Importing from India: DCTS v. FTA

Since 15th July UK businesses have been able to utilise the UK-India Comprehensive Economic Trade Agreement (CETA) when trading goods and services between the UK and India.  

For UK exporters, this is their first opportunity to access the Indian market at a preferential rate of duty.  However, UK importers have already been able to utilise a preferential rate of duty when importing eligible Indian goods through the Developing Countries Trading Scheme (DCTS).   

So, how does the new trade agreement impact the DCTS and what is the best option for you? 

Trading under either the DCTS or the FTA 

Due to the new trade agreement, India will eventually graduate from the DCTS meaning UK importers can only claim preference under the Comprehensive Economic and Trade Agreement.  However, India will only graduate following a 2-year transition period with the transition period allowing importers to continue to utilise the DCTS until 15th July 2028.  

To claim preference under the DCTS, businesses must continue to follow the DCTS rules of origin and provide either an origin declaration or Form A.  Whereas, to claim preference under the trade agreement, importers will have to rely upon either an origin declaration, certificate of origin, or importer's knowledge.  

Using the DCTS and CETA correctly 

Importantly, the DCTS and FTA proofs of origin are not interchangeable.  As such, as an importing business you need to be very clear on which agreement you are utilising, the relevant rules of origin under that agreement and, how you need to claim preference. 

Prior to moving the goods, the UK importer should consult their supplier and the UK Trade Tariff to determine: 

1. Whether the standard rate of duty is higher than the preferential rate of duty that can be utilised under either agreement.  For example, if the standard rate of duty for your product is 0% then you will receive no benefit from claiming preference under either agreement 

2. If the preferential rates of duty are lower than the standard rate then: 

   • Which agreement offers the best rate of duty; and 

   • Under which agreement can your supplier ensure that you meet the appropriate rules of origin.   

3. Finally, ensure that you obtain the necessary evidence and appropriate documentation to claim preference under the relevant agreement.  

Conclusion 

For the next two years, UK importers have the ability to import eligible goods from India under either the DCTS or the trade agreement.  However, with this flexibility comes the necessity to ensure that you fully understand which agreement you are utilising.   

It is imperative that you obtain the correct documentation (Form A, declaration of origin, certificate of origin etc.) and that the agent who is importing the goods on your behalf, is aware under which agreement you are accessing preference.  

If you have any questions on the DCTS, trading under a FTA, or wider queries about international trade, don't hesitate to get in touch at [email protected]