India-UK FTA to include co-equal origin provision; product-specific norms to offer flexibility
TIMESOFINDIA.COM AI generated image
The draft India–UK free trade agreement (FTA) has introduced a 'coequal' rule or product-specific origin norms to offer greater flexibility to specific goods, said people aware of the matter. The rule will allow the producer of a good to meet any of the criteria of origin to claim benefits under the FTA. The origin rules are vital for checking any circumvention of the trade agreement rules and the flow of substandard imports into India.
India's FTA with the UK is different from its earlier trade agreements, which had simple rules of origin linked to the wholly-obtained criterion from the trade partner country, value-added norms, or changes in the tariff heading parameter, which meant transformation of a product leading to a change in its duty classification. However, the rules are getting more complex and offer greater flexibility to specific goods, known as the 'co-equality' of rules. The India–UK FTA will feature the digital exchange of certificates of origin on a self-certification basis for the first time under such a trade accord.
'This deal secures rules of origin to facilitate improved access to both sides. Co-equal rules will allow a producer of a good to meet any of the criteria of origin to claim benefit under the FTA,' said one person aware of the development. Product-specific rules of origin in the current interconnected global supply chains can help to mitigate any misuse of duty concessions given by India, said Bipin Sapra, partner, EY.
The conclusion of FTA negotiations between India and the UK was announced on May 6. The agreement is expected to be signed soon after which it will be made public. It will then be ratified by both countries before coming into force. 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. The chapter on origin rules also provides robust mechanisms for compliance to be checked. 'If risk parameters find an issue in a product, then checks will be carried out,' said another official. Such co-equal origin norms are being considered in the India–EU FTA as well. The EU had suggested some processes related to spun yarn for determining whether textiles are of European or Indian origin to enjoy duty benefits.
India has said that 99% of its exports to the UK will benefit from zero duty and that the FTA opens up significant export opportunities for labour-intensive sectors such as textiles, marine products, leather, footwear, sports goods and toys, gems and jewellery, engineering goods, auto parts and engines, and organic chemicals. As per the UK, the agreement will cut Indian tariffs on 90% of product lines, with 85% of those becoming fully tariff-free within a decade.
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Hans India
35 minutes ago
- Hans India
Retail sector gaining momentum, growth expected to reach 9-10 pc soon: RAI
New Delhi: The Indian retail sector, currently valued at $900 billion, is showing signs of strong recovery and is expected to grow at a faster pace in the coming months, according to the Retailers' Association of India (RAI). The sector, which is currently growing at a rate of 5 per cent, is likely to soon pick up speed and reach a growth rate of 9 to 10 per cent. RAI's CEO Kumar Rajagopalan said that right after the pandemic, the retail sector had bounced back strongly with a 20 per cent growth rate. "However, in the last one year, the growth slowed down to around 5 per cent. Now, with the markets stabilising, consumers spending more, and the right consumer base in place, the sector is once again showing signs of faster growth," he added. Meanwhile, as per RAI's 62nd Retail Business Survey, retail sales across India grew by 7 per cent in May 2025 compared to the same month the previous year. This marks a significant improvement after months of moderate growth ranging between 4 to 5 per cent. Region-wise, southern India led the way with a 9 per cent growth in retail sales in May. Western India followed with 7 per cent, while northern and eastern regions recorded growth of 6 per cent and 4 per cent, respectively, as per the report. Among the different segments, quick service restaurants (QSR) showed the highest growth at 10 per cent. Consumer durables and electronics, along with furniture, also performed well with an 8 per cent rise each. Rajagopalan said this increase shows that people are now more willing to spend, especially on non-essential or discretionary items. Looking ahead, the RAI CEO expressed optimism about the upcoming festive season. He said that the improving consumer sentiment could further boost retail sales and bring the sector closer to double-digit growth in the near future.
