What is a Product Origin Certificate For Export From India

A Product Origin Certificate, often referred to as a Certificate of Origin (CO), is a crucial document in international trade. It confirms the country where a product was manufactured or produced. This document serves multiple purposes and plays a vital role in ensuring compliance with trade regulations. 

Here’s a guide on what a Certificate of Origin is, when you need one, and how the country of origin is determined.

What is a Certificate of Origin?

A Certificate of Origin is a formal document that declares the country of origin of a specific product. According to the International Chamber of Commerce (ICC), it establishes the “nationality” of your product. This certificate is required to accompany shipments, and each new shipment of the same product needs a new certificate. The certificate must be issued or certified by the local Chamber of Commerce or a similar authority.

Types of Certificates of Origin

There are two main types of Certificates of Origin: preferential and non-preferential.

Preferential Certificate of Origin: This type of COO is issued when the products being exported qualify for tariff benefits under specific trade agreements between India and other countries. These agreements include:

• Generalized System of Preferences (GSP): This is where certain developed countries offer tariff reductions to products coming from developing countries like India.
• Global System of Trade Preferences (GSTP): This involves tariff concessions exchanged between developing countries. India has agreements with 12 countries under this system.
• SAARC Preferential Trading Agreement (SAPTA): An agreement among SAARC countries (South Asian Association for Regional Cooperation) to offer tariff reductions to each other.
• Asia-Pacific Trade Agreement (APTA): Aims to reduce trade barriers like tariffs between Asia-Pacific countries, including India.
• Bilateral Agreements: India also has specific agreements with countries like Sri Lanka, Thailand, Malaysia, Korea, and Japan that offer tariff benefits.

To qualify for these benefits, exporters need to provide a preferential COO, which is issued by certain authorized agencies in India.

Non-Preferential Certificate of Origin: This type of COO simply certifies the country of origin of the goods without offering any tariff benefits. It’s still important for customs purposes, but it doesn’t provide the same advantages as a preferential COO. Various agencies across India, such as the Directorate-General of Foreign Trade (DGFT), Textile Committee, and Chambers of Commerce, are authorized to issue non-preferential COOs.

Why is a Product Origin Certificate Important?

When goods are exported from India to another country, the customs authorities at the destination need to know where the products came from. This information is crucial because some countries have agreements that allow products from specific countries to be imported with lower or no taxes. A COO provides this proof of origin, ensuring that the goods qualify for these benefits. Without this certificate, the products might face higher taxes or even be rejected by the customs department of the importing country.

When is a Certificate of Origin Required?

The necessity of a Certificate of Origin can vary depending on the destination country and its specific import regulations. Many countries require this document for goods entering their markets to manage trade flows, enforce tariffs, or adhere to political and commercial restrictions.

For exporters, it’s crucial to check whether the destination country requires a Certificate of Origin. This can be done using resources like the Market Access Database (MADB), which provides information on import conditions for EU exporters. The database helps in understanding whether a Certificate of Origin is needed and the specific requirements for different markets. 

What Determines the Country of Origin?

The country of origin is determined by several factors related to the product’s creation and processing:

Production Process: The country where the final substantial and economically justified transformation of the product occurs is considered its origin. This process involves significant changes to the product, such as assembly, manufacturing, or packaging.

Material Sources: The origin of the raw materials or components used in the product can also influence the country of origin. If a product is made from materials sourced from multiple countries, its origin is typically where the last major processing occurred.

The ICC’s guidelines state that non-preferential origin is established when goods are “wholly obtained” in one country, or if multiple countries are involved, where the last significant processing or working took place, resulting in the manufacture of a new product or an important stage of production.

How Can Exporters Get a Product Origin Certificate?

Exporters can obtain a COO either for individual shipments or on a regular basis. The process involves submitting an application to an authorized agency, along with a few documents. For example, if an exporter wants to get a COO from FIEO (Federation of Indian Export Organisations), they need to submit an indemnity bond, a cover letter, copies of the application form, and a copy of the invoice. The application can be submitted for a one-time shipment or as a regular request, depending on the exporter’s needs.

The application process may also involve a small fee. For instance, FIEO charges around Rs. 100 for issuing eight copies of the COO. Additional certifications, like those for the invoice or packing list, can also be obtained at nominal rates.

Self-Certification of Origin

In some cases, exporters in India are allowed to self-certify the origin of their products. This option is available under the Approved Exporter System, where the DGFT recognizes certain exporters as eligible to self-certify. Typically, this applies to exporters with a strong track record, such as those who are part of the Status Holder Exporters program (One to Five Star Export Houses). This system makes it easier and faster for exporters to certify the origin of their goods.

Who Issues the Product Origin Certificate?

In India, there are specific agencies authorized to issue the COO. For preferential COOs, the DGFT has identified a list of agencies that can issue this certificate. These agencies are spread across the country to make it easier for exporters to obtain the certificate.

For non-preferential COOs, the Indian government has nominated several agencies across the country. Some of these include the DGFT and its regional offices, the Textile Committee, the Federation of Indian Export Organisations (FIEO), and various Chambers of Commerce like CII (Confederation of Indian Industry) and PHDCCI (PHD Chamber of Commerce and Industry).

Conclusion

A Certificate of Origin is more than just a formality; it’s a key document in international trade that validates the origin of products. Whether you are an exporter, importer, or logistics provider, understanding when and how to obtain this certificate is essential for smooth international transactions. By ensuring compliance with the relevant requirements, businesses can navigate global trade more effectively and avoid potential issues with customs and trade regulations.