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Country of Origin Requirements under Indian Law

Around mid-2020, the government of India directed e-commerce platforms to tag country of origin requirements (COO) on all items sold on the platforms. Since then, the Government e-Marketplace (GeM) portal, which is used by government departments for public procurement, has also made it mandatory for sellers to provide the country of origin while registering new products. The major e-commerce platforms then sought time to implement these changes. It was after all a humongous task as this had to be made compulsory for all the sellers on the platform. Country of origin requirements were originally drafted to ensure that countries who have entered into bilateral trade agreements or free trade agreements (FTAs) get preferential rates of duty incase goods are imported from these countries. Further, this also works to prevent any third country taking advantage of the preferential duties agreed between the two countries by routing the goods through an FTA partner country.

The recent enforcement of COO however coincided with rising border tensions with China and the Government's push towards an ‘Atmanirbhar Bharat’ (self sufficient India). While the government did notify the Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR) under the Customs Act, 1962, the changes and implementation of the COO aspects are not just restricted to customs rules but have also been made part of consumer protection initiatives. The introduction of CAROTAR garnered much attention. However, two other legislations which also include COO requirements largely skipped attention. The two other major legislations which serve to drive this COO initiative are (i) the Consumer Protection (E-commerce) Rules, 2020 (E-commerce Rules); and (ii) Legal Metrology (Packaged Commodities) Rules, 2011 (LM Rules).

Consumer Protection (E-Commerce) Rules, 2020 under the Consumer Protection Act, 2019

The E-Commerce Rules require:

  1. All e-commerce entities to mention the name and details of the importer for the imported goods or services;

  2. All sellers offering goods or services through a marketplace entity to provide certain information to the e-commerce entity so it can be displayed on its platform or website. This includes all relevant details about the goods and services being offered for sale by the seller, including the country of origin, as well as name and details of the importer.

  3. Marketplace entities must ensure that the details provided by the sellers under (2), are displayed prominently, and in a clear and accessible manner, to users of its platform.

The E-Commerce Rules inter alia apply to all goods and services bought or sold over digital or electronic networks, including digital products.

The term ‘country of origin’ has not been defined under the Consumer Protection Act, 2019 or the E-Commerce Rules. For physical goods, which are imported, the country of origin could be interpreted to be the place of manufacture of the goods. However, there is no guidance on what the ‘country of origin’ would be for software products that are essentially software services. Further, given that the software may be developed by being outsourced to multiple countries, and the delivery to the end consumer may actually happen through different servers, it may be difficult to ascertain a particular ‘country of origin’. However, in such cases the software provider’s ‘country of origin’ can be listed as the country in which the software provider is incorporated. This is subject to guidance by e-commerce platforms. I suggest if you are a seller, then it may be useful for you to check with the specific e-commerce marketplace if a situation arises where it is difficult to ascertain the country of origin.

Legal Metrology (Packaged Commodities) Rules, 2011

Under the LM Rules the following declarations are to be provided on every package (i) the name and address of the manufacturer, (ii) the name of the country of origin or manufacture or assembly in case of imported products, (iii) the net quantity of the commodity contained in the package, etc., (together Declarations). These Declarations are only applicable to packaged commodities, which are defined under the Legal Metrology Act, 2009 as ‘a commodity which without the purchaser being present is placed in a package of whatever nature, whether sealed or not, so that the product contained therein has a predetermined quantity.’ Therefore, if your product comes in a package then it will be required to adhere to these instructions.

Other Laws

Apart from the laws mentioned above, the Department of revenue has notified CAROTAR as mentioned earlier. These have been made applicable to import of goods in India where the importer makes a preferential claim for duty pursuant to any trade agreement. CAROTAR mandates that minimal processing should happen in the FTA country so the final goods origination can be said to be originating from that country.

Even the Trademarks Act, 1999 and Geographical Indications of Goods (Registration and Protection) Act 1999 also contain provision with respect to providing indication with respect to origin or goods. These legislations empower the central government to issue notification requiring certain goods to indicate the where the goods are made or produced. This also applies to goods which are manufactured within India in certain circumstances. Of course the objective under these legislations are different. They are intended to distinguish between goods and prevent conflict with existing marks and avoid passing off or falsification of GI marks and not an immediate outcome of the events in 2020.

Disclaimer: The link to the legislations embedded in this post as provided on an as is basis. I make no representation regarding the accuracy of information provided on any third-party website.


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