What is a Certificate of Origin? Types and Benefits

For Indian SMEs engaged in international trade, effectively managing the export process is crucial. As an exporter, you face various challenges, from compliance with global regulations to ensuring the timely delivery of goods. One key document that can significantly impact your export operations is the Certificate of Origin (COO).

The meaning of Certificate of Origin certifies the origin of your goods and is required by customs authorities to process your shipment. Understanding the different types of COOs and their importance can help smooth the customs clearance process, reduce costs, and even open up access to new markets with preferential treatment.

This blog will explore the meaning of the Certificate of Origin, the different types of COOs, and how Pazago simplifies the entire process for exporters like you. Keep reading to understand how you can use this document to grow your international trade operations with fewer headaches.

TL;DR

• A Certificate of Origin (COO) verifies the origin of goods and is essential for smooth customs clearance and market access in international trade.
• Two primary types of COOs are Preferential (for tariff reductions under trade agreements) and Non-Preferential (the standard for goods not covered by trade agreements).
• Correct documentation and the proper COO format provide benefits such as tariff preferences and export incentives, while ensuring compliance with international trade regulations.
• The process for obtaining a COO can be done in person or online, with the online method offering faster and more efficient document management.
• Platforms like Pazago help simplify and automate the Certificate of Origin process, ensuring compliance and reducing manual errors.

What is the Meaning of a Certificate of Origin for Export?

A Certificate of Origin (COO) certifies the country in which the goods being exported were produced, manufactured, or processed. This document assists customs authorities in determining the origin of goods, which can directly impact the tariff rates applied to those goods.

For SMEs engaged in export activities, the Certificate of Origin is a mandatory requirement in many countries. The document helps verify that the goods meet the importing country's rules of origin requirements, which may be tied to free trade agreements or regional trade accords.

Hence, obtaining a proper Certificate of Origin ensures compliance, avoids costly delays, and can make the trade process smoother. In the financial year 2024, India experienced a notable decline in imports of over 5%, marking a significant shift in trade patterns. A key driver behind this trend was the government's "Make in India" initiative, designed to boost local manufacturing. 

The COO serves as proof of international trade compliance, facilitating smoother market access and improved tariff management, particularly for Indian exporters seeking to expand into global markets. It's an essential tool in global commerce, designed to simplify customs procedures and enable preferential tariff benefits.

Also Read: Important Documents Required for Export

Who Issues a Certificate of Origin?

A Certificate of Origin (COO) is issued by an authorised body, which could vary based on the country and the type of goods being exported. In general, the following entities are responsible for issuing the COO:

• Chambers of Commerce: In most countries, the local Chamber of Commerce is the primary authority for issuing COOs. They verify the exporter's documentation and confirm the origin of the goods.
• Government Authorities: In some cases, government bodies, such as Customs Departments or Trade Offices, may issue COOs, especially for goods regulated by the government.
• Authorised Third-Party Agencies: In certain regions, there are third-party agencies that work under the supervision of the government to issue the COO.

In India, bodies like the Federation of Indian Export Organisations (FIEO) and various state-level chambers of commerce play a key role in issuing these certificates.

Types of Certificates of Origin

There are two primary types of Certificates of Origin (COO) in international trade: Preferential and Non-Preferential. These two certificates serve different purposes and are required under various circumstances.

Preferential Certificate of Origin

A Preferential Certificate of Origin is used when goods qualify for special treatment under Free Trade Agreements (FTAs) between countries. This certification ensures that goods imported into the trading partner country are subject to reduced or zero tariffs.

Preferential arrangements/schemes under which India is receiving tariff preferences for its exports are:

• Generalised System of Preferences (GSP)
• Global System of Trade Preferences (GSTP)
• SAARC Preferential Trading Agreement (SAPTA)
• Asia-Pacific Trade Agreement (APTA)
• India-Sri Lanka Free Trade Agreement (ISLFTA)
• Indo-Thailand Free Trade Agreement
• India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA)
• India-Korea Comprehensive Economic Partnership Agreement (CEPA)
• India-Japan Comprehensive Economic Partnership Agreement (IJCEPA)
• ASEAN-India Free Trade Agreement

Examples: Under agreements such as the India-Sri Lanka Free Trade Agreement (ISLFTA), the India-ASEAN Free Trade Agreement, and the India-Japan Comprehensive Economic Partnership Agreement (IJCEPA), goods that meet the origin criteria are entitled to preferential treatment.

By securing a Preferential Certificate of Origin, Indian exporters can benefit from these agreements, reducing the overall cost of their products in foreign markets, which is vital for SMEs looking to remain competitive.

