Key takeaways
- Confirm your HS code first
- Compare MFN and preferential duty rates
- Document origin compliance carefully
- Use services and investment chapters too
What a trade agreement really offers
A free trade agreement (FTA) or comprehensive economic partnership agreement is a treaty under which partner countries reduce or eliminate customs duties on each other's goods, and often ease rules for services, investment and movement of professionals.
India has agreements in force with several partners, including the ASEAN bloc, Japan, South Korea, the UAE and Australia, and has been negotiating with other major economies. For a business, the value lies in a simple question: can my product enter the partner country at a lower duty than my competitors from non-partner countries?
Tariff schedules: finding your number
Every agreement contains tariff schedules listing products by HS code with the agreed duty and phase-down timeline. Some lines go to zero immediately, others reduce over years, and sensitive items may be excluded entirely.
Start by confirming your product's correct HS classification at the six-digit level, then compare the partner's standard (MFN) duty with the preferential rate. The difference is your competitive advantage — or your buyer's saving.
Rules of origin: the most misunderstood part
Preferential duty is granted only to goods that 'originate' in the partner country. Rules of origin define this — commonly through a change in tariff classification, a minimum regional value content, or specific processing requirements.
If your product uses significant imported inputs, you must check whether the transformation done in India meets the rule. Keeping cost sheets and supplier declarations is essential, because customs authorities can verify origin claims after the shipment.
- Wholly obtained: goods fully produced in India
- Change in tariff heading: inputs transformed into a different HS heading
- Regional value content: a minimum share of value added locally
- Product-specific rules: special conditions for certain goods
Getting a certificate of origin
Preferential certificates of origin are issued through designated agencies, increasingly via an online platform. The exporter applies with invoice and product details, and the certificate travels with the shipment so the importer can claim reduced duty.
Beyond tariffs
Modern agreements also cover technical standards, customs facilitation, services trade and investment protection. For service exporters and companies setting up overseas offices, these chapters can matter as much as tariffs.
How ITFOI helps
Our research cell tracks agreement developments and publishes member briefings, while the advisory desk helps members interpret tariff schedules and origin rules for their products.
This article is for general information and is not legal, tax or financial advice. Rules change frequently — members can contact the ITFOI advisory desk for guidance on their specific situation.