India Is Rewriting What Makes Your Fabric Indian

What was published, and what kind of document it is

The Directorate General of Foreign Trade issued Trade Notice 27/2026-27 on 14 September 2026, inviting comments on an amendment to Para 2.93 of the Handbook of Procedures, 2023, which is the paragraph that carries India's non-preferential rules of origin. Comments are open for fifteen days from publication. We read the notice and the draft public notice annexed to it rather than the coverage, because a draft is a different thing from a rule and the distinction decides what a buyer should do about it.

Take the frame honestly first. This is a draft placed in the public domain for consultation, issued under Para 1.07A of the Foreign Trade Policy. Nothing in it is operative today, the draft public notice carries no number and no date, and the text can change before it is notified. What makes it worth reading now is that the direction is unambiguous and the criteria are stated in full, so a buyer can check today whether a supply chain would clear them.

The substantive change is one sentence in the covering notice: the amendment seeks to comprehensively prescribe the rules of origin, non-preferential, for both exports and imports. Until now the paragraph spoke mainly to the export side. The draft writes an import-side rule as well, and that is the half most likely to reach a buyer's paperwork.

Non-preferential is not the same as preferential, and the difference is the point

A preferential certificate of origin is what you file to claim a lower duty rate under a trade agreement, and its rules live in that agreement. That is the machinery behind the origin rules in the India-UK agreement, where a product-specific rule decides whether your cloth qualifies for the preferential rate.

A non-preferential certificate confers no tariff benefit at all. The draft says so plainly: these certificates evidence the origin of goods and do not confer any right to preferential tariffs. They exist because somebody else needs to know where the goods came from, which in practice means a letter of credit that calls for one, a government tender that requires a country declaration, an import licence, a quota, a trade-remedy measure, or a buyer's own compliance file.

So this rewrite does not change any duty rate. It changes the standard against which a claim of Indian origin is judged, and it changes what the document a bank or a tender asks for is actually attesting to. For most institutional buyers the certificate of origin is a box that gets ticked; this is the paragraph that says what the box means.

The export test: manufacture, and a list of things that are not manufacture

The draft sets two conditions for exports. The first is that the goods are manufactured by the exporting entity as per the definition of manufacture in Paragraph 11.31 of the Foreign Trade Policy. The second is the one with teeth: where imported inputs, duty paid or duty free, have been used to produce the export product, the goods count as originating in India only if those imported inputs undergo processing that exceeds a listed set of operations.

The listed operations are the ones that do not confer origin, and the draft names eleven of them. Read as a group they describe handling rather than making, and the list is worth knowing because it is the test a trading intermediary fails.

• Simple operations: removal of dust, sifting or screening, sorting, classifying, matching including the making-up of sets of articles, washing, painting, cutting.
• Changes of packing, and breaking up and assembly of consignments.
• Simple cutting, slicing and repacking, or placing in bottles, flasks, bags, boxes, fixing on cards or boards, and all other simple packing operations.
• Operations to preserve products in good condition during transport and storage, such as drying, ventilation, spreading out, chilling and like operations.
• Affixing marks, labels or other distinguishing signs on products or their packaging.
• Simple mixing of products.
• Simple assembly of parts to constitute a complete product.
• Disassembly.
• Mere dilution with water or another substance that does not materially alter the characteristics of the product.
• Any combination of the processes above.

What that list means for cloth specifically

Weaving is not on the list. Neither is spinning, dyeing, or finishing. Converting imported yarn into woven fabric is a change in the nature of the goods, not a handling operation, and it sits well clear of every item above. A mill that weaves cloth in India from imported yarn is not the case this list is aimed at.

The case it is aimed at is the one a buyer should ask about anyway. Cutting is named twice, in the simple operations line and again in the simple cutting and repacking line. Changes of packing and breaking up of consignments are named. Affixing marks and labels is named. That is a precise description of buying finished cloth, cutting it to length, rebranding the roll and exporting it, and the draft says that combination does not make the cloth Indian.

Which is a paperwork question wearing a policy hat, and the site has argued the underlying point for a while: the thing to establish is which stage of production your supplier actually performs, because a mill and a trading house give the same answer to the question of where the goods shipped from and different answers to the question of where they were made. If this draft is notified as written, that difference becomes the origin declaration rather than a matter of preference.