Non-Preferential Certificate of Origin

A Non-Preferential Certificate of Origin is a standard certificate that verifies the origin of the goods but does not qualify them for any preferential tariffs or reduced duties. This is commonly used for exports to countries that do not have a trade agreement with India.

• Examples: Goods exported to countries without preferential trade agreements would require a non-preferential COO. This certificate helps clear the goods through customs and provides verification that the goods comply with general international trade rules.

Both types of COOs are necessary depending on the exporter's target market and trade agreements. For exporters, understanding which certificate is required can help streamline the export process and prevent unnecessary delays.

Why Do You Need a Certificate of Origin?

The Certificate of Origin (COO) is an essential document in international trade. For Indian SMEs involved in export activities, this certificate plays a pivotal role in ensuring smooth, efficient transactions across borders. The Certificate of Origin confirms the country where the goods were produced or manufactured and is typically required by the customs authorities of the importing country.

Without a COO, your goods may face delays, additional inspections, or even be held at customs, leading to missed deadlines and increased costs. Having this certificate ensures that your products can pass through customs efficiently and are accepted into the destination market.

For Indian exporters, understanding the need for a Certificate of Origin is vital for managing the complexities of international trade. Here are some of the benefits of a COO.

1. Tariff Preferences

A Certificate of Origin is essential for qualifying for preferential tariff rates under various free trade agreements (FTAs). Many countries offer lower tariffs or even duty-free entry to goods originating from countries with established trade agreements. For instance, Indian exporters benefit from agreements like the ASEAN-India Free Trade Agreement (AIFTA), where a COO ensures access to reduced duties on their exports.

2. Helps Qualify for Trade Agreements

Many global trade agreements require proof of origin. A COO certifies that your goods meet the criteria set by these agreements, allowing you to benefit from reduced tariffs or other preferential trade terms. These agreements are key to expanding your market presence and reducing the cost of exports.

3. Customs Clearance

Without a Certificate of Origin, your goods may face delays at customs, additional inspection fees, or even rejection. The COO provides customs authorities with critical information regarding the origin of the goods, ensuring a smoother customs process. With this document, your goods can pass through borders without unnecessary hold-ups, speeding up the delivery process.

4. Market Access

In SAARC countries and the European Union, only goods that meet certain origin requirements are allowed entry. The Certificate of Origin helps your goods qualify for easier entry into foreign markets with fewer trade barriers. This can open doors to new markets where importers are looking for products that meet specific origin criteria.

5. Credibility and Trust

Issuing a Certificate of Origin shows your compliance with international standards and trade regulations. This not only builds trust with customers but also boosts your reputation in the global market. Buyers in foreign countries are more likely to engage with businesses that can prove their products meet the required origin standards.

6. Export Incentives

Certain export incentives or subsidies are only available if a Certificate of Origin accompanies the product. These benefits could include tax breaks or additional financial support from government export programmes aimed at boosting trade. A COO helps you access these incentives and reduce the overall cost of exporting.

7. Compliance with Trade Regulations

Every country has its own rules regarding the origin of goods. A COO ensures that your goods comply with these regulations, reducing the risk of penalties, non-compliance issues, or rejected shipments. For Indian SMEs, this is especially important to avoid delays or fines from customs in foreign markets.

Country of Origin Certificate Format: Key Components and Requirements

A country of origin Certificate format contains key details that verify the origin of your goods and are essential for ensuring smooth customs clearance and compliance with trade regulations. This document not only confirms the origin of the goods but also provides the crucial information required by customs authorities to process your shipment efficiently and accurately.

Detailed breakdown of the common components included in a Certificate of Origin:

Each of these sections is crucial for ensuring that the Certificate of Origin complies with the standards established by international trade agreements and the regulations of importing countries. Accurate and complete details are essential to avoid any issues during customs clearance.

Also Read: 10 Required Pre-Shipment Documents for Export Procedure and Shipping Process

How to Obtain a Certificate of Origin? 

Obtaining a Certificate of Origin (COO) is a crucial part of international trade. The COO confirms the origin of your goods and ensures compliance with customs requirements. Depending on the procedure you choose, it can be completed either in person or online. Below is a step-by-step process for obtaining a Certificate of Origin, with a particular focus on the online procedure, which is faster and more efficient for modern exporters.

In-Person Procedure 

For traditional methods, the process of obtaining a Certificate of Origin requires you to visit an authorised body like the Chamber of Commerce or a government-recognised agency. Here’s how the in-person procedure works:

1. Prepare Required Documents: Before you visit the issuing authority, gather all relevant documents, such as the commercial invoice, packing list, and export licence.
2. Visit the Issuing Authority: Go to the local Chamber of Commerce or authorised body responsible for issuing COOs.
3. Submit Application: Fill out the application form and submit it along with your documents for verification.
4. Pay Fees: Depending on the issuing body, you’ll need to pay a processing fee for the certificate.
5. Verification: The authority will verify your documents and confirm the origin of the goods.
6. Receive the COO: Once approved, the Certificate of Origin is issued, either digitally or physically, depending on the issuing authority.

