Introduction: Indian Customs Law, CAROTAR and the Road to the India–UK CETA
India’s engagement with preferential trade is administered through a layered statutory architecture. The Customs Act, 1962 supplies the operational machinery of importation — assessment, exemption and enforcement — with Section 25 empowering the Central Government to exempt goods from duty, the instrument through which every free trade agreement’s tariff concessions are ultimately delivered. The Customs Tariff Act, 1975 houses the rate structure, and Section 5(1) thereof authorises the framing of rules for determining whether goods are entitled to a preferential rate under a trade agreement — the statutory home of every set of Rules of Origin India has notified. The scheme is deliberate: the trade agreement creates the bargain between States; the Section 5 rules translate its origin disciplines into domestic law; and the Section 25 notification carries the actual rates into the assessment of each bill of entry.
Sitting across all of this is a uniquely Indian innovation. By the Finance Act, 2020, Parliament inserted Section 28DA into the Customs Act, and the Board framed the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 — CAROTAR. CAROTAR responded to a practical anxiety: that preferential certificates were being treated as conclusive, allowing third-country goods to ride into India through free trade agreement corridors with minimal processing in the partner country. CAROTAR recast the importer from passive beneficiary to active gatekeeper — obliged to possess sufficient information on origin criteria, to exercise reasonable care, and to accept that a certificate of origin is a starting point of inquiry rather than the end of it. Every origin framework India has notified since must be read against that philosophy, and the India–UK framework discussed in this article extends it further than any predecessor.
The commercial logic of the India–UK Comprehensive Economic and Trade Agreement (CETA), signed at London on 24 July 2025, is not difficult to state. Bilateral trade rose 8.62% to USD 25.12 billion in FY 2025-26, with Indian exports of USD 13.44 billion against imports of USD 11.68 billion — a surplus of USD 1.76 billion in India’s favour. The economies are strikingly complementary: India’s strengths in labour-intensive manufacturing — textiles and clothing, leather and footwear, gems and jewellery, marine products, engineering goods, auto components, organic chemicals and pharmaceuticals — map onto the United Kingdom’s demand profile, while the UK’s strengths in premium consumer goods, spirits, advanced engineering and services map onto India’s expanding consumption base. The CETA promises duty-free access for approximately 99% of India’s exports to the UK, and is accompanied by a Double Contribution Convention on social security that materially improves the economics of posting Indian professionals to the UK. It is India’s first comprehensive trade agreement with a major European economy — a signal, as much political as commercial, of the direction of Indian trade policy.
The CETA also completes a recognisable arc. India’s modern FTA programme has moved with unusual speed: the India–Mauritius CECPA (2021), the India–UAE CEPA (in force May 2022), the India–Australia Economic Cooperation and Trade Agreement (in force December 2022), the India–EFTA Trade and Economic Partnership Agreement (in force October 2025), and the India–Oman CEPA (signed December 2025; in force 1 June 2026). Beyond these, negotiations with the European Union and New Zealand are reported at or near conclusion, a bilateral trade agreement with the United States is under active negotiation, the ASEAN–India Trade in Goods Agreement is undergoing review, and the India–Australia Comprehensive Economic Cooperation Agreement (CECA) — the successor to ECTA — has been expressly fast-tracked. The India–UK CETA, entering into force on 15 July 2026, is therefore not an isolated event but a waypoint in a programme of calibrated openness — liberal at the border, exacting on origin.
The Rules of Origin Notified: Key Aspects of the New Framework
By Notification No. 62/2026-Customs (N.T.) dated 3 July 2026 [G.S.R. 560(E)], issued under Section 5(1) of the Customs Tariff Act, 1975, the Central Government has notified the Customs Tariff (Determination of Origin of Goods under the Comprehensive Economic and Trade Agreement between India and the United Kingdom of Great Britain and Northern Ireland) Rules, 2026. The Rules take effect on 15 July 2026, the same day the CETA enters into force. A companion Notification No. 24/2026-Customs of the same date, issued under Section 25(1) of the Customs Act, 1962, exempts the temporary admission of specified animals under the Agreement. The substantive features of the origin framework may be grouped as follows.
