Harnessing ASEAN-India FTA Benefits for Cheaper Imports from Thailand

Importing from Thailand into India can be significantly more cost-effective when you correctly use the ASEAN-India Free Trade Agreement (AIFTA). The keyword is correctly-because FTA savings don’t come from paperwork alone. They come from aligning four things end-to-end:

1. Right HS classification

2. Product eligibility under the FTA rate schedule

3. Rules of Origin compliance (how/where the product is made)

4. Clean documentation + claim process at Indian Customs

This guide is a practical playbook to help you reduce duty costs while keeping your shipments compliant and clearance-friendly.

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1) What AIFTA Actually Reduces (And What It Doesn’t)

AIFTA’s primary benefit is preferential customs duty on eligible goods that qualify as “originating” under the agreement.

In most cases, importers see savings mainly through:

• Reduced Basic Customs Duty (BCD) (the big lever)

• Reduced downstream impact where other charges are computed with reference to customs duties (depending on the product and duty structure)

What AIFTA usually does not eliminate by itself:

• Domestic taxes applicable on import (which depend on your product category and India’s tax framework)

• Compliance requirements, import licenses, product standards, labeling rules, etc.

Practical takeaway: AIFTA is a duty-reduction tool, not a shortcut around compliance.

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2) The 4-Part Formula to Get FTA Savings Without Delays

If you only remember one thing, make it this:

FTA savings are approved when “classification + eligibility + origin + documentation” all match.

If even one element is off-wrong HS code, incorrect origin criterion, missing consignment proof-preferential duty may be denied and your shipment can face delays, queries, or post-clearance scrutiny.

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3) Step 1: Start With the HS Code (Because Everything Else Depends on It)

Before you talk to suppliers about certificates, confirm your India-side HS classification.

Why this matters:

• The preferential rate you’re trying to claim is tied to the HS code

• Rules of origin can vary by HS code (especially if product-specific rules apply)

• Even small description differences can shift classification

Quick checklist for importers

• Confirm the HS code at the 8-digit level used in India

• Lock a consistent product description that matches:

  • purchase order

  • invoice

  • packing list

  • certificate of origin

  • bill of entry

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4) Step 2: Confirm Your Product Is Eligible for AIFTA Concessions

Not all products get the same tariff benefit under FTAs. Some may have:

• Partial concessions

• Long phase-down schedules

• Sensitive treatment

• Exclusions

So, confirm your specific HS code’s preferential rate and any conditions that may apply.

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5) Step 3: Understand Rules of Origin (ROO) in Plain Language

To get AIFTA benefits, goods must qualify as originating in Thailand (or another eligible ASEAN party), based on how they’re produced and what inputs are used.

There are typically three broad ways goods qualify:

A) Wholly Obtained (WO)

These are products that are entirely obtained/produced in the exporting country (examples can include certain agricultural, mineral, or natural products depending on the detailed definitions).

On the certificate, this is typically indicated as “WO.”

B) Not Wholly Produced: The Common Rule (RVC + CTSH)

For many manufactured products, the typical qualification route is:

• Minimum regional content threshold, and

• A tariff classification change requirement for non-originating inputs

In practice, many products qualify if:

• AIFTA content is at least 35% of FOB value, and

• Non-originating materials undergo a change in tariff sub-heading (CTSH)

Think of it like this:

• You can use some non-ASEAN inputs, but not too much, and the manufacturing must be substantial enough that the classification meaningfully changes.

C) Product-Specific Rules (PSR)

Some HS lines have product-specific origin rules that override the general rule. This is common in sensitive or complex product categories.

Practical takeaway: Don’t assume the same origin logic applies to every product. Confirm whether your HS line relies on a PSR.

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6) Cumulation: A Smart Way to Make Products Qualify

AIFTA includes the concept of cumulation, which can be powerful for Thailand-based manufacturers who source inputs from multiple ASEAN countries.

What it means in practice:

• If a Thai supplier uses qualifying originating materials from another AIFTA party, those inputs can be treated as “originating” when calculating origin.

Why it matters: Cumulation can help manufacturers meet the required regional content threshold without changing the final product or compromising on components.

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7) What Does Not Count as “Originating” Work

A common compliance pitfall is assuming that light processing in Thailand makes the product “Thai origin.”

Under typical FTA frameworks, minimal operations (like simple packing, labeling, repacking, basic mixing, or similar low-value steps) do not confer origin on their own.

Practical takeaway: If your product is basically “imported into Thailand and repacked,” your FTA claim is high-risk.

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8) Step 4: Direct Consignment Matters More Than People Expect

Even if the product qualifies by origin, you still need to meet consignment/transport conditions.

The cleanest approach is:

• Ship directly from Thailand to India, with documentation that supports the route.