While this method works, it can be time-consuming and may involve long waiting periods, especially for exporters managing multiple shipments.

Online Procedure

The online process for obtaining a Certificate of Origin is faster and more efficient, allowing you to handle your documentation from the comfort of your office. In India, Certificates of Origin are issued online through the Common Digital Platform by the DGFT –

Below is a breakdown of the online procedure:

1. Determine Necessity: First, verify whether your goods require a Certificate of Origin based on the destination country’s regulations. Many countries demand this document to process imports.
2. Select the Type: Decide whether you need a preferential or non-preferential Certificate of Origin, depending on whether your goods qualify for tariff reductions under trade agreements.
3. Prepare Documents: Collect the necessary export documents, including invoices, packing lists, and the bill of lading.
4. Submit Application: Submit the Certificate of Origin application through the designated online portal, ensuring that all fields are completed correctly to prevent delays.
5. Verification: The issuing authority will review the submitted documents to verify the origin of the goods.
6. Payment: Pay the necessary fees for the Certificate of Origin through the online payment system. The fee amount can vary depending on the issuing authority and country.
7. Issuance: After verification, the Certificate of Origin is issued digitally and made available for download.
8. Distribution: The COO can then be sent directly to the importer or any relevant authorities for customs processing.
9. Record Maintenance: Keep a digital or physical copy of the COO for your records and future reference. It's important for compliance and possible audits.
10. Follow-Up: If there are any issues with the verification or issuance, you can track the status of your application and follow up accordingly.

The online procedure makes the process much faster, reducing manual work and ensuring that the necessary documentation is processed on time. Exporters can access their Certificate of Origin without the delays and hassle of physical visits to offices.

Sample Certificate of Origin

Schemes Under Which India Receives Tariff Preferences

India has entered into several trade agreements that allow for tariff preferences for its exports. These agreements help Indian SMEs reduce the costs associated with exporting goods to various countries by offering reduced or zero tariffs on certain products. Understanding these schemes and how they work is essential for maximising the benefits available through international trade.

Here are some of the key schemes under which India receives tariff preferences:

1. Generalised System of Preferences (GSP)

The Generalised System of Preferences (GSP) is a trade programme that allows developing countries, including India, to export goods to developed countries at preferential duty rates. Under this scheme, Indian exporters benefit from reduced tariffs when exporting to countries such as the United States, Canada, and the European Union. The GSP is a key tool in helping Indian SMEs expand into new markets and stay competitive.

2. Global System of Trade Preferences (GSTP)

The Global System of Trade Preferences (GSTP) is a preferential trade arrangement within the framework of South-South cooperation. India participates in this scheme, which allows it to trade with other developing countries at reduced tariff rates. This helps improve market access for Indian exporters in countries across Africa, Asia, and Latin America.

3. SAARC Preferential Trading Agreement (SAPTA)

The SAARC Preferential Trading Agreement (SAPTA) aims to promote trade among the South Asian Association for Regional Cooperation (SAARC) member countries. Under SAPTA, Indian exporters can enjoy preferential tariff rates when trading with countries like Sri Lanka, Bangladesh, Nepal, and Pakistan. This agreement enhances regional trade and strengthens economic ties within South Asia.

4. Asia-Pacific Trade Agreement (APTA)

The Asia-Pacific Trade Agreement (APTA), also known as the Bangkok Agreement, involves India and several other countries in the Asia-Pacific region, including China, South Korea, and Sri Lanka. APTA provides preferential tariffs to member countries on goods traded between them, making it an essential scheme for expanding India’s trade in the Asia-Pacific region.

5. India-Sri Lanka Free Trade Agreement (ISLFTA)

The India-Sri Lanka Free Trade Agreement (ISLFTA) allows Indian exporters to trade goods with Sri Lanka at reduced tariffs. This agreement covers a wide range of products, including textiles, agriculture, and machinery. ISLFTA provides a significant opportunity for Indian exporters to expand their footprint in Sri Lanka and capitalise on the preferential tariff rates available.

6. Indo-Thailand Free Trade Agreement

The Indo-Thailand Free Trade Agreement facilitates trade between India and Thailand by offering preferential tariff rates on a range of products. This agreement helps Indian SMEs access Thailand’s growing market, especially in sectors like automobiles, textiles, and electronics.

