Monday – Friday | 09:00 – 18:00
Knowledge Series · Market Entry & Structuring

Sourcing from India: a checklist for European buyers (2026)

ATB Knowledge Series · 11 min read · Published October 2026

Short answer: Sourcing from India works when a European buyer runs it as a sequence of checks, from supplier and contract through payment, inspection and origin to UK or EU compliance, because most losses come from goods that fail on quality, origin or carbon rules after they have been paid for. Since 15 July 2026 UK importers can bring in 99% of Indian goods free of tariffs under the UK–India CETA if they can prove origin, while EU importers still pay normal or GSP duty, because the EU–India FTA concluded in January 2026 is not yet signed or in force [1][9]. EU importers of Indian steel, aluminium and other CBAM goods above 50 tonnes a year must be authorised CBAM declarants, and the EU deforestation and forced-labour rules start to apply in December 2026 and December 2027 [12][15][17].

Who this is for: heads of sourcing, supply-chain directors, CFOs and general counsel of UK retailers and brands and of German and other EU industrial buyers using suppliers and manufacturers in India.

The sourcing checklist, stage by stage

Many buyers come to India as a second supply base alongside China (see China-plus-one manufacturing in India). This article covers importing from India into the UK or EU; duty on goods going into India is on the trade, import-export and customs page, and the wider entry picture in India for European companies: entry, structuring and the EU–India deal.

Stage What to check Watch for
1. Find Trade fairs, export promotion councils, referrals, sourcing agents An agent paid by both sides
2. Vet Company filings, GST, litigation, references, site visit, export code Names or bank accounts that do not match
3. Contract Incoterms 2020, specification, inspection, origin and emissions data, recalls, law and seat Silence on origin and carbon data
4. Pay Advance, documentary collection or letter of credit Credit beyond the exporter's nine-month limit [21]
5. Inspect Samples, in-line and pre-shipment inspection Paying before the inspection report
6. Ship Incoterm, insurance, transport documents Repacking in a third country
7. Clear customs UK: CETA claim; EU: duty and any GSP statement on origin A preference claimed without evidence
8. Comply CBAM, deforestation, forced labour, German supply-chain law, product liability A supplier that cannot give the data

Finding and vetting suppliers in India

Indian trade fairs are an efficient place to meet manufacturers (exhibiting is covered in exhibiting at an Indian trade fair). A sourcing agent in India finds and manages suppliers for a commission; agree in writing who pays it, that it cannot bind you, and that it discloses any payments from suppliers.

Vetting in depth (company filings, GST status, court searches, sanctions, red flags) is in finding and checking an Indian partner. Add one export check: the supplier's Importer-Exporter Code (IEC), issued by India's Directorate General of Foreign Trade.

Contract terms that protect the buyer

  • Delivery. An Incoterms 2020 rule and named place (often FCA or FOB), fixing who clears Indian export and who bears transit risk.
  • Quality. Specification, approved "golden" samples, sampling levels, inspection rights, rejection and replacement at the supplier's cost.
  • Origin. The supplier provides the UK origin declaration or EU statement on origin and the bill-of-materials data behind it, with an indemnity if a claim fails.
  • Compliance data. Emissions data for CBAM goods, geolocation data for deforestation-rule commodities, and labour audit rights.
  • Liability and recalls. For products placed on the EU market after 9 December 2026, the importer is liable for defects alongside a manufacturer established outside the EU, under the national laws implementing the new Product Liability Directive [20]; recover recall costs and require insurance.
  • Disputes. Governing law and an arbitration seat outside India, checked for enforceability against the supplier's Indian assets.

Letter of credit, collection or advance: paying an Indian supplier

A letter of credit is a bank's undertaking to pay the supplier against documents that comply with the credit, normally issued subject to the ICC's UCP 600 rules; make an independent inspection certificate one of those documents. In a documentary collection, banks release shipping documents against payment or acceptance of a bill, with no bank undertaking. Advance payment puts the risk on you; Indian exchange rules require the advance to be routed through the bank that handles the export [21]. On open account, the exporter must realise the export value within nine months of shipment (twelve months if invoiced in rupees), which its bank can extend on request [21], so 90- or 120-day terms fit easily.

Quality inspection in India

Inspection runs in three steps, by your own staff or an independent agency: approval of pre-production samples, a check during production, and a pre-shipment inspection against agreed sampling levels. Test against your own market's product rules, and make payment depend on the pre-shipment certificate.

