SAFTA License

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:

• Reciprocity and mutuality of advantages give equal benefits considering the level of economic trade, industrial development and the trade and tariff systems. 
• Negotiation of tariff reform is implemented in successive stages by periodic reviews. 
• Recognition of the specific needs of the least developed countries (LCD) and agreement on concrete preferential measures in their favour.
• Inclusion of all products, manufacturers and commodities in raw forms.

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:

• Trade Liberalisation Programme
• Rules of Origin 
• Institutional Arrangement 
• Safeguard measures
• Consultations and Dispute Settlement procedures 
• Any other instrument, if agreed 

Benefits of SAFTA License 

Following are the benefits of obtaining a SAFTA License:

• For the people of South Asia, it has brought transparency and integrity among the countries by minimising the tariff and trade barriers. 
• It establishes a robust framework for all the regional co-operations.
• It boosts foreign investment in the member nations of SAARC.
• As per reports of WTO, nations involved in Free Trade Agreements have higher economic growth than others.
• It helps in avoiding any shipment problems. 
• It is essential for exporters to stake their claim to the benefits goods of Indian Origin are eligible for in the country of exports. 
• Most exporters do not need to charge GST in their bill or invoice if they attach their certificate of Origin.
• The exporter with SAFTA License has a preference, and it also boosts their sales. 

Pre-requisites for the SAFTA License 

Following are the requirements that are needed prior to submission of the application for the SAFTA License:

• IEC Code
• Registered office details such as the name of the company, name of partners, directors, managing directors or proprietors, email ID, mobile number and address 
• Branch or unit details with address and GST number of every branch
• DSC
• Details of trade agreement, issuing agency, regional office and issuing office 
• Invoice number

Documents Required for SAFTA License 

Following is the list of the Documents that are required at the time of obtaining the SAFTA License:

• Import-Export Code (IEC) 
• Registration certificate of company or organisation
• Details of each director, partner or proprietor
• Exporter details
• Commercial Invoice 
• Bill with details of quantum or Origin of inputs or consumables used in export products
• Declaration from the manufacturer on the letterhead 
• Product details 
• Details of Raw materials 
• Description of goods
• Purchase order from the importer
• Digital signature
• Affidavit 
• DSC 
• Cost statements
• To verify the imported raw materials: Import CUSDECS and Import Invoice

Procedure for SAFTA License

The overall procedure to obtain the SAFTA License is as follows:

Application:

The applicant has to file an application to the appropriate authority with Digital Signature Certificate (DSC) and updated Import – Export Code (IEC). 

Documents:

The application form submitted must have all relevant information and required Documents.

Payment:

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.