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Are your buyers getting the duty benefit they are entitled to?
How preferential certificates of origin under India's trade agreements help you win and keep buyers.
Contents
- If India has a trade agreement with your buyer's country, your buyer may pay less import duty on your goods.
- The benefit only applies if you send the right preferential certificate of origin, made correctly.
- For your buyer, that saving can be worth more than a discount from you.
A discount you are not giving
Suppose your buyer imports your goods into a country where normal import duty is 5%. Under a trade agreement with India, the duty on your product might be lower, or nothing at all. To get that lower rate, the buyer needs a preferential certificate of origin from you.
If you send it, your goods cost the buyer less at their border. If you do not, or it is rejected, the buyer pays full duty. They may not even know they could have saved. A competitor who sends the certificate looks cheaper, without lowering their price.
Where this applies
India has trade agreements with many countries and groups. They include the UAE, Australia, ASEAN countries, Japan, South Korea, Mauritius, the South Asian countries under SAFTA, the EFTA countries (Switzerland, Norway, Iceland and Liechtenstein) and, more recently, the United Kingdom. More are being negotiated.
Each agreement has its own rules, its own certificate format and its own list of products and duty rates. Ask your CHA or export promotion council which agreements apply to your products and markets.
What can go wrong
The certificate is not sent. The team sends the ordinary certificate of origin out of habit, or none at all.
The goods do not qualify. Each agreement has rules of origin. Goods made from imported materials qualify only if enough of the work or value is Indian. If the claim is wrong, the buyer can be asked to pay the full duty later, sometimes with penalties.
The details do not match. The description, HS code, quantity or invoice number on the certificate differs from the invoice. The buyer's customs rejects the claim.
The certificate is late. The goods arrive and clear before the certificate does. Some countries allow a claim afterwards, many make it difficult.
Each of these lands on your buyer, not on you. But your buyer remembers who caused it.
Making it part of every shipment
Know which buyers are eligible. For each buyer, record the country, the agreement and whether your products qualify.
Keep the origin evidence ready. Have your cost sheets and supplier details available to show your goods meet the origin rules.
Make the certificate from the invoice data. When the certificate is filled from the same record as the invoice, the details match.
Send it with the documents, every time. Treat the certificate as part of the document set, not an extra.
Tell your buyer. Many buyers, especially smaller ones, do not know they can claim a lower rate. Telling them is a reason to buy from you.
How Expodite helps. Expodite prepares the exporter's draft of the certificate of origin from the same shipment record as your invoice and packing list. It covers the non-preferential certificate and around 20 of India's trade agreements, and shows the right draft for the destination country. Descriptions, HS codes and quantities match across every document.
See how Expodite handles certificates of originQuestions to ask your team
- Which of our buyers are in countries that have a trade agreement with India?
- Do we send a preferential certificate of origin to each of them, on every shipment?
- Have we checked that our products meet the origin rules for each agreement?
- Has any buyer had a certificate rejected in the last two years?
- Do our buyers know they can claim a lower duty rate?
Quick answers
- What is a preferential certificate of origin?
- A certificate showing that goods originate in India under a specific trade agreement, so the importer can claim the lower duty rate that agreement allows.
- Who benefits from a preferential certificate of origin?
- The importer, who pays less duty. The exporter benefits too, because the goods become cheaper to land than goods from countries without an agreement.
This article is general information for Indian exporters. Rules of origin are specific to each agreement and product. Check with your CHA or export promotion council.