Import from India to the UK: CETA tariffs and rules of origin

The UK–India CETA eliminates UK tariffs on 99% of Indian goods, including apparel and textiles [1]. A UK importer claims the preference on the exporter's origin declaration, a certificate of origin from an Indian issuing authority, or its own knowledge of how the goods were made, which it must then substantiate [2].

Origin turns on the product-specific rule in Annex 3A [3]: - apparel and made-up textiles such as bed linen (Chapters 61–63): a change of tariff heading and qualifying value content of at least 40% of the ex-works price (build-down; or 45% of FOB build-down, or 35% build-up); - ceramic tableware (Chapter 69): a change of chapter; - glassware (Chapter 70): a change of tariff heading.

India also sits in the Standard Preferences tier of the UK's Developing Countries Trading Scheme, with some goods graduated for 2026–2028 [4]. From 1 January 2027 a UK carbon border adjustment mechanism (CBAM) covers aluminium, cement, fertiliser, hydrogen, and iron and steel; an importer must register once its CBAM imports exceed, or are expected to exceed, £50,000; registration opens on 1 January 2028, so keep records from the start [5][6]. The CETA as a whole is explained in India–UK trade deal (CETA) in force: what UK businesses can use now(ATB Legal).

Import from India to Germany and the EU: duty, GSP and the FTA

With no EU–India agreement in force, Indian goods pay the EU's normal duty unless the Generalised Scheme of Preferences (GSP), the EU's unilateral tariff cuts for developing countries, applies. India is a beneficiary, but from 1 January 2026 its preferences are suspended for mineral products, chemicals, plastics, rubber, textiles, stone, ceramic and glass articles, pearls and precious metals, iron and steel, other base metals, machinery and electrical equipment, and vehicles [7]. Clothing is not on that list. A GSP claim needs a statement on origin by an exporter registered in the EU's REX system (unregistered exporters only up to €6,000 a consignment) [10]. A new GSP regulation applies from 1 January 2027, with a new suspension list applying from the same date [8]: check it before pricing 2027 orders, and check TARIC for anti-dumping or safeguard duty on your line.

The EU–India FTA was concluded in January 2026 and sent to the Council for signature in September 2026; Parliament's consent and India's ratification are still to come [9]. Once in force, the EU would eliminate tariffs on 91% of Indian exports by value, with 99.3% liberalised in full or in part [11]. Staging and origin rules are in EU–India trade deal (2026): status, FTA tariffs, rules of origin, CBAM and investment protection (ATB Legal).

India's other agreements, including the EFTA deal for Swiss and Norwegian companies, are tracked in India free trade agreements: tracker of every deal and negotiation (2026) (ATB Legal).

CBAM India and the other EU rules that bite on Indian goods

CBAM. The EU carbon border adjustment mechanism (CBAM) charges importers for the emissions embedded in iron and steel, aluminium, cement, fertilisers, hydrogen and electricity [13]. Since 1 January 2026 [12]: 1. Importers of more than 50 tonnes net of CBAM goods in a calendar year (counting aluminium, cement, fertilisers, and iron and steel) carry the full obligations; below that they are exempt. 2. Only an authorised CBAM declarant may import; applicants who applied by 31 March 2026 may import while their application is decided. 3. The first declaration, for 2026 imports, and the matching surrender of certificates are due by 30 September 2027; certificates go on sale from 1 February 2027, and from 2027 at least 50% of embedded emissions must be covered at each quarter end.

The certificates due are reduced to reflect free EU emissions allowances still given to EU producers [13]. The EU–India FTA gives India no exemption, only a technical dialogue and any flexibility granted to other countries [14].

Deforestation. The EU Deforestation Regulation covers cattle, cocoa, coffee, oil palm, rubber, soya and wood, and listed products made from them [16]. As amended in December 2025, it applies from 30 December 2026, and from 30 June 2027 for micro and small operators [15][22]; its product list (Annex I) was updated in 2026, so check your CN codes against the current annex [22].

Forced labour. From 14 December 2027, no product made with forced labour may be sold in or exported from the EU, whatever its sector or the operator's size [17][18].

German supply-chain law. Germany's Supply Chain Due Diligence Act (LkSG) still binds companies with at least 1,000 employees; a September 2025 government bill would scrap its reporting duty retroactively and most fines, and the enforcement authority, BAFA, now reviews no reports and pursues only serious breaches [19][23].

Worked example (illustrative)

Hypothetical. Rounded exchange rates, October 2026: INR 107 = EUR 1 and INR 127 = GBP 1, so GBP 1 = about EUR 1.19. Tariff rates and the steel product's CBAM classification are our assumptions; check the UK Trade Tariff, TARIC and Annex I to the CBAM Regulation for your own lines.

