South Asian Free Trade Area (SAFTA) is a free trade agreement for promoting trade & economic growth in South Asia by reducing or minimising tariffs for intra-regional exports. Eight South Asian Association for Regional Cooperation or SAARC countries, including India, make up the South Asian Free Trade Area. The Republic of Bangladesh, Kingdom of Bhutan, Republic of Maldives, Kingdom of Nepal, India, Islamic Republic of Pakistan, & Democratic Socialist Republic of Sri Lanka are all members of SAARC. The South Asian Free Trade Area (SAFTA) was signed in 2004 and came into effect on January 1, 2006; Bangladesh, the Maldives, Bhutan, and Nepal are classified as Least Developed Contracting (LDC) States, while India, Pakistan, and Sri Lanka are considered Non-Least Developed Contracting (NLDC) States. In 2007, Afghanistan joined SAARC, and under SAFTA, it was designated as an LDC. This agreement aimed to enhance and maintain regional economic and commercial cooperation. By the end of 2007, the developing nations were to lower their tariffs by 20% in the first of a two-year term. The least developed nations were also given an additional three years to lower tariffs. In this write-up, we will discuss how to get SAFTA Certificate in India.
Purpose of SAFTA Certificate in India
The primary purpose of the SAFTA Certificate is to promote competition in the region at the time of providing proper advantages to the countries involved. The instruments to assist the purpose of SAFTA are as follows:
- Trade Liberalisation Programme
- Rules of Origin
- Institutional Arrangement
- Safeguard measures
- Consultations and Dispute Settlement procedures
- Any other instrument, if agreed
Categories of Certificate of Origin
There are 2 categories of Certificate of Origin:
- Non-Preferential Scheme: These Certificates of Origins evidence the Origin of products and don’t bestow any right to preferential tariffs.
- Preferential Certificate Scheme: Preferential Certificates prescribe rules of Origin that must be met for exports to be eligible for tariff preference.
Importance of SAFTA Certificate in India
- Exporters and importers must add the Certificate of Origin to the commercial invoice to avoid shipment issues. A Certificate of Origin is an instrument that establishes evidence of the Origin of products imported into any country.
- There are tax exemption advantages also if the exporter has a SAFTA Certificate. Most exporters don’t need to pay GST in their invoices or bills if they have attached the origin certificate.
- These certificates are vital for exporters to prove where their products come from and therefore stake their claim to whatever benefits products of Indian Origin (Made in India) may be eligible for in the country of exports.
- This gives a boost in sales & preference to the exporter holding SAFTA Certificate. If the exporter does not charge GST on the export of products, then the importer will have to pay a lesser price. The importer will choose an exporter who charges “Base Price + No Tax”.
Benefits of SAFTA Certificate in India
Following are benefits of obtaining a SAFTA Certificate in India:
- For the people of South Asia, it has brought integrity & transparency among the countries by minimising the tariff and trade barriers.
- It boosts foreign investments in the member nations of SAARC.
- It establishes a robust framework for all regional cooperation.
- It helps in avoiding any shipment problems.
- According to reports from WTO[1], nations involved in Free Trade Agreements have higher economic growth than others.
- Most exporters don’t need to pay GST in their bill or invoice if they attach their Certificate of Origin.
- Exporters need to stake their claim to the benefits goods of Indian Origin are eligible for in the country of exports.
- The exporter with SAFTA Certificate has a preference and boosts their sales.
Documents Required for SAFTA Certificate in India
Following are some vital documents required to obtain SAFTA Certificate in India
- Registered Email on DGFT;
- Organisation Digital Signature Certificate (embedded IEC Code);
- Updated IEC License;
- Mobile No.;
- DSC software;
- Commercial Invoice;
- Declaration from Manufacturer (Exporter) in Letterhead;
- Purchase Bill that has information of Origin or quantum of inputs/consumables used in export products;
- Product Information;
- Purchase order from an importer.
Procedure for Obtaining SAFTA Certificate in India
The overall procedure to obtain the SAFTA Certificate in India is as follows:
Step 1: Application: The applicant has to file an application form to the appropriate authority with Digital Signature Certificate (DSC) & updated Import–Export Code (IEC).
Step 2: Documents: The submitted application must have all relevant information and required documents.
Step 3: Payment: After submission of the application form, the applicant has to make payment of the requisite fees.
Step 4: Issuance of License: Once all the previous steps are completed, the appropriate authority grants the SAFTA Certificate in the applicant’s name as the Certificate of Origin.
Conclusion
SAFTA Certificate is a certificate of Origin granted through DGFT for exporters and importers of India. SAFTA Certificate is added to the industrial invoice to show the origin country of products.
