Soon Indian exporters will be able to officially label their goods as ‘made in India’ easily. Come 2017, goods exported to the European Union (EU) by exporters will soon carry this tag. It’s a welcome move, as it will help exporters cut down on the processing time and costs.
Only traders who export goods under the European Union’s special scheme called the Generalised System of Preferences (GSP), a preferential tariff system that is extended to developing countries by developing countries. The duty is low or non-existent for each country under the GSP quota.
Shipments under this quota are required to be accompanied by a certification that the goods were indeed manufactured by that country. This is to help the EU gauge if the quota is being properly utilised by the country it is allotted to.
As of today, exporters acquire this certification from accredited agencies. A process that requires time and involves money. “We plan to go ahead with the scheme because it benefits exporters. Now, exporters have to pay for getting the certificates issued from notified agencies. This adds to the exporters’ costs,” said a commerce department official.
A ‘certificate of origin’ currently indicates the origin of the product being exported and hence enables exporters to avail the benefits under the scheme. The certificate also ensures that exporters from countries not included under this tariff system are unable to avail its benefits.
From January 1st 2017, a so-called self-certification system by exporters will come into force. The registered exporter system (REX) will replace the certificate of origin which is issued by accreditation agencies. Using this system, exporters will be able to directly offer their customers statements on origin.
“This move is a part of a global effort to reduce transaction costs,” he said, requesting not to be identified. Exporting countries are required to notify to the European Union the date on which they can begin complying with the new system, the official said.
“There are many agencies which give these certificates. The self-certification system will reduce transaction costs but there could be a problem with new exporters. We have to train exporters,” said another official.
The president of the Federation of Indian Export Organisations Ajay Sahai revealed that 20% of the total exports from India to EU avail the GSP benefits. Textiles, chemicals and handicrafts were singled out as the largest beneficiaries.
India exports to the EU in 2015-16 was $44.5 billion compared to $49.3 billion in 2014-15. Imports also fell to $43.8 billion from $49.2 billion.