A. A UK homeware retailer buys cotton bed linen (HS 6302), customs value EUR 593,500 (GBP 500,000), and stoneware tableware (HS 6912), EUR 178,000 (GBP 150,000), a year. At assumed UK tariffs of 12% and 6% (our assumption), duty without a preference is 12% × GBP 500,000 + 6% × GBP 150,000 = GBP 69,000 (EUR 81,900); with CETA origin proven, it is nil [1]. - Tableware: clay into plates is a change of chapter, so it qualifies [3]. - Bed linen: sets woven from Indian yarn qualify. Sets sewn from imported fabric must also pass the 40% value test [3]: at an ex-works price of GBP 10.00 a set with imported fabric at GBP 6.50, value content is (10.00 − 6.50) ÷ 10.00 = 35%, so the line fails and pays 12% × GBP 500,000 = GBP 60,000 (EUR 71,200). - Payment: 30% in advance, 70% by letter of credit against a pre-shipment inspection certificate. See also the UK–India corridor page.

B. A German industrial buyer imports steel bolts (CN heading 7318, assumed to be a CBAM good) from a forge near Pune: 300 tonnes a year at EUR 2,000 a tonne, customs value EUR 600,000. - Duty: iron and steel articles are on India's GSP suspension list, so the normal duty applies: 600,000 × 3.7% (our assumption) = EUR 22,200 [7]. - CBAM: 300 tonnes exceeds the 50-tonne threshold, so the buyer needs authorised declarant status before the first shipment clears [12]. At 2.0 tonnes of CO2 per tonne (our assumption), the imports embed 300 × 2.0 = 600 tonnes of CO2, to be declared and covered by certificates, net of the free-allocation adjustment, by 30 September of the following year [12][13]. We do not model the certificate cost; the contract obliges the forge to supply verifiable emissions data. See also the Germany–India corridor page.

Risks and common mistakes, ranked

  1. Paying before inspection, or by a credit that does not require an inspection certificate.
  2. Claiming the CETA preference without origin evidence, or letting imported fabric break origin [3].
  3. Importing CBAM goods without authorised declarant status: customs will not release them [12].
  4. Pricing on GSP rates for suspended sections such as machinery, steel, ceramics and glass [7].
  5. Contracts silent on emissions, geolocation and labour-audit data.
  6. Open-account terms longer than the supplier can carry under the nine-month rule [21].
  7. Treating the EU–India FTA as in force [9].

Checklist to forward internally

  • Suppliers checked: company record, GST, litigation, IEC, site visit
  • Sourcing-agent terms: commission, no authority to bind, disclosure
  • Supply agreement: Incoterms, specification, inspection, origin, compliance data, recalls, law and seat
  • Payment agreed; credit documents include the inspection certificate
  • HS code, duty and (EU) India's GSP status for each line
  • Origin evidence on file: CETA declaration or importer's knowledge (UK); REX statement (EU)
  • CBAM: authorised declarant status (EU); UK threshold monitored from 2027
  • Deforestation commodities identified before 30 December 2026
  • Forced-labour risk map ready before 14 December 2027
  • EU–India FTA signature and entry into force on watch

How ATB Corporate can help

ATB Corporate advises companies and investors on entering, structuring and operating in India and the UAE: choosing the entry route and holding structure, tax and exchange-control planning, regulatory compliance, and setting up and running the local business. To discuss your plans, contact ATB Corporate.

FAQ

Where do European buyers find manufacturers in India?

European buyers find manufacturers in India mainly through Indian trade fairs, export promotion councils, referrals and sourcing agents, and then check each shortlisted company's filings, GST registration, litigation record and export code before ordering. A site visit before the first order is worth its cost.

Is there import duty on goods from India to the UK?

Most goods imported from India to the UK have been free of tariffs since 15 July 2026, because the UK–India CETA eliminated UK tariffs on 99% of Indian goods [1]. The importer must support the claim with an origin declaration, an Indian certificate of origin or its own knowledge of how the goods were made; goods that fail the origin rule pay the normal UK tariff [2][3].

What duty applies when importing from India to Germany?

Goods imported from India to Germany pay the EU's normal customs duty, or the lower GSP rate where India's preferences still apply, because no EU–India trade agreement is in force [7][9]. From 1 January 2026 India's GSP preferences are suspended for sections including machinery, iron and steel, chemicals, plastics, textiles, ceramics and glass, but not for clothing, and a new list applies from 1 January 2027 [7][8].