2.1 The originating-goods trilogy
A good qualifies as originating on one of three bases: it is wholly obtained or produced in India or the UK; it is produced exclusively from originating materials; or it is produced using non-originating materials that satisfy the applicable Product-Specific Rule (PSR) — a change in tariff classification, a Qualifying Value Content (QVC) threshold, or a prescribed manufacturing process, as set out in the Annexure to the Rules (which mirrors Annex 3A to the CETA, drawn on the 2022 Harmonized System).
2.2 Qualifying Value Content
The standard QVC thresholds are 40% of the ex-works price or 45% of the FOB value under the build-down method, and 35% under the build-up method. Build-down measures value by deducting non-originating materials from the value of the good; build-up aggregates the value of originating materials. The Rules prescribe the includible and excludible cost elements — freight, insurance, packing, transport, customs brokerage, non-refundable duties, and waste or spoilage — so that the arithmetic is not left to improvisation. Certain sectors carry elevated thresholds: the chapter-level rule for vehicles (ex Chapter 87) demands 45%/50%/40%, while motor cars of heading 8703 are governed by a pure value test of not less than 35% with no classification-change limb at all.
2.3 From Certificate of Origin to Proof of Origin
Conceptually the most significant departure is the movement from the familiar ‘Certificate of Origin’ to a broader ‘Proof of Origin’, and the framework is notably asymmetric between the Parties. For imports into India, the claim rests on an origin declaration made by a UK producer or exporter. For imports into the UK, the importer may rely on any of three bases: an origin declaration by the Indian producer or exporter; a Certificate of Origin issued by an Indian competent authority; or the importer’s own knowledge that the goods originate in India — a route with no Indian mirror. A proof of origin is valid for twelve months; it may be issued retrospectively (marked as such, with reasons recorded, and with no outer time-limit prescribed); and an expired proof may still support a claim on force majeure or other valid reasons. Third-party invoicing is permitted, subject to the origin and non-alteration disciplines.
2.4 De-minimis, cumulation and non-Party operations
The tolerance rule is calibrated by chapter of the Harmonized System rather than stated as a single figure: non-originating materials that fail the classification-change test may be disregarded up to 7.5% (Chapters 1–3, 5–6, 10, 14 and 16) or 12.5% (Chapters 4, 7–9, 11–13, 15–24 and 25–98) of the net weight or value of the good, provided all other requirements are met. Bilateral cumulation permits inputs originating in one Party to be treated as originating in the other when used in further production — a genuine planning lever for integrated supply chains. The Rules also permit certain minor operations — labelling, marking, packaging, bottling and similar acts not amounting to production — to be undertaken in a non-Party, facilitating the use of third-country logistics hubs, provided the goods remain under customs supervision in transit.
2.5 Verification, temporary suspension and records
The verification architecture is the framework’s centre of gravity. Customs authorities of the importing Party may verify origin claims and supporting documentation directly from the exporter or producer, or from the issuing authority — a direct-interaction model without precedent in most of India’s earlier agreements. Preferential treatment may be temporarily suspended pending verification, but only within a defined fence: the goods must have been subjected to verification on at least two separate occasions, each resulting in denial of preference. During suspension, duty may be paid at the normal rate or security furnished; preference — with refund of any excess — is restored where compliance is subsequently established. Records substantiating origin must be maintained for up to five years, an obligation that extends even to the designated authority issuing Certificates of Origin in India. Late claims for preference are permitted up to one year from importation (or a longer specified period), with refund of excess duty where the goods would have qualified at the time of import; and, on the UK side, no proof of origin is required for imports not exceeding GBP 1,000 or where specifically waived.
What Indian Importers and UK Exporters Must Be Mindful Of
The first discipline is conceptual: the preferential rate under the CETA is a conditional entitlement, not an automatic one. From 15 July 2026, every claim stands or falls on the origin file behind it. Several specific areas deserve attention.
3.1 The CAROTAR interplay and a heavier burden of proof
Section 28DA of the Customs Act and the CAROTAR discipline of importer due diligence continue to frame every preferential claim into India. But the CETA Rules go further than CAROTAR in material respects — the elaborate verification machinery, the five-year record obligation reaching even the issuing authority, and the direct exporter-to-foreign-customs interaction model together demand that origin documentation be maintained as a live, audit-ready file rather than assembled after a query arrives. How far the jurisprudence developed under CAROTAR and earlier agreements will carry over to the distinct language and structure of these Rules is an open question that the first wave of verification proceedings will test; prudent operators will not assume continuity.
