Topic Insight
Advance Authorization Scheme allows duty free import of inputs, which are used in manufacturing of an export product. In addition to any inputs, packaging material, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, is also allowed.
The quantity of inputs allowed for a given product is based on specific norms defined for that export product, which considers the wastage generated in the manufacturing process.
Validity of Advance Authorization
Advance Authorization is valid for 12 months from the date of issue of such Authorization
Export obligation
Export obligation may be fulfilled within 18 months from the date of issue of Authorization.
The export proceeds should be realized in freely convertible currency.
Value Addition
The minimum Value Addition to be achieved is 15%, except for physical exports for which payments are not received in freely convertible currency and other specified export products
Calculation of Value addition = [(1 – 2) x 100] / 2
FOB Value of exports realized / FOR value of supply received
CIF Value of imports against authorization + any inputs on which drawback is claimed or intended to be claimed
Input-Output Norms
The quantity of inputs allowed for a given product is based on specific norms defined for that export product, which considers the wastage generated in the manufacturing process. Broadly the Advance Authorization is issued on the basis of the following Input-Output Norms:
1. Standard Input Output Norms (SION)
DGFT provides a sector-wise list of Standard Input-Output Norms (SION) under which the exporters may choose to apply
2. Self-declaration
SION Norms are not classified for some products. Therefore, the importer can self-declare norms in an application filed with regional authority (RA). The RA will review the application and may issue authorization based on the merits
3. Application prior to fixation of the norm by the Norms Committee
SION Norms are not classified for some products. Therefore, the importer can make an application to fix the norms for the product. The Norms Committee after considering the application shall fix the norms.
4. Self-Ratification Scheme
Only Authorized Economic Operator (AEO) certificate holders can apply for advance authorization under Self-Ratification Scheme when there is no SION or valid ad-hoc norms for an export product and also where, SION has been notified, but the exporter wishes to use additional inputs in the manufacturing process.
Ratification by the norms committee is not required under this scheme and the regional authority may issue Advance Authorization upon fulfilment of the relevant conditions.
FAQ
How much minimum value addition is required for advance authorization?
1. Minimum value addition is required to be achieved under Advance Authorization is 15%.
2. Export Products where value addition could be less than 15% are given in Appendix 4D.
3. In case of Tea, minimum value addition shall be 50%.
Value addition is calculated based on values in which currency?
Value addition in the application form is calculated based on the “Freely Convertible Currency” selected by the applicant in the application form.
Past Years Export / deemed supplies details are not coming correct in the application form, how should I correct it?
Past Years Export / deemed supplies details are populated from IEC profile. In case details are not populated correctly, please modify IEC.
What is the application fee for Advance Authorization?
Application fee for import License for restricted item / permission / certificate / Advance Authorization / DFIA / EPCG Authorization is ‘One per thousand or part thereof subject to a minimum of Rs. Five Hundred and maximum of Rupees one lakh on CIF value/duty saved amount of Authorization/ license / permission’.
What if I’m unsure about the ‘ITC(HS) Code’ for the product to be exported/ imported?
ITC(HS) Codes are necessary information that must be filled in for importing/exporting products. Request you to connect with technical experts to identify the ITC(HS) codes for your concerned products before imports.
What if I’m unsure about the ‘Technical characteristics’ for the product to be imported/exported?
Technical detail is important information that is requested. It is necessary to fill in relevant information in this field. Please connect with the manufacturer of your product for more details on this.
What if I discover an error after submitting the authorization?
For all application that are not yet submitted, you can modify the application from the “Drafts” section on the website. In case you have submitted the authorization application, no changes can be made in the submitted application but applicant can raise request for ‘withdraw’ request of the submitted application.
