Preferential Tariff

FTA / RoO

A reduced or zero import duty available to goods qualifying for FTA or GSP treatment.

Sources

1. CBIC — Customs (Administration of Rules of Origin under Trade Agreements) Rules, 2020 (CAROTAR), Notification No. 81/2020-Customs (N.T.) taxinformation.cbic.gov.in accessed 23 September 2026

India’s CAROTAR rules define the term precisely: “Preferential tariff treatment” means “allowing preferential rate of duty to goods imported into India in accordance with a trade agreement”, and “preferential rate of duty” is the “rate at which customs duty is charged in accordance with a trade agreement”. The rules, in force since 21 September 2020, apply “to import of goods into India where the importer makes claim of preferential rate of duty in terms of a trade agreement” — the claim, not the agreement, is what triggers them.

What CAROTAR does and does not settle. These rules govern how an importer into India claims and proves preferential origin. They do not define the substantive origin criteria — cumulation, value content, tariff shift, wholly obtained — which are set by each trade agreement’s own Rules of Origin. CAROTAR says so itself at rule 8(3): “In the event of a conflict between a provision of these rules and a provision of the Rules of Origin, the provision of the Rules of Origin shall prevail to the extent of the conflict.” So read the agreement for what qualifies, and CAROTAR for what India requires of the importer who claims it.

Related terms

• Absorption Principle
• Bilateral Cumulation
• Certificate of Origin
• Change in Tariff Classification
• Cumulation
• Diagonal Cumulation

From the AJG lexicon archive (July 2026).