decide to cut such duties on most products.
A product must qualify as originating goods of the exporting party to get FTA duty concessions, it added.
It also said that once a firm is sure that its product meets the rules of origin criteria, it should apply for issuing a Certificate of Origin (COO) to the agency nominated by the Indian or Australian government.
Former Indian Trade Service officer Ajay Srivastava is the co-founder of GTRI. He took voluntary retirement from Government of India in March 2022. He has a rich experience in trade policy making, and issues related to WTO and FTAs.
He was involved in the negotiation process of India's FTAs with Japan and Australia.
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