3.2 The asymmetry is real — and cuts both ways
UK importers enjoy the importer’s-knowledge route and a GBP 1,000 de-minimis exemption; Indian importers enjoy neither. Indian exporters should therefore not assume reciprocity of process: a UK-side verification may reach back to the Indian producer directly, and the producer must be prepared to substantiate the declaration without exposing commercially sensitive cost structures beyond what the inquiry legitimately requires. Conversely, UK exporters selling into India should recognise that their origin declaration is the sole foundation of the Indian importer’s claim — a defect in the declaration is the importer’s problem at assessment, and contractual allocation of that risk deserves explicit drafting.
3.3 Sector traps: the conjunctive test, the bottling rule and the automotive thresholds
Three product families illustrate how the PSRs bite. For textiles and clothing (Chapters 50–63), the rule is uniformly ‘CTH and Standard QVC’ — a conjunctive double test. Converting imported fabric into a garment of a different heading satisfies the classification limb, but simple cut-and-sew operations may still fail the value limb; both must be modelled and documented. For spirits of heading 2208, the general rule is likewise conjunctive, though whiskies (2208 30) and gin in containers of two litres or less carry the lighter classification-only rule; critically, mere bottling from bulk — even with permissible dilution — does not confer origin, so third-country bulk spirit bottled in the UK will not qualify. For automotives (Chapter 87), the elevated value thresholds leave a narrower margin than the standard band, and assemblers dependent on imported components should map the bill of materials line-by-line — while noting that bilateral cumulation can convert a UK-origin input into originating content for an Indian-assembled vehicle.
3.4 The rate instrument is separate — and must be confirmed
Notification No. 62/2026-Customs (N.T.) prescribes origin rules only; it carries no rates of duty. The preferential rates of basic customs duty on goods imported from the UK will be given effect by a separate rate-of-duty notification under Section 25 of the Customs Act, 1962 — the standard mechanism for every Indian FTA (the India–UAE CEPA’s Notification No. 22/2022-Customs being the familiar exemplar). Until that instrument issues and each tariff line is confirmed against it, importers should budget landed cost on the conservative footing, and in every case on the footing that a defective origin file means the full MFN rate applies.
3.5 Housekeeping that decides disputes
Finally, the unglamorous disciplines: align the origin declaration, commercial invoice and customs entry so the file is internally consistent; validate sourcing against the de-minimis band for the relevant chapter; elect the easier limb where a PSR is disjunctive; preserve traceability records — for both originating and non-originating materials — for the full five years; and treat any request for verification as a matter for considered, coordinated response rather than reflexive disclosure. Experience under earlier agreements teaches that origin disputes are rarely lost on the law; they are lost on the file.
4. Concluding Remarks: The Corridor Ahead — and the Company It Keeps
The India–UK CETA arrives with the wind at its back. A corridor already worth USD 25.12 billion, growing at nearly 9% annually and running a surplus in India’s favour, now acquires duty-free coverage across virtually the entire Indian export basket, a social-security convention that changes the arithmetic of professional mobility, and — in the Rules of Origin examined above — a compliance framework designed to ensure the preferences flow to genuinely bilateral production. If the early years of the UAE and Australia agreements are any guide, the combination of deep tariff coverage and complementary trade baskets should translate into visible export growth within the first full year, with labour-intensive sectors the earliest beneficiaries. The realistic ambition of doubling corridor trade over the coming decade does not appear extravagant.
The CETA should also be read alongside what India is negotiating now. In the very week these Rules take effect, the third India–Australia Annual Summit at Melbourne (9 July 2026) saw both Prime Ministers commit to fast-track the Comprehensive Economic Cooperation Agreement — the successor to ECTA, eleven negotiating rounds deep — alongside agreements on uranium supply and critical-minerals cooperation; notably, from 1 January 2026, all Australian tariff lines are already duty-free for Indian exports under ECTA’s schedule. Negotiations with the United States toward a bilateral trade agreement continue in parallel, with the outcomes of the UK and UAE templates plainly informing both sides’ expectations. The pattern across these negotiations is consistent, and it is the central lesson of this article: India is prepared to liberalise at the border on a scale unthinkable a decade ago, but the price of admission is origin discipline — rigorous, verifiable, and documented. The India–UK CETA’s Rules of Origin are the most developed expression of that bargain to date, and businesses that internalise them early will be best placed not only in this corridor, but in every corridor India opens next.
