IS INDIA HEADING TOWARDS TRADE PROTECTIONISM: AN ANALYSIS OF CAROTAR RULES?

Surendar Singh, Ram Singh

Abstract


With the announcement of Self-Reliant India Mission, the Government of India has announced several policy measures to promote domestic manufacturing to make India, as a hub of global manufacturing. One of its major policy measures is the introduction of Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR Rules). The objective of these rules is to regulate frivolous imports of the third country, which is routing to the Indian market via its FTA partners. These rules have created ‘lots of hues and cry’ among importing and exporting firms due to their regulatory, operational and business implications. This article examines key provisions of CAROTAR rules and their implications to India’s foreign trade sector in general and exporting and importing firms in particular. Findings show that CAROTAR rules are highly protective and regressive in nature and designed to safeguard the domestic manufacturing industry. The intent and content of these rules clearly demonstrate that importing firms are subject to strict regulatory compliance to claim preferential benefit under India’s existing trade agreements. New rules will increase the cost of importing inputs and components thereby affecting India’s trade competitiveness.

Keywords: CAROTAR rules, free trade agreements trade protectionism, customs, imports, global value chains.

Full Text:

PDF

References


Anuradha, R.V. (2011). ‘Regional Trading Agreements: Need for a Coherent Policy Framework for India’s Negotiating Strategy, Jindal Global Law Review’, 2011.

Baldwin, R. (2011). 21st Century Regionalism: Filling the gap between 21st century trade and 20th century trade rules (No. ERSD-2011-08). WTO Staff Working Paper.

Bhattacharyya, R., & Mandal, A. (2014). The India-ASEAN Free Trade Agreement: How Will Indian Industries Be Affected?. Available at SSRN 2446414.

CAROTAR Rules 2020: Will it cost importers more than gains? Checkimplications on trade, Financial Express, 29 September 2020.

Central Board of Indirect Taxes and Customs, Guidelines regarding implementation of section 28DA of the Customs Act, 1962 and CAROTAR, 2020 in respect of Rules of Origin under Trade Agreements (FTA/PTA/CECA/CEPA) and verification of Certificates of Origin- reg.Dated 21st August, 2020.

Chatterjee, S., & Subramanian, A. (2020). India’s Export-Led Growth: Exemplar and Exception. Ashoka Center for Economic Policy Working Paper, (01).

Chatterjee, S., & Subramanian, A. (2020). India’s Inward (Re) Turn: Is it Warranted? Will it Work?. Ashoka Center for Economic Policy, Policy Paper, (01).

Cheap imports threaten bicycle industry, Hindu Business Line, 30 August 2019.

Consumer electronics should be excluded from FTAs to boost exports: Report, Business Standard 2019.

Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020.Notification No. 81/2020 - Customs (N.T.) dated the 21st August, 2020.

CUTS International, Mega Regional Trade Agreements and the Indian Economy An Analysis of Potential Challenges and Opportunities, 2015.

Das, R., & Ratna, R. (2014). Perspectives on Rules of Origin Analytical and Policy Insights from the Indian Experience. Palgrave Macmillan.

Department Related Parliamentary Standing Committee on Commerce.2018. A Report on the Impact of Chinese Goods on Indian Industry. Rajya Sabha Secretariat, New Delhi.

Estevadeordal, A., & Suominen, K. 2003. Rules of Origin in the World Trading System. Paper Prepared for the the Seminar on Regional Trade Agreements and the WTO.

Export Import Bank of India, Self-Reliant India: Approach And Strategic Sectors To Focus, Occasional Paper 199, 2020.

Financial Express, Atmanirbhar Bharat not about import substitution; here’s what the Modi’s self-reliant India means, June 2020.

Francis, S. (2015). India’s Manufacturing Sector Export Performance during 1999-2013: A Focus On Missing Domestic Inter-sectoral Linkages (No. 182).

Francis, S. Impact of Preferential Trade Liberalisation on India’s Manufacturing Sector Trade Performance: An analysis of India’s major trade agreements. Institute for Studies in Industrial Development, 2020.

Karmakar, S. (2014). Rulemaking in super-RTAs: implications for China and India (No. 2014/03). Bruegel Working Paper.

Phone makers taking advantage of India's free trade agreement to avoid import duty, Livemint 2019.

Puri, H. S. (2017). India's Trade Policy Dilemma and the Role of Domestic Reform. Carnegie Endowment for International Peace.

Rajeev Kher & Ram. U. Das, An Untold Story of India’s FTAs: An Alternative Narrative, Centre for Regional Trade, Indian Institute of Foreign Trade, Research Policy Paper #01-2019.

Rekha Misra and Sonam Choudhry, Foreign Trade Agreements: An Analysis, Reserve Bank of India Bulletin, September 2019.

Roy, J., & Banerjee, P. (2013). Why Isn't India a Major Global Player? The Political Economy of Trade Liberalization. The Political Economy of Trade Liberalization (November 1, 2013). Robert Schuman Centre for Advanced Studies Research Paper, (2013/84).

Rules of origin: Govt steps up scrutiny of Chinese dumping, Financial Express, 20 June 2020.

Rupa Chanda, RCEP: Implications for Indian Trade & Economy, Contemporary Concerns Study Report (Indian Institute of Management, Bangalore 2017).

Sahoo, P., & Bhunia, A., China’s Manufacturing Success: Lessons for India, Working Paper (Institute of Economic Growth 2014).

Saraswat, V. K., Priya, P., & Ghosh, A. (2018). A note on free trade agreements and their costs. NITI Aayog.

Sikdar, C., & Nag, B. (2011). Impact of India-ASEAN Free Trade Agreement: A cross-country analysis using applied general equilibrium modelling (No. 107). ARTNet Working Paper Series.

Singh, S. (2015). India’s Approach towards Bilateral, Regional and Multilateral Negotiations. CUTS International. Development Paper.

The Economic Survey, Preferential Trade Agreements, Ministry of Finance, 2016.

The Economist Intelligence Unit, FTAs: fantastic, fine or futile? Business views on trade agreements in Asia, 2014.

Vermulst, E. A., Waer, P., & Bourgeois, J. (Eds.). (1994). Rules of Origin in International Trade: a comparative study. University of Michigan Press.

Wignaraja, G. (2011). The People's Republic of China and India: Commercial Policies in the Giants.


Refbacks

  • There are currently no refbacks.


International Journal of Business and Economics is licensed under a Creative Commons Attribution 4.0 International License Based on a work at http://ijbe.ielas.org

Copyright © 2016-2021 International Journal of Business and Economics (IJBE)

ISSN (online) 2545-4137

Disclaimer: Articles on International Journal of Business and Economics (IJBE) have been previewed and authenticated by the Authors before sending for the publication. The Journal, Chief Editor and the editorial board are not entitled or liable to either justify or responsible for inaccurate and misleading data if any. It is the sole responsibility of the Author concerned.