The Advance Authorisation Scheme (AAS) is an export incentive under India’s Foreign Trade Policy (FTP) that allows manufacturers and exporters to import raw materials duty-free for producing export goods. This ensures cost competitiveness in global markets.
🔹 Key Benefit: Import raw materials without paying Basic Customs Duty (BCD), IGST, Anti-Dumping Duty, Safeguard Duty, and Compensation Cess.
🔹 Applicable For: Manufacturers & Merchant Exporters tied to supporting manufacturers.
Key Features of Advance Authorisation
✔ Duty-Free Import: Import essential inputs without paying duties, reducing production costs.
✔ Export Obligation (EO): Fulfillment of minimum export requirements within a specified period.
✔ Advance Authorisation for Annual Requirement: Bulk import facility for exporters with consistent export performance.
✔ Normal & Special Advance Authorisation: Special provisions for sensitive items like pharma, textiles, and electronics.
✔ Actual User Condition: Imported materials must be used in the production of export goods only.
✔ Minimum Value Addition Requirement: Exported goods must have a minimum value addition over input costs.
Who Can Apply for Advance Authorisation?
The following exporters can apply under this scheme:
✔ Manufacturer Exporters – Who directly produce and export goods.
✔ Merchant Exporters (Tied to Supporting Manufacturers) – Who source from manufacturers and fulfill export obligations.
✔ Deemed Exporters – Supplies to EOUs, SEZs, and mega projects also qualify.
It is applicable across various industries including textiles, engineering goods, chemicals, pharmaceuticals, and automobiles.
Key Benefits of Advance Authorisation
✅ 1. Cost Reduction
Import raw materials duty-free, reducing overall manufacturing costs.
✅ 2. Enhanced Global Competitiveness
Lower production costs allow exporters to offer competitive pricing in international markets.
✅ 3. Boost to Working Capital
No upfront customs duty means better cash flow management.
✅ 4. Faster Export Growth
With cost advantages, exporters can expand globally.
✅ 5. Deemed Export Benefits
Supplies to EOUs, SEZs, and large-scale projects under deemed export category qualify for additional incentives.
Export Obligation (EO) Under Advance Authorisation
Exporters availing duty-free imports under Advance Authorisation must fulfill an Export Obligation (EO) within a specified period.
✔ Normal EO: Exporters must fulfill the EO by exporting finished goods equivalent to a prescribed value addition (%). The EO period is 18 months from the date of issue, with possible extensions under DGFT provisions.
✔ Deemed Export EO: Supplies to EOU/SEZ projects qualify under deemed export EO.
✔ Minimum Value Addition: Exporters must achieve a minimum 15% value addition (varies by sector).
⏳ Failure to meet EO? Non-compliance leads to penalties, interest, and customs duty repayment.
Allowed and Restricted Imports Under AAS
✔ Allowed: Raw materials, intermediates, components, fuel, and packaging materials.
❌ Restricted: Capital goods, prohibited items under the ITC (HS) Classification.
Inputs must be directly used in the export product and specified under Standard Input Output Norms (SION) or applied under self-declaration.
Types of Advance Authorization
- Standard Advance Authorization – Issued based on SION.
- Advance Authorization for Annual Requirement – For large exporters based on previous exports.
- Advance Authorization for Deemed Exports – For supplies to EOU, SEZ, and projects under EPCG.
Common Challenges & Solutions
| Challenge | Solution | ||
|---|---|---|---|
| Changes in input-output norms | Seek EO extension or revalidation from DGFT. | ||
| Compliance with GST regulations | Apply under self-declaration or request SION revision | ||
| Delays in authorization processing | Maintain proper documentation and liaise with GST authorities. | ||
| Delays in authorization processing | Use online filing through DGFT’s e-platform | ||
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- 01 What is the purpose of Advance Authorisation?
- It allows exporters to import raw materials duty-free for manufacturing export goods, reducing costs and improving global competitiveness.
- 02 Who is eligible to apply for Advance Authorisation?
- Manufacturers, merchant exporters (linked to a manufacturer), and deemed exporters can apply.
- 03 Which duties are exempted under Advance Authorisation?
- BCD, IGST, Anti-Dumping Duty, Safeguard Duty, and Compensation Cess.
- 04 What is the minimum value addition required under this scheme?
- Typically, 15% value addition is required, but it may vary by industry.
- 05 How long do exporters have to fulfill their Export Obligation?
- Normally, 18 months, extendable upon request.
- 06 How long is DFIA valid?
- DFIA is valid for 12 months from the date of issuance, and imports can be made within 18 months.
- 07 What happens if an exporter fails to meet the Export Obligation?
- They must repay customs duty with interest and may face penalties.
- 08 Can Advance Authorisation be used for domestic sales?
- No, goods produced under this scheme are strictly for export purposes only.
- 09 Is IGST exempt under Advance Authorisation?
- Yes, but only if the exporter is not availing ITC (Input Tax Credit) on inputs.
- 10 Can DFIA be clubbed with other export incentives?
- It can be combined with RoDTEP & MEIS but not with Advance Authorisation.
- 11 Can we apply for multiple Advance Authorisations?
- Yes, exporters can apply for multiple authorisations based on their export needs.
- 12 What happens if an exporter fails to fulfill the Export Obligation?
- They must pay applicable customs duties along with interest.
- 13 What are Deemed Exports under Advance Authorisation?
- Supplies to EOUs, SEZs, and mega projects qualify as deemed exports
- 14 Can an exporter surrender an unused Advance Authorisation?
- Yes, by requesting cancellation and providing justification.
- 15 Is revalidation of an expired authorisation possible?
- No, revalidation is not allowed once it expires.