- Origin is decided by one of three tests: wholly obtained, a change in tariff classification, or a minimum regional value content.
- A preferential certificate claims duty relief under an agreement; a non-preferential one only states where goods were made.
- Under CAROTAR 2020 the importer must verify origin and keep records for five years, or the concession can be denied.
Two kinds of origin certificate
"Country of origin" answers where the goods were made, but the paperwork depends on what you want from it.
| Non-preferential origin | Preferential origin | |
|---|---|---|
| Purpose | Proves where goods come from for the buyer, customs or a letter of credit | Claims a lower or zero import duty under a trade agreement |
| Rule set | General rules of the importing country | The rules of origin in that agreement, product by product |
| Who issues it | An authorised agency such as a chamber of commerce or export promotion council, or the DGFT platform | The authority named in the agreement, using its prescribed form |
| Cost of getting it wrong | A rejected document | Duty demanded back, with interest and penalty |
For the technical side of issuing certificates through DGFT's platform, see DGFT's Open API for Certificates of Origin. This guide is about the rules behind them.
The three ways goods become "originating"
- Wholly obtained. Natural products and goods made entirely from them in the country, such as crops, minerals or live animals.
- Change in tariff classification (CTC). Imported inputs are transformed enough to land in a different HS chapter (CC), heading (CTH) or subheading (CTSH) than the finished product. This is why the HS code of every input and the product matters.
- Regional value content (RVC). A minimum share of the price must be added within the area, commonly around 35% to 40%, though each agreement and product sets its own figure.
Many product rules combine these, for example "CTH and RVC 35%", or give a choice between them. Some agreements also allow cumulation (counting inputs from partner countries as local), a de minimis allowance for small non-originating content, and require direct consignment so the goods are not altered in a third country.
A worked value-content test
Does the product meet a 35% value-content rule?
Ex-works price split into four parts, as a share of 100. Illustrative 35% regional value content, indirect method. Hover or tab to a segment.
Show as a table
| Product | Non-originating materials | Originating materials | Labour and overhead | Profit | RVC | Result |
|---|---|---|---|---|---|---|
| A | 58% | 14% | 18% | 10% | 42% | Meets 35% |
| B | 72% | 8% | 12% | 8% | 28% | Fails 35% |
Product A buys 58% of its price in non-originating materials, so its RVC is 42% and it passes a 35% rule. Product B buys 72% abroad and reaches only 28%. A small change in sourcing, such as moving one input to a local supplier, can be what turns B into an originating product.
The import side: CAROTAR
Indian customs checks whether preferential claims on imports are genuine under the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020, known as CAROTAR, in force since 21 September 2020.
- The importer must exercise reasonable care and satisfy themselves that the goods meet the origin criteria before claiming the concession. Holding a certificate is not enough on its own.
- Origin details from the certificate are declared in the Bill of Entry, and the importer keeps the supporting information for five years.
- If customs doubts the claim it can ask the importer for cost and sourcing documents, and where doubt remains it can seek verification from the issuing authority abroad. The concession can be denied.
Exporters feel it too. An Indian exporter's buyer faces similar checks in the destination country. Keep a bill of materials, input invoices and a cost sheet for each product for every origin claim, so you can answer a verification request within days rather than weeks.
Records to keep for every origin claim
How EXIMnx helps: EXIMnx's FTA advisor suggests the agreement that gives the lowest duty for an HS code and destination, and the document set holds the certificate and its supporting records against each shipment. See AI features.
Frequently asked questions
What is regional value content (RVC)?
The minimum share of a product's price that must be added within the trade-agreement area, often around 35–40% but set by each agreement and product.
What is CAROTAR?
The Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020, under which importers must verify origin and keep records for five years.
Is a certificate of origin enough to claim FTA duty?
No. Customs can still ask for cost and sourcing records and deny the concession if the claim is not supported.
- Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020, and Customs Act section 28DA: cbic.gov.in
- DGFT, preferential and non-preferential certificates of origin: dgft.gov.in
- The rules of origin chapter of each trade agreement, on the Department of Commerce site: commerce.gov.in
This guide is a practical overview, not legal or tax advice. Rules, rates and procedures change by notification; confirm against the current text before you act.