What must an EU importer of Indian steel or aluminium do under CBAM?

An EU importer of Indian steel, aluminium or other CBAM goods above 50 tonnes a year must hold authorised CBAM declarant status before importing, declare the embedded emissions each year by 30 September and surrender CBAM certificates, which go on sale from 1 February 2027 [12]. The EU–India FTA gives no exemption [14].

Should I pay an Indian supplier by letter of credit?

A letter of credit suits a first or large order with an Indian supplier, because the bank pays only against documents that comply with the credit, which can include an independent inspection certificate. With established suppliers, documentary collection or open account is cheaper, but the supplier must still be paid within nine months of shipment unless its bank extends the period [21].

How does quality inspection in India work?

Quality inspection in India usually runs in three steps: approval of pre-production samples, a check during production and a pre-shipment inspection against agreed sampling levels, by the buyer's own staff or an independent agency. Making the pre-shipment certificate a condition of payment is what gives the inspection force.

Do I need a sourcing agent in India?

You need a sourcing agent in India only if you lack the people to find, visit and manage suppliers yourself: an agent shortens the search but adds a commission and, if suppliers also pay it, a conflict of interest. Put the commission, the agent's lack of authority to bind you and the disclosure of supplier payments in writing.

Sources

  1. GOV.UK, "UK–India trade deal: conclusion summary" (tariffs eliminated on 99% of Indian goods; apparel and textiles) (updated 15 July 2026) — https://www.gov.uk/government/publications/uk-india-trade-deal-conclusion-summary/uk-india-trade-deal-conclusion-summary (accessed 20 October 2026)
  2. Department for Business and Trade, "Tariffs and customs for imports from and exports to India" (bases for a UK importer's preference claim) — https://www.business.gov.uk/export-from-uk/markets/india/trade-agreement/tariffs-and-customs-for-imports-from-and-exports-to-india/ (accessed 20 October 2026)
  3. GOV.UK, UK–India CETA Annex 3A, Product Specific Rules of Origin (Chapters 61–63, 69 and 70; Headnote 9(f), standard qualifying value content) (July 2025) — https://assets.publishing.service.gov.uk/media/687e5e378adf4250705c96db/uk_india_ceta_annex3a_product_specific_rules_of_origin.pdf (accessed 20 October 2026)
  4. GOV.UK, "Developing Countries Trading Scheme (DCTS): goods graduation notice" (India and Indonesia, Standard Preferences tier; suspension 1 January 2026 to 31 December 2028) (30 September 2025) — https://www.gov.uk/government/publications/developing-countries-trading-scheme-dcts-goods-graduation-notice (accessed 20 October 2026)
  5. HM Revenue & Customs, "Prepare for the Carbon Border Adjustment Mechanism (CBAM)" (in effect 1 January 2027; sectors; registration opens on 1 January 2028; Finance Act 2026, Part 5) (published 10 February 2026) — https://www.gov.uk/government/collections/carbon-border-adjustment-mechanism (accessed 20 October 2026)
  6. HM Revenue & Customs, "Check if you'll need to register for Carbon Border Adjustment Mechanism (CBAM)" (£50,000 registration threshold) (16 July 2026) — https://www.gov.uk/government/collections/check-if-youll-need-to-register-for-carbon-border-adjustment-mechanism-cbam (accessed 20 October 2026)
  7. EUR-Lex, Commission Implementing Regulation (EU) 2025/1909 on the suspension for the years 2026–2028 of certain tariff preferences granted to certain GSP beneficiary countries, Annex (India) and Article 2 (24 September 2025) — https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32025R1909 (accessed 20 October 2026)
  8. European Commission (DG Trade), "Generalised Scheme of Preferences" (new GSP rules apply from 1 January 2027; Regulation (EU) 2026/1395) — https://policy.trade.ec.europa.eu/development-and-sustainability/generalised-scheme-preferences_en ; EUR-Lex, Regulation (EU) 2026/1395 applying a scheme of generalised tariff preferences, Art 8 (suspension list applying from 1 January 2027) (17 June 2026) — https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32026R1395 (both accessed 20 October 2026)
  9. European Commission, "EU–India trade agreement" (concluded January 2026; proposals for signature sent to the Council in September 2026; remaining steps) (updated 11 September 2026) — https://commission.europa.eu/topics/trade/eu-india-trade-agreement_en (accessed 20 October 2026)
