India's Free Trade Agreement network — including agreements with ASEAN, Japan, South Korea, Singapore, UAE, Australia, and Mauritius — confers preferential (zero or reduced) customs duty on thousands of goods imported from treaty partner countries. The aggregate potential import duty saving across all active Indian FTAs exceeds ₹80,000 crore annually. Actual utilisation by Indian importers, according to CBIC data, remains well below 30% of potential. The gap is not ignorance of the FTA's existence — it is failure at the operational step: Rules of Origin (RoO) compliance.
Customs Act 1962, Section 156A — FTA Preferential Rate Mechanism
Where any agreement or treaty with any other country or territory provides for the levy of duty on goods at a rate lower than the rate specified in the First Schedule to the Customs Tariff Act, 1975, the Central Government may, by notification in the Official Gazette, provide for levy of duty on such goods at the rate so agreed.
Statutory Reference
Key FTAs and Applicable Benefit Zones
ASEAN-India FTA (AIFTA)
Zero duty on most goods from Thailand, Malaysia, Vietnam, Indonesia. High utilisation potential for electronics, auto parts, chemicals. RoO: 35% ASEAN value addition required. Most goods qualify easily — the tranche lists need checking.
India-UAE CEPA (2022)
One of India's most commercially significant. Zero duty on gems, jewellery, textiles, and many manufactured goods from UAE. Re-export restriction: goods must have RoO certificate from UAE Customs Authority. New — many importers still unaware.
India-Australia ECTA (2022)
Preferential rates on wine, wool, lamb, macadamia, education services (indirect). For Indian exporters: zero duty on 96% of tariff lines entering Australia. Heavily underutilised by Indian exporters.
An Indian importer bringing in ₹5 crore of ASEAN-origin electronics at 10% basic customs duty is paying ₹50 lakh in duty that a FORM AI or COO certificate would entirely eliminate. This is money left on the customs counter.
— Sami Tax Customs Advisory, January 2025
The operational challenge is the Certificate of Origin (COO). Each FTA has a specific RoO criterion — either a value-addition test (e.g., 35% of FOB value must originate in the treaty country), a change-in-tariff-heading criterion (the HS code of the finished good must differ from the HS code of all non-originating inputs), or a specific manufacturing process test. The importer must obtain the COO from the exporting country's designated authority before the goods land. Retrospective COO claims are possible under some FTAs but are operationally difficult and audit-prone.
Your FTA Utilisation Action Plan
- Run a Duty Savings Audit: take your top 20 import product categories and check each against the applicable FTA tariff schedule (CBIC's website has FTA tariff schedules by country).
- Where duty savings are identified, instruct your overseas supplier to obtain and provide the appropriate COO/Form AI before each shipment — this is a commercially straightforward ask.
- Verify GSTN-linked import data in your IEC profile to identify historically missed FTA claims — some FTAs allow retrospective claims within 1 year.
- If your imports are above ₹10 crore annually from ASEAN, UAE, Japan, or Australia, a one-time FTA utilisation audit by Sami Tax typically identifies ₹30–80 lakh in annual recurrent savings.
- We document it, advise on COO procurement, and set up an import monitoring calendar.