Rules of Origin (RoO) have become an important area of policy attention in international trade negotiations due to their far-reaching trade and investment implications to member countries. The main function of RoO in free trade agreements (FTAs) is to set conditions so that goods produced within FTAs comply with the essential origin criterion to claim the benefits of preferential market access and to prevent the entry of goods from non- FTA partners. The rising cases of disproportionate trade benefits have compelled countries to review their RoO provisions under different trade agreements. Additionally, the disproportionate benefit of RoO under the South Asia Free Trade (SAFTA) has received considerable interest in the recent years. This article examines how RoO under the SAFTA is extending unwarranted trade benefit to Bangladesh and Sri Lanka in bicycle and textile and clothing industries. Findings backed by data analysis demonstrate that the entry of Chinese imports into the Indian market via Bangladesh and Sri Lanka is adversely affecting the domestic bicycle and garment industries. Options available to revamp RoO under the SAFTA are limited. This article concludes that reforming value addition criterion and including a ‘sourcing restrictions’ clause may prove effective to prevent the unjustifiable benefits of RoO.