7. India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA)

The India-Malaysia Comprehensive Economic Cooperation Agreement (IMCECA) focuses on enhancing trade between India and Malaysia. Under this agreement, Indian exporters benefit from preferential tariffs on a variety of goods, including agricultural products, machinery, and chemicals.

8. India-Korea Comprehensive Economic Partnership Agreement (CEPA)

The India-Korea Comprehensive Economic Partnership Agreement (CEPA) offers Indian exporters preferential tariff rates when trading with South Korea. This agreement covers sectors like information technology, automobiles, and pharmaceuticals, providing Indian SMEs with greater access to South Korea’s advanced market.

9. India-Japan Comprehensive Economic Partnership Agreement (IJCEPA)

The India-Japan Comprehensive Economic Partnership Agreement (IJCEPA) provides preferential tariffs for Indian exporters when trading with Japan. This agreement primarily benefits industries such as automobiles, textiles, and agriculture, allowing Indian businesses to access Japan’s technologically advanced and high-demand market.

10. ASEAN-India Free Trade Agreement

The ASEAN-India Free Trade Agreement (AIFTA) is a landmark trade agreement between India and the 10 countries of the Association of Southeast Asian Nations (ASEAN). This agreement offers Indian exporters preferential tariff rates for a wide range of goods, thereby significantly enhancing India's trade relations with ASEAN countries, including Singapore, Malaysia, and Thailand.

The Certificate of Origin is crucial for seamless customs clearance and effective international trade. With a clear understanding of the tariff preference schemes available to Indian exporters, the next step is to ensure that proper documentation is in place.

How Pazago Helps in the Process of Certificate of Origin for Export

Pazago simplifies the entire process of obtaining and managing Certificates of Origin with its all-in-one export management platform. By automating document creation, ensuring compliance with international trade agreements, and securely storing records. Here's how Pazago can help:

• Document Management: Manage all your export documentation, including the COO, securely in one place. No more losing important documents or wasting time searching through piles of paperwork.
• Order Tracking: Track your shipments in real-time to ensure everything is moving smoothly. Stay informed of any delays and communicate directly with your clients, keeping them updated on the status of their orders.
• Communication Tools: Centralise your conversations with suppliers, vendors, and team members to reduce communication challenges and ensure a smooth workflow.
• Quality Inspections: Arrange and manage thorough quality inspections for your exports directly within the platform. Receive detailed reports, allowing you to address any issues before your goods reach the importer.
• Logistics & Insurance: Plan, book, and manage all logistics and insurance needs in one place. Pazago saves you time and simplifies the coordination process with streamlined tools for managing these aspects.

By using Pazago's platform, you ensure that every step of the Certificate of Origin process is managed efficiently, reducing delays and improving compliance.

Conclusion

The Certificate of Origin (COO) is a vital document in international trade that confirms the country of origin of goods. For Indian SMEs engaged in export activities, understanding the importance of the COO, along with its types and benefits, is crucial to ensure compliance with trade regulations, gain access to preferential tariffs, and facilitate smooth customs clearance.

By securing the correct Certificate of Origin, exporters can expand their reach into new markets, reduce operational costs, and enhance their credibility on the global stage. With Pazago's all-in-one export management platform, the process of obtaining and managing COOs is simplified, allowing businesses to focus on growth while minimising the complexities of international trade.

Whether you are just starting to export or looking to streamline your export processes, a Certificate of Origin is essential for ensuring that your goods comply with international regulations and are eligible for benefits under trade agreements.

Explore Pazago's all-in-one export management platform for easy and secure document management, order tracking, communication tools, quality inspections, logistics, and integrated finance, efficiently ensuring smooth and hassle-free international trade.

FAQs

1. What is the certificate of origin for export and import?

A certificate of origin (COO) is a document that verifies the origin of goods being exported. It is issued by a recognised authority like the Chamber of Commerce and is required for customs clearance, as it helps determine tariffs and trade agreements. A certificate of origin for export ensures compliance with destination country regulations and is crucial for smooth trade operations.

2. What is the difference between a certificate of origin and a bill of lading?

The certificate of origin certifies the country of origin of the goods, applicable for customs and tariff purposes. The bill of lading, on the other hand, is a legal document issued by the carrier acknowledging receipt of goods for transport. It serves as a title for ownership of the goods during shipment.

3. Is the certificate of origin necessary for every transaction for export from India?

Not all exports from India require a certificate of origin. It is needed for shipments that qualify for preferential treatment under trade agreements or specific country requirements. Check the destination country's regulations to determine if it's required for your export.

4. Is a certificate of origin the same as a title?

No, a certificate of origin is not the same as a title. The certificate of origin confirms the origin of goods for customs purposes. At the same time, a title (like a bill of lading) represents ownership of the goods and is used to claim the cargo during transit.