Updated : November 01, 2024SAFTA Certificate of Origin in India. Process, Benefits, and Common Mistakes to Avoid
Overview :In this blog, we will discuss the SAFTA registration process in India and its benefits and common mistakes to avoid. We cover everything you need to know about applying for and obtaining a certificate of origin under the SAFTA agreement, as well as common mistakes to avoid. Whether you’re a manufacturer, importer, or exporter, this guide will help you navigate the complexities of SAFTA rules of origin and make the most of the preferential tariff treatment available under the agreement.
If you are an exporter or importer in India, it is essential for you to register for SAFTA to avail of the benefits of this agreement. It is a regional free trade agreement among the South Asian Association for Regional Cooperation (SAARC) countries. This trade agreement was introduced in the beginning of 2006 with the purpose to reduce tariff and non-tariff barriers on trade between its member countries, thus enhancing trade flows within the region.
What is SAFTA?
SAFTA stands for the South Asian Free Trade Area. SAFTA is a regional free trade agreement among the South Asian Association for Regional Cooperation (SAARC) countries. India, as a member of SAARC, allows duty-free access to goods from other SAFTA member countries. SAFTA came into effect in January 2006, and it aims to reduce or eliminate tariffs and non-tariff barriers on trade between member countries, thereby promoting regional economic integration and increasing trade flows within the region.
The member countries of SAFTA are Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka. Under SAFTA, member countries have agreed to reduce tariffs on a range of goods traded between them. In addition, SAFTA also includes provisions for rules of origin, safeguard measures, and dispute settlement procedures. The agreement also provides for the establishment of a committee of experts to oversee its implementation and to address any issues that may arise.
SAFTA Certificate of Origin
The SAFTA Certificate of Origin is a document that certifies that the goods being exported from one SAFTA country to another area of South Asian origin. The purpose of this certificate is to allow exporters to benefit from preferential tariff rates offered under the SAFTA agreement. The SAFTA Certificate of Origin is different from other certificates of origin, such as the Certificate of Origin issued by the Chamber of Commerce, in terms of its specific requirements and procedures.
What is SAFTA Registration?
SAFTA registration is the process of obtaining a certificate of origin from the authorized agency in India. The certificate of origin is a document that certifies that the goods are produced and manufactured in India and are eligible for duty-free access in other SAFTA member countries. The SAFTA registration process is a one-time process that is valid for a year. The registered exporters can avail of the duty-free access for the eligible goods for a year from the date of registration.
Benefits of certificate of origin under SAFTA / SAFTA Registration
Duty-Free Access: Under the SAFTA agreement, member countries provide duty-free access to goods originating from other member countries. This means that exporters can sell their products to other member countries without having to pay customs duties or tariffs, which can make their goods more competitive in those markets. Learn about it in detail with further illustration.
For example, if an Indian manufacturer exports a product to Sri Lanka under the SAFTA agreement, they will not have to pay any customs duties or tariffs on that product when it enters Sri Lanka, as long as it meets the rules of origin criteria. This can help to promote regional trade and boost economic growth by creating more opportunities for businesses to expand their markets and increase their sales.
Increased Exports: SAFTA registration allows exporters to take advantage of the preferential tariff treatment available under the SAFTA agreement when exporting their goods to other member countries. By obtaining a SAFTA certificate of origin, exporters can demonstrate that their products meet the rules of origin criteria and are eligible for preferential treatment under the agreement.
This can result in lower customs duties or tariffs being applied to their products, making them more competitive in the markets of other SAFTA member countries. Therefore, SAFTA registration can be a valuable tool for exporters who want to expand their business and take advantage of the benefits of regional trade.
- Better Market Access: The SAFTA agreement creates new market opportunities for Indian exporters by allowing them to access the markets of other SAFTA member countries on preferential terms. This can be beneficial for Indian exporters who may have previously relied on a single market for their exports. By diversifying their export markets and accessing new customers, exporters can reduce their reliance on any one market and spread their risk.
- Competitive Advantage: The duty-free access provided under the SAFTA agreement gives Indian exporters a competitive advantage over exporters from non-SAFTA member countries. This helps in increasing the competitiveness of Indian exporters in the international market.
SAFTA Registration Process in India
The SAFTA agreement allows Indian exporters to access the markets of other SAFTA member countries on preferential terms, which can be beneficial for businesses looking to expand their reach. To take advantage of the preferential tariff treatment under the SAFTA agreement, Indian exporters must obtain a SAFTA Certificate of Origin for their products. This certificate is issued by the relevant authorities in India and confirms that the products being exported meet the criteria for preferential treatment under the SAFTA agreement.
Step 1: Obtain an IEC Code
The first step in the SAFTA registration process is to obtain an Import-Export Code (IEC) from the Director-General of Foreign Trade (DGFT). The IEC code is a 10-digit PAN based code that is required for all import and export activities in India.
Step 2: Check Eligibility
Ensure that the goods being exported qualify for preferential treatment under the SAFTA agreement. The SAFTA agreement specifies the criteria that must be met for goods to be considered as originating from a SAFTA member country, and these criteria vary depending on the type of product.