Mint
40 minutes ago
- Mint
Running a family business with loans or gifts? Know the tax rules
I have two questions regarding laws around investments, business and loans applicable to an HUF: a) can money be lent to an HUF and the same money can be invested? Will income from such investment be taxed in the HUF's hands while the principal remains debt? b) Can an HUF start a business using gifts or loans? Will clubbing apply? Yes, a Hindu Undivided Family (HUF) can accept loans, and this is one of the most effective ways to introduce funds into the HUF without triggering adverse tax implications—provided the loan is genuine and properly documented. It should clearly state the repayment terms and, if applicable, the interest payable. If an HUF borrows money and invests those funds (for example, in shares, mutual funds, or fixed deposits), any income earned from such investments—such as interest, dividends, or capital gains—is taxable in the hands of the HUF. The original loan continues to be shown as a liability on the HUF's books. Moreover, if the borrowed funds are used in a business or to earn taxable income, the interest paid on the loan can be claimed as a deduction, as long as it meets the standard tax rules for expense eligibility. However, caution is advised when the loan is from members of the HUF. If the loans are frequent, large, interest-free, or never repaid, the Income Tax Department may recharacterize such funds as indirect gifts. This could result in clubbing of income—i.e., taxing the income from such funds in the hands of the lender member instead of the HUF. To second the second question: Yes, an HUF can own and operate a business. It is recognised as a separate legal entity under Indian law. However, it cannot engage in professions or services that depend on personal skills or qualifications—since it is not a natural person. For example, an HUF cannot be a lawyer or a doctor. When it comes to starting a business, the source of funds becomes crucial from a tax perspective: Gifts: If the business is funded through gifts from members or third parties, the ₹ 50,000 threshold under Section 56(2)(x) of the Income Tax Act applies. Since the HUF has no 'relatives' under the gift tax definition, even gifts from members may be taxable if the value exceeds ₹ 50,000 in a year. Loans: Loans from members or outsiders are permissible and preferable, as long as they are properly documented. Loans don't attract tax liability for the HUF as long as the transaction is genuine and repayable. Member's Personal Funds or Assets: If a member—including the Karta or any coparcener—contributes personal funds or assets to start or run the HUF business, clubbing provisions under Section 64(2) of the Income Tax Act come into play. This means that any income generated from such funds may be taxed in the hands of the member, not the HUF. This clubbing continues even if the funds are converted into another form or reinvested. Given these legal and tax implications, funding a business through properly structured loans is generally more tax-efficient and compliant than using gifts or personal contributions from members. Documentation and intention must be clear to avoid income being clubbed back to the contributor. CA Vijaykumar Puri, partner at VPRP & Co LLP, Chartered Accountants
India.com
40 minutes ago
- India.com
Mukesh Ambani, Gautam Adani join hands, set to reshape This Indian Sector, Reliance issues statement, says…
Mukesh Ambani and Gautam Adani (File) New Delhi: In a major development, two of India's richest businessmen, Reliance Industries Limited Chairman Mukesh Ambani and Chairman of the Adani Group Gautam Adani, have announced a partnership in country's fuel sector. The main motive behind the collaboration is to integrate their respective fuel station networks for wider access and improved consumer offerings. It is important to note that this is the second joint business initiative, following Reliance's acquisition of a stake in an Adani Power project in Madhya Pradesh last year. Partnership will 'redefine the auto fuel retail experience': Both Reliance and Adani Group have said that the will 'redefine the auto fuel retail experience for Indian consumers' and help scale the availability of high-quality fuels across the country. As part of the agreement, selected fuel stations operated by Adani Total Gas Ltd (ATGL) will begin selling Jio-bp's high-performance petrol and diesel. Meanwhile, CNG dispensing units from ATGL will be installed at Jio-bp's outlets. The agreement spans both current and upcoming stations from both companies. ATGL, a joint venture between the Adani Group and French energy giant TotalEnergies, operates approximately 650 CNG stations and is a major player in India's city gas distribution (CGD) sector. In contrast, Jio-bp—a collaboration between Reliance Industries and UK-based BP—manages a nationwide network of around 2,000 fuel stations. Jio-bp Statement Sarthak Behuria, Chairman of Jio-bp, said, 'We are united by a shared vision to offer our customers a superior selection of high-quality fuels. Jio-bp has always been committed to delivering an exceptional customer experience, and this partnership allows us to leverage each other's strengths to further enhance the value we provide to India.' Adani Total Gas Statement Echoing the collaborative sentiment, Suresh P Manglani, Executive Director and CEO of Adani Total Gas, commented, 'It is our shared vision to provide a complete range of high-quality fuels at our outlets. This partnership will enable us to leverage each other's infrastructure, thus enhancing customer experience and offerings.' The business relationship between the two conglomerates first took shape last year when Reliance acquired a 26 percent stake in an Adani Power project located in Madhya Pradesh. As part of that deal, Reliance secured 500 MW of electricity from the plant for captive consumption.
