New Delhi: After much fanfare, Indo-Thailand Free Trade Agreement (FTA) appears to have developed some glitches over the methodology to be adopted on framing of the Rules of Origin agreement.

The differences have surfaced as Bangkok, a member of the Association of South East Asian Nations (ASEAN), wants to follow the AFTA model while New Delhi is keen on following comprehensive rules which it is currently pursuing with other trading regions, sources said.

India is insisting on not just value addition clause in the AFTA model but also Special Process Test and change in tariff heading as value addition provision can give competitive edge to incompetent competitors.

In the ASEAN Free Trade Agreement, the Rule of Origin hovers around 40 per cent value addition norm, implying that any product having at least 40 per cent value addition from a country would be treated as originating from that country, which is being insisted by Thailand.

According to Ram Upendra Das, from Research and Information Systems for Non-Aligned Nations and a member of the Indian negotiating group on FTA, it was in India's interest to adopt the model it has followed with other nations.

Under the Special Process Test, proposed in the agreement by India and prevalent under North American Free Trade Agreement (NAFTA), a provision is made according to which it is seen if the imported product has undergone a complete transformation and involved labour.

In the change in tariff heading, the final product is put under a different tariff heading than that of the raw materials.

PTI