'If you import goods from China and send them to the US, you will have to pay heavy taxes', Commerce Ministry warns domestic industry
Export: The Commerce Ministry said that if products are purchased from high-duty countries like China and sent from India to America without adequate value addition, then it will be considered transshipment. The ministry says that this is against the US rules of origin. This can cause losses to Indian exporters and heavy taxes or sanctions can be imposed on them.
The Commerce Ministry firmly advised Indian exporters to strictly abide by the rule of origin while exporting goods to America. The ministry stated that in case of goods being procured from countries of high duties like China and shipped from India to America with little value addition, then these will be treated as transshipment.
Transshipment is importing goods from another country into your country and then exporting them directly to another nation with little change or value addition (raising the price of the item). The ministry maintains that transshipment is in contravention of the US rules of origin. This can hurt Indian exporters and they could be taxed heavily or maybe even restricted. According to a ministry official, the ministry will work closely with the industries in this matter to ensure that Indian exporters do not suffer any loss.
In a meeting organized by the ministry on May 2, Special Secretary and Chief Negotiator of India-US Trade Agreement (BTA) Rajesh Agarwal talked to the exporters on this issue. In this, the ministry explained to the exporters about the US customs rules and the conditions of fundamental transformation i.e. actually giving a new form, use or identity to a product. They were assured that work will be done towards clarifying and fixing the rules of value addition so that the industries do not have any confusion about it. Exporters will have to either ensure that the goods are completely made in India or there is such a transformation in it that its name, use or form changes, only assembly, packaging or labeling will not be enough.
