How to pay zero custom duties

It is a very important factor for a business to reach out to the customers globally and for that you need to think beyond the border lines.

So one of the ways to offer products at competitive rates while keeping profits margins intact is lowering the cost of imported products. So how can it be done? – Answer is exploring Free Trade / Preferential Trade Agreements (FTA/PTAs) for import of products from outside India.

What are Free-Trade / Preferential Trade Agreements?

FTA/PTAs are arrangements between two or more countries or trading blocs that primarily agree to reduce or eliminate customs tariff and non-tariff barriers on substantial trade between them. FTAs, normally cover trade in goods (such as agricultural or industrial products) or trade in services (such as banking, construction, trading etc.)

Why are FTAs signed between countries?

Countries negotiate Free trade Agreements for a number of reasons:

  • Free trade means that countries can import and export goods without any tariff barriers or other non-tariff barriers to trade.
  • Exporters prefer FTA because they get preferential treatment over non-FTA member country competitors. For example in the case of ASEAN, ASEAN has an FTA with India but not with Canada. ASEAN’s custom duty on leather shoes is 20% but under the FTA with India it reduced duties to zero. Now assuming other costs being equal, an Indian exporter, because of this duty preference, will be more competitive than a Canadian exporter of shoes. Secondly, FTAs may also protect local exporters from losing out to foreign companies that might receive preferential treatment under other FTAs.
If you are importing any product from any country do not miss out on exploring the possibility to import zero or at concessional rate of customs duty under Free Trade / Preferential Trade Agreement.

If you are exporting any product to any country do not miss out on exploring the possibility to export under Free Trade / Preferential Trade Agreement so that the importer in other country can import at zero or concessional rate of customs duty.
This blog is authored by Company Secretary Ronak Gupta. He is author of many blogs and runs many websites and youtube channels. His work is dedicated to corporate laws, legal, secretarial, professional services and also in strategy formulations for corporates. Mail him at: csronakgupta23@gmail.com or call at :9910226715

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