Overview of SAPTA License
SAARC Preferential Trading Arrangement (SAPTA) License is obtained to claim benefits of Free Trade Agreements (FTA) to the importing country. It is mandatorily required to be produced at the landing port with the commercial invoices. It is issued by the Directorate General of Foreign Trade (DGFT) to ensure that goods are being produced from countries under trading agreements.
Its objective is to ensure optimum economic co-operation between the SAARC member countries through the exchange of benefits of trade and concessions. SAPTA License is the first step to promoting and assisting mutual trade towards a higher level of trade and economic co-operations in the SAARC member countries. The agreement on the Preferential trade arrangement among the member countries named Bangladesh, Bhutan, India, Pakistan, Nepal, Maldives and Sri Lanka of the SAARC. All the SAARC member countries signed it in April 1993 in Dhaka. SAPTA is the first step in the direction of higher rates of trade and economic co-operation in the region.
SAPTA is governed by the provisions of the Agreement on SAARC Preferential Trading Arrangement (SAPTA) and by the Rules, Regulations, Decisions, Understanding, and Protocols to be agreed upon within the framework of such agreement by the Contracting SAARC member countries. It is governed according to the following principles:
- It is based and applied on the principles of overall reciprocity and mutuality of advantages in a way as to benefit all the contracting members of SAARC taking into account their levels of economic and industrial development and the pattern of their external trade, trade and tariff policies and systems equally.
- SAPTA is negotiated step-wise, improved and extended in successive stages with periodic reviews.
- Special needs of Least Developed Contracting member countries are clearly recognised, and concrete preferential measures in favour of them are agreed upon
- It includes all products, manufacturers and commodities in raw, semi-processed and processed forms.
- SAPTA consists of arrangements relating to the followings:
- Non-tariff measures
- Direct trade measures
Eligibility of products for SAPTA License
To qualify for the preference, the products must fall under the following categories:
- Fall within a description of the product that is eligible for preference in the list of concessions of the destination’s SAPTA country.
- Comply with SAPTA rules of origin, and comply with the consignment conditions specified by SAPTA rules of origin.
Key criteria for ensuring the origin country of the products are as follows:
- Wholly Obtained: This occurs in a case where all products and their inputs originate in exporting country.
- Substantial transformation: For goods not wholly obtained, these criteria are applicable and include various parameters like change in tariff classification, value addition, technical specifications, etc.
Following is the list of Products that are wholly produced or obtained in exporting participating countries and are eligible for preferential concessions:
- Raw or mineral products are extracted from its soil, water or sea beds.
- Agriculture products are harvested there.
- Animals were born and raised there.
- Waste & scrap resulting from manufacturing operations conducted there.
- Used articles collected there.
- Product processed or made on boards its factory ships.
- Products of sea fishing and other such marine products are taken from the high seas by its vessels.
- Products are obtained by hunting or fishing there.
- Products are obtained from animals raised there.
- Goods are produced exclusively from the products mentioned above.
Documents required for SAPTA License
Following are the documents needed to obtain a SAPTA License:
- Import-Export Code (IEC)
- Registration Certificate of Company or Organisation
- GST Registration Certificate
- Details, including ID and address proof of each director, partner or proprietor
- Exporter details
- Commercial Invoice
- Purchase bill with details of the origin of inputs or consumables used in export products
- Declaration from the manufacturer (exporter) on the letterhead
- Product details
- Purchase order from the importer
Procedure to obtain SAPTA License
The complete procedure to obtain the SAPTA 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 SAPTA License in the name of the applicant as the Certificate of Origin.
Frequently Asked Questions
On 11th April 1993, the member countries of SAARC signed the SAPTA Agreement and then on 7th December 1995, it came into effect.
ASEAN stands for Association of South East Asian Nations, which initiated steps to integrate the economy of the member countries to make the region more attractive for investors to face the competition. The members of ASEAN are Indonesia, Thailand, Malaysia, Singapore, Philippines, Brunei, Vietnam, Myanmar, Cambodia and Laos.
The contracting states conduct their negotiations for trade liberalisation as per the following approaches and procedures or a combination of these:
- Product by product basis
- Across the board tariff reductions
- Sectoral basis
- Direct trade measures.
The serious injury means significant damage to domestic producers or similar products resulting from the substantial increase of preferential imports in a situation which causes substantial losses in terms of earnings, production or employment unsustainable in the short term.
The Sectoral basis means agreements amongst contracting states regarding the removal or reduction of the tariff, non-tariff and para-tariff barriers and other trade promotion or co-operative measures for specified products or groups of products closely related in end-use or in production.
SAPTA aims to promote and sustain mutual trade and economic co-operation among the Contracting States through exchanging concessions under this agreement.
The products mean all the products, including the manufacturers and commodities in the raw, semi-processed and processed forms.