India's Free Trade Agreements and Their Impact on Pharma Export Costs
For international buyers, import duties on pharmaceutical products represent a real cost — added to the product price, freight, and insurance, they determine your landed cost and ultimately your commercial viability. India's growing network of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) can reduce or eliminate duties on Indian pharmaceutical exports to partner countries, directly lowering your procurement cost.
This post gives a practical overview of the FTA landscape relevant to pharmaceutical buyers.
Note: Duty rates and FTA eligibility change over time as agreements are renegotiated or implemented. Always verify current rates with your customs broker or the relevant authority before finalising procurement decisions.---
Why FTAs Matter for Pharma Procurement
Standard (MFN — Most Favoured Nation) import duties on pharmaceutical products vary widely by country. In some markets, MFN duties on finished pharmaceutical formulations can range from 0% (many developed markets) to 5–15% or higher (some developing markets). On a large volume order, even a 5% duty reduction represents significant savings.
Under an FTA, goods that qualify as originating in India (meeting the FTA's Rules of Origin requirements) attract a preferential (reduced or zero) duty rate instead of the MFN rate.
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India's Key FTAs Relevant to Pharma Buyers
India-UAE Comprehensive Economic Partnership Agreement (CEPA)
India and the UAE signed a CEPA in February 2022, which came into force in May 2022. For pharmaceutical products:
- Many finished pharmaceutical formulations (HS Chapter 30) attract reduced or zero duty under the India-UAE CEPA - The agreement covers a staged tariff reduction schedule — some products achieved zero duty immediately, others follow a phase-down schedule
Relevant for: UAE-based importers and those using the UAE as a re-export/distribution hub for broader Middle East markets. Reference: Ministry of Commerce India / DGFT for the official tariff schedule under India-UAE CEPA.India-ASEAN Free Trade Agreement (AIFTA)
India's FTA with ASEAN (in goods) covers member states including Malaysia, Thailand, Indonesia, Philippines, Vietnam, Singapore, Myanmar, Cambodia, Laos, and Brunei. Under AIFTA, many pharmaceutical products receive preferential tariff treatment.
Relevant for: Buyers in Southeast Asian ASEAN member states. Reference: ASEAN-India FTA tariff schedules are publicly available through ASEAN and DGFT.India-Sri Lanka Free Trade Agreement (ISLFTA)
India's bilateral FTA with Sri Lanka provides preferential access for a range of goods. Pharmaceutical products have featured in this agreement.
India-Mauritius CECPA
The Comprehensive Economic Cooperation and Partnership Agreement with Mauritius (2021) includes provisions for goods trade, potentially relevant for buyers using Mauritius as a routing or re-export base.
India-Japan CEPA / India-South Korea CEPA
Both agreements provide preferential tariff access for specified goods — check the relevant tariff schedule for pharmaceutical chapter coverage.
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Rules of Origin: The Critical Qualifier
To benefit from FTA preferential rates, the pharmaceutical product must qualify as originating in India under the FTA's Rules of Origin (ROO). For pharmaceutical formulations, this typically requires:
- The product is manufactured in India (which is standard for Indian-sourced pharma) - The manufacturing process meets the specific transformation criteria in the ROO (e.g., change in tariff classification, regional value content threshold, or specific process requirements)
Your supplier (and ultimately your customs broker in the importing country) must confirm that the specific product qualifies under the applicable ROO before you claim the preferential rate.
Document required: A Certificate of Origin (CO) in the FTA-specific format, issued by an authorised body in India (FIEO, Chambers of Commerce, or specific agency as designated by the FTA). Without the correct CO, the customs authority in the importing country will not grant the preferential rate.---
What to Do as a Buyer
1. Identify whether your country has an FTA with India (check your country's trade ministry or customs authority) 2. Verify whether the specific HS codes for your products are covered under the FTA with preferential rates 3. Confirm ROO compliance with your Indian supplier and customs broker 4. Request the correct format Certificate of Origin from your supplier for FTA-qualifying shipments 5. Present the CO to your customs authority at import to claim the preferential rate
Bharat Medex can advise on Certificate of Origin availability and the relevant issuing authority for your FTA-qualifying shipments.
Contact us to discuss FTA-related documentation for your country.
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