Advance Authorisation Scheme (India): Complete Guide for Exporters

Overview

The Advance Authorisation (AA) Scheme is one of India's most important export promotion schemes under the Foreign Trade Policy (FTP). It enables exporters to import eligible inputs without paying customs duties, provided those inputs are used in manufacturing products that are subsequently exported.

The scheme helps exporters reduce production costs, improve global competitiveness, and promote value-added exports.

Objectives

The scheme is designed to:

• Allow duty-free import of inputs used in export production
• Reduce manufacturing costs
• Improve international competitiveness
• Encourage exports of value-added products
• Simplify procurement of imported raw materials

Who Can Apply?

The following entities are eligible:

• Manufacturer Exporters
• Merchant Exporters supported by Manufacturer Exporters

Applicants must comply with the eligibility requirements prescribed under the Foreign Trade Policy.

Prerequisites

Before applying, businesses should have:

• Import Export Code (IEC)
• Product details
• Manufacturing process
• Bill of Materials (BOM)
• Details of imported inputs
• Export product information

Additional documentation may be required depending on the product and export sector.

Benefits

The Advance Authorisation Scheme offers several advantages:

• Duty-free import of eligible inputs
• Lower production costs
• Improved export competitiveness
• Better cash flow
• Reduced customs burden

Eligible inputs may include:

• Raw materials
• Components
• Consumables
• Packaging materials
• Fuel
• Oil
• Catalysts
• Chemicals
• Accessories incorporated into exported products

Standard Input Output Norms (SION)

The Directorate General of Foreign Trade (DGFT) publishes Standard Input Output Norms (SION) that specify the quantity of imported inputs permitted for manufacturing specific export products.

Where no suitable SION exists, exporters may apply for Adhoc Norms.

Complete Workflow

1. Receive Export Order
2. Analyse Product Requirements
3. Identify applicable SION (or Adhoc Norms)
4. Calculate input requirements
5. Prepare application documents
6. Submit Advance Authorisation application
7. DGFT review and approval
8. Import duty-free inputs
9. Manufacture export goods
10. Export finished products
11. Fulfil Export Obligation
12. Apply for redemption and closure

Documents Commonly Required

Typical documents include:

• IEC
• PAN
• GST Registration
• Export Order
• Bill of Materials
• Manufacturing Process
• Product Details
• Input Consumption Details

During closure, additional documents generally include:

• Shipping Bills
• Bills of Entry
• Export Invoices
• eBRC (where applicable)
• Supporting compliance documents

Export Obligation (EO)

After receiving an Advance Authorisation, exporters are required to fulfil the prescribed Export Obligation (EO).

This generally involves:

• Importing eligible inputs
• Manufacturing export products
• Completing exports within the permitted period
• Maintaining supporting documentation
• Applying for redemption after EO fulfilment

Failure to fulfil the export obligation may result in recovery of applicable duties, interest, or other actions under the Foreign Trade Policy and customs regulations.

Amendments

Exporters may request amendments for situations such as:

• Quantity revisions
• Port changes
• Supporting manufacturer updates
• Input modifications
• Value corrections

Approval is subject to DGFT provisions.

Revalidation

Where permitted under policy, exporters may apply for revalidation if additional validity is required due to genuine business circumstances.

Clubbing of Authorisations

DGFT allows clubbing of eligible Advance Authorisations under specified conditions, helping exporters simplify export obligation fulfilment and licence closure.

Closure and Redemption

Once export obligations are fulfilled, exporters should:

1. Verify imports
2. Verify exports
3. Reconcile licence utilisation
4. Submit redemption documents
5. Obtain licence closure

Maintaining accurate documentation throughout the licence lifecycle significantly simplifies the closure process.

Common Mistakes

Businesses should avoid:

• Incorrect HS Code selection
• Wrong SION selection
• Incorrect input quantities
• Missing shipping documents
• Delayed export obligation completion
• Incomplete documentation

Best Practices

• Verify product classification before applying
• Maintain accurate Bills of Materials
• Track licence validity
• Monitor Export Obligation progress regularly
• Preserve all import and export records
• Reconcile imports and exports periodically

Frequently Asked Questions

Can merchant exporters apply?

Yes. Merchant exporters may apply when supported by eligible manufacturer exporters.

Can an Advance Authorisation be amended?

Yes, subject to the provisions of the Foreign Trade Policy and DGFT guidelines.

Can multiple shipping bills be used?

Yes, provided they satisfy the applicable policy requirements.

What happens if Export Obligation is not completed?

Applicable duties, interest, or other actions may apply depending on the circumstances and prevailing policy.

Conclusion

The Advance Authorisation Scheme is an important export incentive that enables Indian exporters to reduce costs by importing eligible inputs without customs duties. Proper planning, documentation, compliance monitoring, and timely fulfilment of Export Obligation are essential for successfully utilizing the scheme.