The Rules of Origin (RoO) is a fundamental concept in international trade, defined as the laws, regulations, and administrative determinations used to attribute an "economic nationality" or country of origin to a product. This determination is crucial because it dictates the application of various trade policy measures, such as tariffs, quotas, and anti-dumping duties.
The need for RoO intensified with the rise of global supply chains, where a single product often involves manufacturing processes across multiple countries. The international framework is governed by the WTO Agreement on Rules of Origin (ROO Agreement), which entered into force on January 1, 1995, to ensure that RoO are applied in a transparent and consistent manner and do not themselves create unnecessary obstacles to trade.
RoO are broadly classified into two types: Non-preferential (used for measures like anti-dumping duties and trade statistics) and Preferential (used to grant reduced or zero tariffs under trade agreements like Free Trade Agreements (FTAs)). For a product to qualify as "originating," it must either be "wholly obtained" (e.g., mined or grown entirely in one country) or, if multiple countries are involved, undergo "substantial transformation". This transformation is typically proven using criteria like the Change of Tariff Classification (CTC) or a minimum percentage of Regional Value Content.
In India, the administration of preferential RoO is governed by Section 28DA of the Customs Act, 1962, and the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR, 2020). CAROTAR, 2020 was notified on August 21, 2020, and enforced from September 21, 2020, to prevent the misuse of FTAs, such as goods from a non-FTA country being routed through a partner country to claim undue tariff benefits. The rules mandate that an importer claiming preferential duty must make a specific declaration in the Bill of Entry and retain origin-related information for a minimum of five years. A recent amendment (Notification No. 14/2025-Customs (N.T.) on March 18, 2025) replaced the term 'certificate of origin' with the broader 'proof of origin' to accommodate modern mechanisms like self-declarations under newer FTAs.