If your shipment is routed through a non-AIFTA country for transshipment or storage, you generally need to ensure:

• the transit is justified by geography/logistics,

• the goods do not enter commerce there, and

• the goods are not processed beyond what is needed to keep them in good condition (typically unloading/reloading or preservation).

Operational tip: If you expect transshipment (e.g., via a major hub), instruct your forwarder in advance to preserve a documentation trail that supports compliant transit.

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9) Step 5: Certificate of Origin “Form AI” - Get It Right Every Time

To claim preferential tariffs under AIFTA, the proof document is typically the Certificate of Origin (C/O) Form AI.

What “good” looks like (importer-side checklist)

Before the cargo departs Thailand, verify the certificate includes:

• exporter details (matching your supplier’s legal name/address)

• consignee details (matching your importer entity)

• transport details and route (as far as known)

• clear goods description + package details

• the HS number used by the importing country

• FOB value

• invoice number/date reference where applicable

• the correct origin criterion (e.g., “WO” or the relevant qualifying statement)

• proper stamps/signatures, no unauthenticated alterations

• correct tick-boxes where relevant (such as third-country invoicing, back-to-back CO, cumulation)

Practical tip: Many import issues come from “small mismatches”-HS code mismatch, invoice mismatch, or unclear origin criterion. Build a pre-shipment document review step into your SOP.

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10) Step 6: Claiming Preference in India Requires Importer Due Diligence

Claiming preferential duty is not only the exporter’s job. Under India’s framework, the importer must be able to demonstrate that the goods meet the origin criteria and must keep supporting information ready.

What to operationalize as an importer

• Claim the preferential rate correctly at the time of filing your import documents

• Ensure certificate details are captured accurately

• Maintain an internal “origin file” (more on this below)

• Be ready to respond to customs queries with a clear audit trail

Practical mindset: Don’t treat Form AI as a standalone paper. Treat it as the “cover page” of your origin story.

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11) Build an “Origin Dossier” for Repeat Imports (This Is Where Real Savings Scale)

If you import regularly from Thailand, build a repeatable compliance pack per supplier + HS code. This makes every next shipment smoother.

What to include in your origin dossier

• Final HS classification (internal note + reasoning)

• Supplier declaration of origin route (WO / RVC+CTSH / PSR)

• Basic bill of materials (high level is often sufficient for importer records)

• Manufacturing process summary (what is done in Thailand)

• Cost/value summary to support regional content logic (as appropriate)

• Sample Form AI template filled correctly (for future consistency)

• “Direct consignment” routing instructions for your forwarder

• A master document checklist:

  • invoice

  • packing list

  • BL/AWB

  • Form AI

  • insurance certificate (if applicable)

  • any product compliance certificates (if applicable)

Add a contract clause (highly recommended)

In your PO or supply agreement, include:

• supplier obligation to provide a valid Form AI

• supplier obligation to support verification if authorities request clarification

• responsibility for costs arising from incorrect origin documentation (commercially negotiated)

This turns “FTA compliance” into a managed process, not a recurring fire drill.

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12) Common Mistakes That Kill AIFTA Savings

Here are the issues that most often lead to denial or delay:

• HS code mismatch between Form AI and Bill of Entry/invoice

• Wrong or vague origin criterion (Box 8 not aligned to how goods qualify)

• Certificate has unauthenticated corrections/alterations

• Goods shipped via a route that breaks direct consignment conditions

• Supplier uses mostly non-ASEAN inputs and cannot support regional content threshold

• Product only undergoes minimal operations in Thailand

• Third-country invoicing scenario exists but is not properly indicated/documented

• Importer claims preference but cannot provide supporting origin information when asked

Rule of thumb: If you can’t explain “why this is originating” in 2-3 clear sentences backed by documents, your claim is fragile.

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13) A Simple Way to Estimate Savings Before You Commit

Before you decide to pursue AIFTA for a product, do a quick commercial check:

1. Identify your current normal duty (non-preferential) scenario

2. Identify the preferential duty under AIFTA for that HS code

3. Estimate savings on:

   • Basic Customs Duty difference

   • Any dependent charges impacted by that duty (varies by structure)

Why this matters: This helps you decide if it’s worth investing time in origin documentation and supplier alignment.

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14) A Practical Implementation Timeline (For First-Time Users)

If you’re starting from scratch, this workflow is realistic:

Week 1: Setup

• confirm HS code + product eligibility

• align with supplier on origin qualification route

• create document templates and a “pre-shipment doc review” SOP

Week 2: Trial shipment discipline

• request Form AI draft early

• validate route/consignment plan

• ensure invoice/packing list/HS/origin criterion alignment

Week 3 onwards: Scale

• build your origin dossier per supplier and HS code

• standardize everything (same templates, same checks, same process)