  10. European Commission, Access2Markets, "Generalised Scheme of Preferences (GSP)" (statement on origin; REX; €6,000; 12-month validity) — https://trade.ec.europa.eu/access-to-markets/en/content/generalised-scheme-preferences-gsp (accessed 20 October 2026)
  11. European Commission (DG Trade), "Memo: EU–India free trade agreement – chapter-by-chapter summary" (EU tariff elimination 91% by value; 99.3% including partial liberalisation) (2026) — https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/india/eu-india-agreements/memo-eu-india-free-trade-agreement-chapter-chapter-summary_en (accessed 20 October 2026)
  12. EUR-Lex, Regulation (EU) 2025/2083 amending Regulation (EU) 2023/956 as regards simplifying and strengthening the carbon border adjustment mechanism, Arts 2a, 5, 6, 17(7a), 20, 22, 25 and Annex VII (8 October 2025) — https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32025R2083 (accessed 20 October 2026)
  13. EUR-Lex, Regulation (EU) 2023/956 establishing a carbon border adjustment mechanism, Art 6(2)(c) and recitals on the sectors covered (10 May 2023) — https://eur-lex.europa.eu/eli/reg/2023/956/oj (accessed 20 October 2026)
  14. Ministry of Commerce and Industry, India–EU Agreement, Annex 14-A "Carbon Border Adjustment Measures" (text subject to legal revision) (February 2026) — https://www.commerce.gov.in/wp-content/uploads/2026/02/14.1-Annex-14A-Carbon-Border-Adjustment-Measures.pdf (accessed 20 October 2026)
  15. EUR-Lex, Regulation (EU) 2025/2650 amending Regulation (EU) 2023/1115 as regards certain obligations of operators and traders, Art 38 and Art 34(1a) as amended (19 December 2025) — https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32025R2650 (accessed 20 October 2026)
  16. EUR-Lex, Regulation (EU) 2023/1115 on deforestation-free products, Art 1(1) (31 May 2023) — https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32023R1115 (accessed 20 October 2026)
  17. European Commission (DG GROW), "Forced Labour Regulation" (applicable from 14 December 2027) — https://single-market-economy.ec.europa.eu/single-market/goods/forced-labour-regulation_en (accessed 20 October 2026)
  18. EUR-Lex, Regulation (EU) 2024/3015 on prohibiting products made with forced labour on the Union market, Art 3 and recital 18 (27 November 2024) — https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32024R3015 (accessed 20 October 2026)
  19. Bundesamt für Wirtschaft und Ausfuhrkontrolle (BAFA), "Lieferketten – Überblick" (thresholds; cabinet bill of 3 September 2025; BAFA enforcement approach) (notice of 1 October 2025) — https://www.bafa.de/DE/Lieferketten/Ueberblick/ueberblick_node.html (accessed 20 October 2026)
  20. EUR-Lex, Directive (EU) 2024/2853 on liability for defective products, Arts 2(1) and 8(1)(c) (23 October 2024) — https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:32024L2853 (accessed 20 October 2026)
  21. Reserve Bank of India, Foreign Exchange Management (Export and Import of Goods and Services) Regulations 2026, Notification FEMA 23(R)/2026-RB, regulations 1(2), 5(1) (realisation within nine months of shipment, twelve months where invoiced in rupees; extension by the authorised dealer) and 10 (export advances) (13 January 2026; in force 1 October 2026) — https://rbi.org.in/SCRIPTS/BS_FemaNotifications.aspx?Id=13277 ; amending Notification FEMA 23(R)/(1)/2026-RB (nine months substituted for fifteen) (22 September 2026) — https://rbi.org.in/Scripts/BS_FemaNotifications.aspx?Id=13714 (both accessed 20 October 2026)
  22. European Commission, "Deforestation Regulation implementation" (application from 30 December 2026; Annex I updated by Commission Delegated Regulation (EU) 2026/2102) — https://green-forum.ec.europa.eu/nature-and-biodiversity/deforestation-regulation-implementation_en (accessed 20 October 2026)
  23. Bundesministerium der Justiz, Gesetz über die unternehmerischen Sorgfaltspflichten in Lieferketten (LkSG), §§1 and 10, consolidated text (16 July 2021) — https://www.gesetze-im-internet.de/lksg/BJNR295910021.html (accessed 20 October 2026)

Disclaimer: This article is general information, not legal, tax or customs advice; the worked example is hypothetical, and tariffs, origin rules and EU and UK compliance dates change, so check the current rules for your products before acting.

Keep Reading

More practical commentary from the ATB Knowledge Series.

All insights
From Reading to Advice

How does this apply to your structure?

This article is general commentary — your situation is specific. When the position needs a clear answer for your business, talk to our team.

Get in touch