India pushing for more robust rules of origin norms as it prepares SOP for FTAs

India all up for stringent rules of origin

India is pushing for more robust rules of origin to prevent the circumvention of certain products as it prepares standard operating procedures that can guide its foreign trade agreement negotiations.

The idea is for the trading partners to enforce rules of origin stringently so that certain products from specific countries do not find their way to India via a different channel.

In May, Moneycontrol reported that India was also planning to upskill negotiators and expand its workforce as it decides on SOP norms, which are expected to include new and emerging issues like gender and environment.

The SOPs are likely to be presented to the Cabinet for approval, and they come as India is negotiating key FTAs with the UK and EU.

Recently, India’s finance and commerce industry ministers spoke against the European Union’s unilateral decision to impose a Carbon Border Adjustment Mechanism and deforestation norms, which are likely to increase trade costs.

CBAM imposes tariffs on carbon-intensive products like steel and cement. The deforestation regulation requires companies trading in agricultural products to ensure due diligence so that products are not derived from deforestation.

“An outcome-oriented trade agreement requires a two-way commercially meaningful agreement; we are confronted with unfair rules of deforestation and CBAM, disrespecting the Paris Agreement,” Commerce and Industry Minister Piyush Goyal had said at the formation of the Federation of European Business in India on October 11.

Finance Minister Nirmala Sitharaman had termed these measures as "unilateral and arbitrary".

India is negotiating an FTA with the EU. In its ninth round of negotiations, held in September, India raised its concerns regarding CBAM.

It is also in talks to sign FTAs with UK, Peru and Oman and attain an FTA-like status from the US, in terms of critical minerals.

The commerce and industry minister, in his recent visit to the US, signed a memorandum of understanding on critical minerals for secure supply chains on critical minerals.

In an interaction with the media on October 19, the minister noted that India was pushing for a critical mineral agreement, which could open the door for an FTA.

Japan had signed a critical mineral partnership agreement with the US, which attained an FTA status from the US Department of Treasury, allowing Japan to take advantage of the EV subsidies under the Inflation Reduction Act.

Meanwhile, it is also pushing for a review of its existing FTAs with ASEAN and the UAE.