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The Advance Authorisation (AA) scheme helps exporters by allowing them to import necessary materials without paying any Read More... duties. This applies to both manufacturers and merchant exporters. Read less

Details

Are you an Indian exporter looking to reduce costs and boost your competitiveness? The Advance Authorisation (AA) scheme could be a game-changer for your business. It's designed to support your export endeavors by letting you import essential raw materials and components duty-free.

What Is The Advance Authorisation Scheme?

Simply put, the Advance Authorisation scheme allows eligible exporters to import inputs (raw materials, components, etc.) that will be used to produce goods for export. The key advantage is that these imported inputs are exempt from various duties and taxes, making your production process more cost-effective.

This scheme is based on norms that define the specific inputs required and their quantities for a particular export product. The Directorate General of Foreign Trade (DGFT) provides lists of Standard Input-Output Norms (SION) to make the process easier. If a standard norm doesn't fit your needs, you can also apply for your own specific norms.

Who Can Benefit From This Scheme?

The AA scheme is primarily for:

Manufacturer Exporters: Businesses that manufacture their own export products.
Merchant Exporters: Traders who export goods manufactured by others, provided they have a tie-up with supporting manufacturers.

The scheme also extends to specific types of supplies, including exports to Special Economic Zones (SEZs), intermediate supplies, and supplies of 'stores' to foreign-going vessels or aircraft, subject to specific conditions.

Why This Scheme Is Important

By removing import duties on inputs, the AA scheme significantly lowers the cost of production for exporters. This helps Indian businesses compete more effectively in the global market. It also supports industries that rely on imported materials for their export products and encourages the manufacturing sector in India.

Additionally, the scheme allows for the duty-free import of fuel, oil, and catalysts that are essential for the production process, further streamlining operations for exporters.

Objective

The Advance Authorisation (AA) scheme helps exporters by allowing them to import necessary materials without paying any duties. This applies to both manufacturers and merchant exporters.

Benefits

Internship Duration & Exposure:12 months of real-life work experience in top companies across India.
Monthly Financial Assistance:₹4,500/- per month by Government of India and ₹500 per month by the industry partner.
One-time Grant:₹6,000/- provided to interns for incidental expenses.
Insurance Coverage:Coverage under Pradhan Mantri Jeevan Jyoti Bima Yojana and Pradhan Mantri Suraksha Bima Yojana provided by the Government of India.

Note 1:Monthly assistance will be paid to the interns for the entire duration of 12 months of the internship.

Note 2:A one-time grant will be disbursed to each intern by the government through Direct Benefit Transfer, upon the intern's joining at the internship location.

Sources and references

Guidelines

Eligibility Criteria for Advance Authorisation

To be eligible for the Advance Authorisation scheme, you must meet the following conditions:

You should be a manufacturer exporter or a merchant exporter who is tied up with supporting manufacturer(s).
For pharmaceutical products manufactured using a Non-Infringing (NI) process, only manufacturer exporters can apply.

The Advance Authorisation can be issued for:

Physical exports, including supplies to SEZ units.
Intermediate supplies.
Supplies of goods to specific categories mentioned in Paragraph 7.02 of the Foreign Trade Policy (FTP).
Supply of 'stores' to foreign-going vessels or aircraft, provided specific Standard Input-Output Norms exist for the supplied item.

Export Obligation:

You need to achieve a minimum value addition of 15% on your exports.
The period for fulfilling your export obligation is generally 18 months from the date the Authorisation is issued, or as specified by DGFT.

How To Apply for Advance Authorisation

The application process for the Advance Authorisation scheme is primarily online. Here's how you can apply:

Visit the official Directorate General of Foreign Trade (DGFT) website: www.dgft.gov.in.
Navigate to the 'Services' section.
Under 'Advance Authorisation / DFIA', select 'Apply for Advance Authorisation (ANF 4A)'.
Fill in the application form with all the required details and submit it.

Ensure you have all the necessary documents ready before starting the online application.

Documents Required for Advance Authorisation

To apply for the Advance Authorisation scheme, you will need to provide the following documents:

Import Export Code (IEC) copy.
Detailed description of the export item.
Harmonized System of Nomenclature (HSN) code for the export product (ITC HS code).
Quantity of the export item.
Free On Board (FOB) value of the item to be exported.
Detailed description of the import item.
HSN code for the import product (ITC HS code).
Quantity of the import item.
Cost, Insurance, and Freight (CIF) value of the imported item.
IGST duty percentage applicable to the item to be imported (%).
Customs duty percentage applicable to the item to be imported (%).
Name of the Port of Registration.
Valid Registration cum Membership Certificate (RCMC) from an appropriate Export Promotion Council for your export product.
Industrial License, if applicable.
Chartered Accountant (CA) certificate.
CA certificate regarding consumption for the last 3 years.

FAQ’s

What is the main goal of the Advance Authorisation scheme?

The primary goal is to enable exporters to import raw materials and other essential inputs required for manufacturing export goods without paying any customs duties or taxes, thus reducing production costs and improving global competitiveness.

Can I import spices under this scheme and for what purposes?

Yes, duty-free import of spices listed under Chapter 9 of ITC (HS) is permitted, but only for specific processes like crushing, grinding, sterilization, or manufacturing oils/oleoresins. It is not allowed for simple activities like cleaning or repacking.

What does 'value addition' mean in the context of this scheme?

Value addition refers to the increase in the value of the exported goods compared to the value of the imported inputs used. The scheme requires a minimum value addition of 15%.

How long do I have to fulfill my export commitment after getting the authorisation?

You need to fulfill your export obligation within 18 months from the date the Advance Authorisation was issued. However, DGFT may notify different periods.

What is SION, and how does it relate to this scheme?

SION stands for Standard Input-Output Norms. These are pre-defined ratios of inputs needed to produce a unit of an export product, notified by DGFT. You can apply based on these norms or request specific norms if they don't suit your product.

Can the Advance Authorisation be used for supplies to SEZs?

Yes, the scheme can be used for physical exports, which includes supplies made to Special Economic Zones (SEZs).

What happens if I import inputs but don't export the final product?

The scheme is tied to an export obligation. Failure to meet this obligation within the specified period may lead to penalties, including the payment of duties and interest.

Do I need any specific registration to apply?

Yes, you will need a valid Registration cum Membership Certificate (RCMC) from an Export Promotion Council that is relevant to your export product. This is a crucial document for applying.

Is there any difference in eligibility for pharmaceutical exporters?

Yes, for pharmaceutical products made through a Non-Infringing (NI) process, only manufacturer exporters are eligible to apply for the Advance Authorisation.

Besides customs duty, are there other taxes I am exempted from?

Yes, you are also exempted from Integrated Goods and Services Tax (IGST) and Compensation Cess on the imported inputs, provided they meet the scheme's conditions.