Overview of SAFTA License
An Agreement on the South Asian Free Trade (SAFTA) is a free trade agreement/arrangement for promoting trade and economic growth in South Asia by reducing or minimising tariffs for intra-regional exports. The South Asian Free Trade Area includes eight members of the South Asian for Regional Cooperation (SAARC), including India. The SAARC Member States comprise the People's Republic of Bangladesh, the Kingdom of Bhutan, the Republic of Maldives, the Kingdom of Nepal, the Republic of India, the Islamic Republic of Pakistan and the Democratic Socialist Republic of Sri Lanka.
The agreement on the South Asian Free Trade Area, commonly known as SAFTA, was signed in 2004 and enforced on 1st January 2006, where India, Pakistan and Sri Lanka are categorised as Nor-Least Developed Contracting (NLDC) Sates and Bangladesh, Maldives, Bhutan and Nepal are categorised as Least Developed Contracting (LDC) States. Afghanistan became a member of SAARC in 2007 and was then categorised as LDC under SAFTA.
This agreement was signed to promote and sustain mutual trade and economic co-operation within the region. The developing countries had to reduce duties down by 20% in the first phase of a two-year period by the end of 2007. And the least developing countries had an additional three years to reduce tariffs.
The basic principles related to SAFTA are as follows:
The primary purpose of SAFTA is to encourage and elevate the common contract among countries. Contracts involving trade operated by the states, supply and import assurance in respect of specific products etc.
SAFTA License is a Certificate of Origin granted by the Directorate General of Foreign Trade (DGFT) for imports and exports of India. It is added to commercial invoices to show the country of origin of the goods imported or exported.
Objectives of SAFTA License
The primary objective of the SAFTA agreement and the License obtained under it is to promote competition in the region at the time of providing proper benefits to the countries involved. The instruments to assist the objectives of SAFTA are as follows:
Benefits of SAFTA License
Following are the benefits of obtaining a SAFTA License:
Pre-requisites for the SAFTA License
Following are the requirements that are needed prior to submission of the application for the SAFTA License:
Documents Required for SAFTA License
Following is the list of the documents that are required at the time of obtaining the SAFTA License:
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Procedure for SAFTA License
The overall procedure to obtain the SAFTA License is as follows:
The applicant has to file an application to the appropriate authority with Digital Signature Certificate (DSC) and updated Import – Export Code (IEC).
The application form submitted must have all relevant information and required documents.
After submission of the application form, the applicant has to make payment of the requisite fees.
- Issuance of License:
Once all the previous steps are fulfilled, the appropriate authority issues SAFTA License in the name of the applicant as the certificate of Origin.
Frequently Asked Questions
SAFTA was introduced to replace South Asia Preferential Trade Agreement (SAPTA) because SAPTA has limited scope. The ultimate goal of SAFTA is to put in place a complete South Asia Economic Union along the lines of the European Union (EU). It is reducing the traffic for intra-regional trade among SARC member countries.
SAPTA means an agreement on the SAARC Preferential Trading Arrangement signed in April 1993.
The SAFTA consist of arrangements relating to the followings:
- Non-tariff measures
- Direct trade measures
Para-tariffs mean border charges and fees on foreign trade transactions of a tariff-like effect other than tariffs levied solely on imports but not such indirect taxes and charges levied in the same manner on similar domestic products.
Direct Trade Measures are conducive to promoting mutual trade of contracting states like long- and medium-term contracts that contains import and supply commitments in respect of specific products, state trading operations, buy-back arrangements and government and public procurement.
Export Inspection Council (EIC) is the authorised agency to issue India's South Asian Free Trade Agreement (SAFTA).
SAFTA agreement incorporates the trade in goods only, and services and investments are not part of it.