Advance Authorisation Scheme

Source: BS

Context: The government decided to ease rules under the Advance Authorisation (AA) Scheme, allowing exporters to claim duty-free benefits even if goods were shipped before licence issuance, provided the Bill of Entry is filed post licence date.

About Advance Authorisation Scheme:

• What It Is?

• A foreign trade policy initiative allowing duty-free import of inputs used in manufacturing export products.

• Administered By: Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce and Industry.

• Aim: To reduce input costs for exporters, thereby improving the global competitiveness of Indian goods.

• Key Features of the Scheme:

• Duty-Free Import: Allows import of raw materials, packaging, fuel, oil, and catalysts without payment of Customs duties. Standard Input-Output Norms (SION): Exports must conform to sector-wise norms issued by DGFT. Exporters can also seek ad-hoc norms if SION doesn’t apply. Eligibility: Open to manufacturer exporters and merchant exporters linked with supporting manufacturers. Physical Incorporation Principle: Inputs must be physically consumed or used in the manufacture of the final export product.

• Duty-Free Import: Allows import of raw materials, packaging, fuel, oil, and catalysts without payment of Customs duties.

• Standard Input-Output Norms (SION): Exports must conform to sector-wise norms issued by DGFT. Exporters can also seek ad-hoc norms if SION doesn’t apply.

• Eligibility: Open to manufacturer exporters and merchant exporters linked with supporting manufacturers.

• Physical Incorporation Principle: Inputs must be physically consumed or used in the manufacture of the final export product.

• Recent Relaxation:

• Previous Rule: If goods were shipped before the AA licence was issued, duty exemption was denied even if the Bill of Entry was filed later. New Rule: Exporters can now avail benefits as long as the Bill of Entry is filed after licence issuance, regardless of shipment date. Restriction: Relaxation does not apply to restricted or canalised goods unless special DGFT approval is granted. Impact: Removes ambiguity, streamlines Customs clearance, and boosts exporter confidence amid rising logistics challenges.

• Previous Rule: If goods were shipped before the AA licence was issued, duty exemption was denied even if the Bill of Entry was filed later.

• New Rule: Exporters can now avail benefits as long as the Bill of Entry is filed after licence issuance, regardless of shipment date.

• Restriction: Relaxation does not apply to restricted or canalised goods unless special DGFT approval is granted.

• Impact: Removes ambiguity, streamlines Customs clearance, and boosts exporter confidence amid rising logistics challenges.