India-UK trade: Co-equal rule to aid claiming of benefits

The India-UK Comprehensive Economic and Trade Agreement has introduced a “coequal” rule or product-specific origin norms to offer greater flexibility to certain goods such as chemicals, pharmaceuticals, paints, essential oils and iron and steel The rule will allow a producer of a good to meet any of the criteria of origin to claim benefit under the FTA.

The origin rules are vital for checking any circumvention of FTA rules and flow of substandard imports into India.

India’s trade pact with the UK is different from its earlier trade pacts with which had simple rules of origin linked to the wholly-obtained criterion from the trade partner country, value-added criteria or change in tariff heading parameter, which means transformation of a product leading to a change in its duty classification.


“The coequal rules for various chapters will ease the determination of rules of origin in the India-UK FTA, allowing more preferential benefits for goods being traded between the countries. This lays down a sound precedent for future FTAs as most mature economies prefer coequal rules of origin atleast at a chapter level, if not at a line item wise level of HSN,” said EY India Tax Bipin Sapra.

While there are references to such rules in India’s trade pact with Australia, it is for the first time that such elaborate rules have been created.

However, the rules are getting more complex and offer greater flexibility to specific goods called “co-equality” of rules.

To qualify for reduced tariffs, the rules of origin specify that a product must either be wholly obtained or significantly transformed through processing in either the UK or India.