The import side: a self-declaration instead of a certificate

This is the genuinely new half, and it points the opposite way to what most people expect from a rules-of-origin rewrite. For goods being imported into India, the draft prescribes a self-declaration on the Bill of Entry in which the importer states the country of origin on the basis of the information available to it, giving the Bill of Entry number and date, the ITC (HS) code and the country.

Then the sentence that matters: no separate certificate of origin or other origin-related document shall be required for clearance of the goods, except where such a document is expressly mandated under applicable law or a notified country-specific requirement. Goods clear on the declaration. Verification, where it happens at all, is to be risk-based, limited to cases where there are reasonable grounds to doubt the declared origin or where country-specific conditions apply, and the draft explicitly says routine or repeated verification of the same goods, same country and same circumstances is to be avoided.

The origin test applied on the import side is stated separately from the export test. For goods outside Chapters 01 to 14 of the ITC (HS) Schedule, which includes every textile chapter, origin is the country where all the non-originating materials used in manufacture have undergone a change in tariff heading at the four-digit HS level, or where the good has undergone at least 35 percent value addition. One or the other, not both. The draft's own formula for value addition is written in terms of FOB value of exports and the value of non-originating material, which reads oddly inside an import paragraph and is the kind of thing a consultation period exists to fix.

A four-digit change of heading is not a demanding test for cloth. Yarn and woven fabric sit in different headings, so weaving clears it on its own. The 35 percent alternative is there for cases where it does not.

The same week, the electronic certificate got legal parity in one agreement

Separately and on the same day, India and MERCOSUR signed the First Additional Protocol to their Preferential Trade Agreement. It amends Article 16 of Annex III, the rules of origin annex, to provide that certificates of origin issued in electronic format have the same legal validity and identical value as paper certificates, where they are issued and electronically signed under each party's domestic law by authorised entities.

That agreement itself is small for our trade. It was signed in January 2004, entered into force in June 2009, and covers preferential concessions on 450 tariff lines from the Indian side and 452 from the MERCOSUR side. Negotiations to expand it were launched the same day, with terms of reference still being finalised, so the expansion is an intention rather than a schedule. The protocol also enters into force only once both sides complete internal procedures and notify each other, so nothing changes at a counter yet.

It is here for the direction rather than the destination. Read alongside the DGFT draft, which routes non-preferential certificate applications through an online system and provides for corrections as an in-lieu application, the pattern is that origin is moving from a stamped paper a buyer files to a data record a customs system checks. A buyer whose compliance process depends on receiving a physical certificate should know that is the direction of travel.

What we are deliberately not saying

We are not telling you this is in force. It is a draft out for comment for fifteen days, and the final text can differ. Anyone making a commercial decision on it now is reading ahead of the rule.

We are not advising on your own import clearance. The self-declaration described above is a draft procedure of Indian customs practice for goods entering India, and what your own customs authority requires of you at your own border is a separate question governed by your own law, which is the ground covered in the conformity and origin documents guide. Confirm your position with your customs broker.

What a buyer can usefully do now

• Establish which stage of production your supplier performs itself. If the answer is weaving, the export test above is clear on any reading of the draft. If the answer is buying finished cloth and re-exporting it, read the eleven listed operations again carefully.
• Check what your own paperwork actually asks for. A letter of credit or tender clause calling for a certificate of origin is usually asking for the non-preferential one, which confers no duty benefit, and is a different document from the preferential certificate you would file to claim an agreement rate.
• Ask who issues it. The draft keeps issuance with agencies notified in Appendix 2E, allows agencies authorised for preferential certificates to issue non-preferential ones, and allows manufacturer exporters who are also Status Holders to self-certify. Which of those routes your supplier uses decides how fast a correction can be made.
• If you buy through a trading house or consolidator, ask on what basis it will certify origin, because the draft provides separately for back-to-back certificates covering goods that are not of Indian origin at all, for re-export, transhipment and merchanting trade.
• Diarise the consultation. Fifteen days from 14 September 2026 is the comment window, after which a public notice may issue with or without changes. Nothing needs to be done to a live order in the meantime.