Duty Exemption Scheme
The Duty Exemption Scheme enables duty free import of inputs required for export production. Under the scheme government can issue an Advance Authorisation or DFIA to import \ procure domestically the inputs duty free.
Imports under Advance Authorisation for physical exports are exempted from payment of Basic Customs Duty, the whole of the integrated tax and Compensation Cess leviable under sub-section (7) and sub-section (9) respectively, of section 3 of the Customs Tariff Act, 1975 (51 of 1975), Additional Customs Duty, Education Cess, Anti-dumping Duty, Countervailing Duty, Safeguard Duty, Transition Product Specific Safeguard Duty, wherever applicable and such imports shall be subject to pre-import condition. For Imports against deemed export supplies have different rules.
Advance Authorisation (License)
Advance Authorization can also be issued for supplies with in India that are categorized as Deemed Exports. Purposes like supplies to Mega Power Projects, Projects funded by IBRD/IDA/ADB UN Agencies etc, EOUs etc.
An Advance Authorization is issued to allow duty free import of inputs, which are physically incorporated in the export product (making normal allowance for wastage) subject to actual user condition. Such Authorizations are exempted from payment of basic customs duty, additional customs duty, anti dumping duty and safeguard duty, if any.
Advance Authorizations are issued with an obligation to export the quantity and value of goods mentioned therein in a fixed period of 18 months. Before imports customs ask for a bond or a bank guarantee towards security for duty saved, till export obligation is fulfilled.
Advance Authorizations or materials imported against it cannot be transferred even after completion of Export Obligation.
Advance Authorisations are also available for Annual requirements under SION.
Types of Advance Licenses:
At Andees, we facilitate two types of Advance Licenses issued by the Directorate General of Foreign Trade (DGFT):
- Advance Authorization: This license permits duty-free import of raw materials and inputs incorporated into the exported product. It benefits exporters with firm export orders or a proven export track record.
- Advance Authorization for Annual Requirement: This license is ideal for exporters with continuous export commitments or those engaged in job work. It allows them to import duty-free inputs equivalent to their annual export value.
Benefits of Advance Licensing:
Advance Licensing brings a plethora of benefits to exporters and the Indian economy:
- Cost Savings: Duty exemptions or reductions on imported inputs lead to significant cost savings for exporters, enhancing product price competitiveness globally.
- Promotes Export-Oriented Industries: Advance Licensing encourages industries to focus on export-driven production, supporting their growth and expansion.
- Streamlined Import Process: Elimination of upfront customs duties simplifies import procedures, reduces paperwork, and accelerates clearances for eligible exporters.
- Boosts Global Competitiveness: Access to duty-free or reduced-cost inputs enables exporters to produce higher-quality and diversified goods, elevating their competitiveness.
- Foreign Exchange Earnings: Incentivizing exports leads to increased foreign exchange earnings, bolstering India’s economic position.
Eligibility:
The Advance Authorisation Scheme is open to both manufacturer and merchant exporters linked to a supporting manufacturer. It covers various purposes, including physical exports, intermediate supply, deemed exports, and supplying stores to foreign-going vessels/aircraft.
Advance Licensing is a pivotal instrument in India’s trade policy, providing crucial support to export-oriented industries and fostering economic growth. At Andees, we believe in harnessing the power of this scheme to enable exporters to produce high-quality goods at competitive prices. As India strives for a larger global market share, Advance Licensing continues to be a vital component in realizing its export potential and enhancing competitiveness on the international stage.
Expertise with Policy Relaxation:
Andees boasts a comprehensive understanding of policy relaxation measures, our seasoned experts specialise in representing in Policy Relaxation Committee(PRC) matters, ensuring that our clients remain at the forefront of trade developments.
Input – Output Norms (SION)
The government has published the standard input-output norms (SION) for more than 6000 products. These are available in the Handbook of Procedures (Vol-II) of Exim Policy. While applying for advance Authorisation the Input-Output norms are to be followed for duty exempted inputs. If however no norms are available, Authorisation can still be applied on self- declaration basis.
Represent Norms – Substantial Experience with Norms Committee:
Our extensive experience extends to engaging with norms committees, where we play an active role in ratifying and establishing industry norms. This involvement allows us to contribute significantly to the development of regulatory frameworks that are not only compliant with national standards but also conducive to the growth of specific sectors.
Notable Collaborations – Norms for Steel Wire and Beyond:
Andees has a proven track record of working closely with governmental bodies and ministries, including the Food Ministry, to address norm-related matters. In one instance, we were instrumental in shaping and standardising norms for the steel wire industry. This collaborative effort with relevant authorities underscores our commitment to driving policy changes that benefit our clients and industry stakeholders.
Our dedication to representing norms and advocating for policy relaxation reflects our unwavering commitment to facilitating smoother trade operations, reducing barriers, and bolstering the competitiveness of our clients on the global stage. As a trusted partner in international trade, Andees leverages its expertise to ensure that businesses can thrive in an ever-evolving global market environment.
Choose Andees as your partner to navigate the world of international trade and benefit from the Advance Licensing advantage. Together, let’s drive exports, foster growth, and build a prosperous future for India’s global trade endeavors.
Duty Free Import Authorisation (DFIA)
DFIA is issued to a merchant-exporter or manufacturer-exporter for duty free import of inputs used in the manufacture of goods without payment of basic customs duty. DFIA is issued on minimum value addition of 20%, and only for the export of products covered under the SION. DFIA or the material(s) imported against it are freely transferable after completion of Export Obligation.
Indigenous Sourcing
The holder of advance Authorisation and DFIA may also source their inputs from indigenous sources. In such cases, the GST paid by the indigenous supplier can be taken credit of or refunded. In addition the indigenous supplier can import his own raw material duty free or can even get a drawback.
Related Notifications
| Notification No. 21/2023 | Notification No. 22/2023 | Notification No. 23/2023 |
| Notification No. 24/2023 | Notification No. 25/2023 |
Role of Andees Team
It is very important to note in the above process, that foresight and experience can play a big role in not only getting an optimum license issued but also in monitoring the export obligation and documentation at each point. Further, in case of delay in exports, timely actions can save a lot of problems and liability in future. Finally, proper documentation and representation at the time of redemption can ensure a smoother and optimum closure, taking into account other schemes, compliances etc.
Andees team has been assisting clients with the whole process of Advance Authorisation / DFIA for the last more than 20 years. Since the team is Tech-Savvy, we maintained all the data on the cloud and give real time updates on their work to the client with software. Sound knowledge of Policy & Procedures along with a very qualified and experienced team, Andees has handled hundreds of complicated matters related to Advance Authorisation, saving thousands of crores for clients that are MNCs, Indian Corporates, or PSUs. While proper planning during the entire life cycle has helped smooth operations, several complicated matters even at the last stage have been saved by Andees team from substantial liabilities.