AIFTA Rules of Origin (Appendix 1 & 2)

Official Translation and Summary of Pages 8-16 (Circular No. 15/2010/TT-BCT)

ASEAN-India Free Trade Area

Key Compliance Highlights

1
General Origin Criteria: For non-wholly obtained goods, the product must meet a **Regional Value Content (RVC) of \(\ge 35\%\)** of the FOB value AND undergo a **Change in Tariff Sub-Heading (CTSH)** at the 6-digit level.
2
Wholly Obtained Status: Reserved for products purely from one member state, such as plants, live animals, or minerals extracted locally.
3
Insufficient Operations: Processes like packing, simple assembly, cleaning, or labeling do NOT qualify the goods for origin, regardless of tariff classification changes.
4
Accumulation Principle: Materials originating from any AIFTA member state used as input in another member state are treated as originating materials.

Article-by-Article Analysis

Article 1: Definitions (Page 8)

CIF (Cost, Insurance, Freight)

Includes freight and insurance costs up to the port of the importing country.

FOB (Free on Board)

Value when goods pass the ship's rail at the export port, including all costs to that point.

Article 3: Wholly Obtained (Page 9)

Includes natural resources and their derivatives:

Crops, vegetables, and fungi harvested within the territory.
Live animals born and raised in the territory and products derived from them.
Minerals and natural substances extracted from the earth or sea-bed.
Products obtained from hunting, trapping, or fishing within the territory.

Article 4: Not Wholly Obtained Products (Page 10)

Origin is conferred if the final manufacturing stage occurs in the exporting member state and meets:

Calculation Formulas

1. Direct Method (RVC):

\[ \frac{\text{AIFTA Material Cost} + \text{Direct Labor} + \text{Overheads} + \text{Profit}}{\text{FOB Price}} \times 100\% \ge 35\% \]

2. Indirect Method (Non-Originating):

\[ \frac{\text{Value of Non-Originating Materials}}{\text{FOB Price}} \times 100\% \le 65\% \]

Article 7: Minimal Operations (Page 12)

Non-Qualifying Operations:

Drying, chilling, or salting for preservation.
Simple dust removal, sifting, or painting.
Changing of packaging or breaking up bulk.
Bottling, canning, or putting in boxes.
Affixing simple labels or marks.
Simple assembly of parts.

Appendix 2: FOB & Ex-Factory (Page 15-16)

FOB Price Calculation: \[ \text{FOB} = \text{Ex-factory Price} + \text{Other Costs (Inland transport, brokerage, etc.)} \]

Ex-factory Price Calculation: \[ \text{Ex-factory} = \text{Production Cost} + \text{Profit} \]

Production Cost Includes: Raw materials, labor (wages/benefits), and distributed overheads (factory rent, utilities, R&D, patent royalties, and quality testing).