Compliance Advisory: How Indian Firms Can Qualify for RCEP Benefits in Vietnam

Indian companies can access RCEP’s tariff advantages by setting up operations in Vietnam, but success depends on strict compliance with Rules of Origin, certification, and supply chain structuring. This guide explains how to qualify for RCEP benefits and reduce trade costs.

For Indian businesses seeking to leverage Vietnam’s membership in the Regional Comprehensive Economic Partnership (RCEP), the most critical factor is compliance with the Rules of Origin (RoO) and associated certification procedures. These determine whether goods manufactured in Vietnam qualify for preferential tariffs when exported to other RCEP member countries.

What is the RCEP and how can it benefit Indian businesses?

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The RCEP, which came into effect in January 2022, is the world’s largest free trade agreement, covering nearly 30 percent of global GDP and trade. It brings together 15 countries, including ASEAN member states, China, Japan, South Korea, Australia, and New Zealand, into a single, integrated trade framework. Vietnam, as an ASEAN member, plays a central role in connecting supply chains within this vast market.

India opted out of RCEP negotiations in 2019 due to concerns about trade imbalances, and as a result, Indian exporters cannot directly benefit from RCEP tariff concessions.

How Indian businesses can leverage Vietnam for RCEP benefits

Indian businesses can indirectly access the RCEP’s treaty benefits if they have set up operations in Vietnam. By incorporating manufacturing or services entities in Vietnam, Indian companies can qualify as “RCEP insiders,” provided they meet the RoO criteria and comply with Vietnamese and RCEP trade regulations.

This strategy is particularly relevant for Indian firms seeking to:

• Re-export manufactured goods (such as garments, auto components, and electronics) from Vietnam to advanced RCEP markets like Japan, South Korea, and Australia.
• Participate in regional supply chains by sourcing components from multiple RCEP countries and consolidating final production in Vietnam.
• Reduce tariff burdens and customs bottlenecks that would otherwise apply if exporting directly from India.

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However, tapping into RCEP is not automatic. To benefit from tariff reductions and trade facilitation, firms must carefully structure their operations in Vietnam and prove eligibility through documentation, certification, and ongoing compliance checks. Failure to meet these requirements can lead to shipments being denied preferential access, retroactive duties, or even penalties.

For Indian firms, this makes compliance not just a legal necessity but a strategic enabler of competitiveness. By meeting RCEP requirements, they can significantly lower costs, improve supply chain resilience, and strengthen their role in Asia-Pacific trade networks.

Step-by-step: How Indian firms can qualify for RCEP benefits

Step 1: Choose the right business structure

Indian firms must establish a recognized legal entity in Vietnam, such as a foreign-owned enterprise (FOE) or a joint venture with a local partner. Only registered entities in Vietnam can apply for RCEP Certificates of Origin (C/O). Representative offices cannot qualify since they are non-trading.

Step 2: Understand the Rules of Origin

RCEP defines three key tests to determine origin:

• Wholly obtained: Goods entirely produced in Vietnam (e.g., agricultural produce, fish, minerals).
• Regional Value Content (RVC): Goods must achieve a minimum percentage of regional content (typically 40 percent) from RCEP countries, including Vietnam.
• Change in Tariff Classification (CTC): If sufficient transformation occurs in Vietnam to alter the tariff code of the final product compared to imported inputs.

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Indian firms should map their production process to see whether their products can meet RVC or CTC thresholds. For the application of RCEP’s RoO in Vietnam, businesses should consult Circular No. 05/2022/TT-BCT (“Circular 05”), released by the government, for specific guidance.

Step 3: Maintain proper documentation

To claim RCEP preferences, businesses must prepare:

• Bill of Materials (BOM): Showing origin of inputs.
• Supplier declarations: From local or regional suppliers confirming source of raw materials.
• Production records: Detailing processing and value addition in Vietnam.
• Customs declarations: For all imports and exports involved in production.

This documentation is critical for audit and verification by Vietnamese customs.

Step 4: Apply for RCEP Certificate of Origin (C/O)

• Applications are submitted to Vietnam’s Ministry of Industry and Trade (MOIT) or authorized agencies.
• Firms must present supporting documents proving compliance with RoO.
• Certificates can be issued electronically under Vietnam’s e-CO platform.

Without this certificate, shipments cannot enjoy preferential tariffs in RCEP member markets.

According to Appendix II of Circular 05, an eligible C/O must contain the following details:

• Name and address of the exporter.
• Name and address of the manufacturer (if known).
• Name and address of the importer or consignee.
• Description of goods and corresponding HS code (at the six-digit level).
• Reference number.
• Origin criteria of the goods.
• Declaration by the exporter or manufacturer.
• Certification from the issuing authority or organization confirming compliance, signed and sealed.
• RCEP country of origin.
• Shipment details, including invoice number, departure date, vessel name or flight number, and port of discharge.
• FOB value (if applying regional value content criteria).
• Quantity of goods.
• For back-to-back C/Os, the reference number, issuance date, and RCEP origin country of the initial C/O issued by the first exporting member state, along with the self-certification code of the qualified exporter, if applicable.

Step 5: Align supply chains with RCEP cumulation rules

RCEP allows cumulation, meaning inputs from other RCEP members (e.g., Japan, Korea, ASEAN) can be counted towards origin requirements when finished in Vietnam.

• Example: An Indian electronics company sources components from Japan and assembles them in Vietnam. Since both Vietnam and Japan are RCEP members, the final goods exported from Vietnam can qualify for tariff concessions in Australia or South Korea.

Step 6: Ensure customs and tax compliance

• Customs declarations: Must explicitly state intent to claim RCEP benefits.
• Transfer pricing: Firms must comply with Vietnam’s Decree 132, especially when sourcing from related parties in RCEP countries.
• Audit preparedness: Maintain records for at least three years, as customs authorities can review past claims. The documents must be retained in a form that allows for quick retrieval, depending on the rules of the respective member state.

Step 7: Monitor sector-specific rules

Certain sectors (e.g., pharmaceuticals, electronics, automotive) have Product-Specific Rules (PSRs) under RCEP that may impose stricter origin thresholds. Firms should seek legal or professional guidance before structuring supply chains.

Strategic takeaway

For Indian firms, setting up in Vietnam offers a gateway to RCEP’s vast market. However, compliance is not automatic. Companies must carefully design their production processes, maintain rigorous documentation, and secure Certificates of Origin to unlock tariff savings.

Professional advisory firms like Dezan Shira & Associates can assist with supply chain structuring, RoO analysis, documentation, and customs compliance, ensuring Indian investors maximize RCEP’s benefits while avoiding penalties.

RCEP compliance checklist for Indian firms in Vietnam

(With technical inputs from Vu Nguyen Hanh.)

For business inquiries, please contact our teams at: India@dezshira.com or Vietnam@dezshira.com

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