Step 3: Submit the Application
The exporter needs to submit the application for the certificate of origin to the authorized agency under trade agreement SAFTA along with the requisite documents.
Step 4: Verification of Documents
The authorized agency verifies the documents submitted by the exporter and issues the SAFTA certificate of origin if the documents are found to be in order.
Step 5: Issuance of SAFTA Certificate of Origin
The authorized agency issues the SAFTA certificate of origin to the exporter, which is valid for a year from the date of registration. But before making the application for SAFTA certificate of origin , the exporter must understand the concept of Rule of Origin under Rules of Determination of Origin of Goods under the Agreement on South Asian Free Trade Area (SAFTA) which outlines the criteria for determining the origin of goods that are produced using materials from outside the SAFTA member countries. Please refer to setindiabiz.com/learning/understanding-rules-of-origin-for-safta-in-india
Documents Required for SAFTA Registration
SAFTA registration allows Indian exporters to avail the benefits of tariff preference under the South Asian Free Trade Area agreement. To obtain a Certificate of Origin for SAFTA, Indian exporters must provide certain documents. There are two types of Certificates of Origin: preferential and non-preferential. Preferential certificates require adherence to specific Rules of Origin for exports to qualify for tariff preference. Non-preferential certificates serve as evidence of the origin of goods without conferring the right to preferential tariffs. To obtain a SAFTA Certificate of Origin, Indian exporters must provide the following documents:
- Import Export Code (IEC) Certificate
- Commercial Invoice
- Purchase Bill with details of inputs or consumables used in Export Products
- Bill of lading or Airway Bill
- Product Details along with Packing List
- Purchase Order from Importer
- Bank certificate of export realization
- Declaration of the exporter stating that the goods being exported meet the SAFTA origin criteria
- Letter of credit or contract, if applicable
In the case of tea, exporters must submit a Non-Preferential Certificate of Origin and apply to the Tea Board, or any Inspection Agency authorized by the Tea Board along with the documents listed above
Apart from the above documents required for SAFTA Registration, certain prerequisites also need to be met. It’s important to take care of such requisites to get the SAFTA registration done easily. The SAFTA registration process involves creating an account with an organization-based DSC with all data fetched through the IEC which requires the followings:
- Organization Digital Signature Certificate with embedded IEC Code
- Registered Email on DGFT
- Mobile Number
- Updated IEC License
- DSC software must be installed on the system
Indian exporters can apply for the Certificate of Origin online, fill the form with appropriate details, and upload the necessary documents. The SAFTA Certificate is usually issued within 2-3 working days from the date of shipment or at the time of exportation if the goods meet the criteria for originating goods under the SAFTA agreement. In exceptional cases where a Certificate of Origin cannot be issued, it may be issued retrospectively but no later than 45 days from the date of shipment, with the phrase “ISSUED RETROSPECTIVELY” clearly stated in the certificate.
It is important to note that a SAFTA Certificate of Origin must be issued for each shipment. It is important to note that the documents required for SAFTA registration may vary based on the specific product being exported. Therefore, it is advisable to consult with the authorized agency or a customs broker to obtain a complete list of documents required for SAFTA registration based on your specific product and destination country.
SAFTA registration is a simple and straightforward process that enables exporters to avail of duty-free access to other SAFTA member countries. This opens up new markets for Indian exporters and helps in increasing their exports. The SAFTA agreement provides Indian exporters with a competitive advantage over exporters from non-SAFTA member countries. If you are an exporter in India, it is advisable to register for SAFTA and avail of its benefits.
Common errors and mistakes that businesses should avoid when applying for the SAFTA Certificate of Origin
As Setindiabiz provides services for obtaining the SAFTA Certificate of Origin, we understand the importance of avoiding common errors and mistakes that can result in delays or rejections. Some of the common errors and mistakes that businesses should avoid when applying for the SAFTA Certificate of Origin include:
Incorrect or incomplete information: Providing incorrect or incomplete information in the application form can lead to delays or rejections. It is important to ensure that all the information provided in the application form is accurate and complete.
Improper documentation: Providing improper documentation can also lead to delays or rejections. Our consultant services can help businesses prepare and review the required documentation to ensure that they meet the specific requirements of the importing country.
Failure to meet the specific requirements of the importing country: Each importing country may have its own specific requirements for the SAFTA Certificate of Origin. Our consultant services can help businesses understand and meet these specific requirements to ensure that their application is accepted.
By utilizing our consultant services, businesses can avoid these common errors and mistakes and ensure a smooth and timely process for obtaining the SAFTA Certificate of Origin. Our team of experts can assist with the preparation and submission of the application form, review of documentation, and compliance with the specific requirements of the importing country.
Conclusion
In conclusion, SAFTA registration is essential for importers and exporters in India as it enables them to avail the benefits of tariff preference under the South Asian Free Trade Area agreement. By exploring the blog, you would have developed comprehensive and clearer insights into SAFTA Certificate of Origin in India: its benefits, process, documents required and common errors & mistakes to avoid while applying for it.
