The Indo-European Free Trade Agreement (India-EFTA FTA) marks a significant partnership between India and the European Free Trade Association (EFTA), comprising Iceland, Liechtenstein, Norway, and Switzerland. After 15 years of negotiations, the agreement was finalized in July 2024, focusing on fostering economic collaboration through the elimination or reduction of tariffs and trade barriers on goods and services.
This comprehensive FTA covers a wide range of sectors, including industrial goods, agricultural products, and intellectual property rights. For Indian businesses, it opens new markets with preferential access to EFTA countries, while Indian consumers benefit from lower prices on imported goods. The deal is expected to boost bilateral trade, create job opportunities, and strengthen the economic ties between India and the EFTA nations.
What is India – EFTA Registration
India-EFTA registration refers to the formal process required for businesses to access the benefits of the Free Trade Agreement between India and the European Free Trade Association, consisting of Iceland, Liechtenstein, Norway, and Switzerland. This registration allows businesses to trade goods and services with reduced tariffs and fewer trade barriers, encouraging smoother economic exchanges between India and EFTA countries. The agreement simplifies the procedures for exporting and importing products, making it easier for companies to enter and operate in each other’s markets.
Rules of Origin of Product
Rules of Origin determine a product’s country of origin for eligibility under trade agreements. These criteria ensure fair trade, requiring products to be wholly obtained, sufficiently value-added, or undergo classification changes. Final production must take place in the exporting country, and compliance requires sharing product details with authorities to meet specific manufacturing rules.
- Criteria are used to determine the country of origin for exported products under trade agreements.
- These rules ensure fair trade and prevent misuse of preferential treatment.
- Products can qualify if they are wholly obtained or sufficiently value-added in the exporting country.
- Changes in classification under the Harmonized System (HS) may also be required.
- Final production must occur in the exporting country for eligibility.
- Exporters must share specific product details with authorities to comply with the agreement.
- The product must meet Product Specific Rules (PSR) regarding adequate manufacturing or processing.
Proof of Origin of Product
Proof of origin is the documentation used to verify where a product was manufactured, often necessary for international trade. Exporters can provide proof through:
- Digital certifications from approved government organizations.
- A paper or electronic certificate of origin issued by a government authority under Indo-EFTA registration.
- A declaration from a licensed exporter, in compliance with Indo-EFTA regulations.
Documents Required for EFTA Certificate of Origin
- Commercial invoice
- Product description
- Digital signature certificate
- Mobile number and email address
- Updated Import Export Code (IEC)
- Purchase order from the importer company
- Organization-based digital signature certificate
- Manufacturer Exporter Declaration on the company’s letterhead
- Purchase bill detailing quantity, origin of raw materials, and consumables used in the product meant for export
EFTA Registration Process
- Filing of Application
- Submit the application for EFTA registration with the necessary details.
- Documentation
- Provide required documents, including the commercial invoice, product description, and certificates.
- Payment
- Pay the applicable registration fees to proceed with the application.
- Issuance of Certificate
- Once all steps are verified, the certificate of origin is issued by the relevant authority.
Product Eligibility Under the EFTA Agreement
To qualify for preferential treatment under the EFTA agreement, a product must meet the following criteria:
- Wholly Obtained & Produced Products: Items entirely produced or extracted within the contracting nation.
- Live Animals: Animals raised or bred in the country.
- Agricultural Products: Products derived from agricultural activities in the contracting nation.
- Products Made of Animals: Goods manufactured from animals raised in the country.
- Products Made of Marine Animals: Items produced from marine animals caught or farmed within the country.
- Products Made of Natural Resources: Products derived from natural resources extracted in the contracting nation.
- Produced Exclusively in the Country: Items produced entirely within the country’s territory.
- Sufficient Working or Production: Products must undergo adequate manufacturing or processing as per Product Specific Rules.
Benefits of EFTA Registration
- Facilitates the exchange of goods and services between the two nations.
- Reduces tariffs and trade barriers in preferred countries.
- Encourages cross-border transactions between contracting countries.
- Promotes fair competition within the free trade area.
- Ensures equitable benefits for all contracting nations.
- Provides an effective mechanism for joint administration and dispute resolution.
- Creates a framework for regional cooperation and enhances mutual trade benefits.
Responsibility of Exporters Under EFTA
- Exporters must provide all required documents during the certification process.
- Misleading information or false documents by exporters can lead to penalties or punishment.
- Exporters need to retain minimum information and supporting documents for 5 years from the certificate’s expiry date.
- Appropriate accounting records of the production and supply of products must be maintained.
- Exporters must notify the issuing authority, customs authority, and importer of any changes affecting the accuracy or validity of the certificate.
Non-compliance & Penalties
- Customs duties will be applied if the product’s certificate of origin does not comply with the rules of origin.
- Parties must enforce civil and administrative laws related to trade. Criminal penalties may be imposed for violations of customs laws.
Conclusion
The EFTA agreement provides significant benefits by facilitating trade between contracting nations through reduced tariffs and trade barriers, promoting fair competition, and enhancing regional cooperation. Exporters must adhere to strict documentation requirements and maintain accurate records to ensure compliance and avoid penalties. Non-compliance can result in customs duties and legal repercussions. Overall, effective implementation and adherence to these rules support robust trade relationships and economic growth between EFTA members and their trading partners.