The government of India has introduced various types of schemes to increase exports made by the country. All import and export-related activities are governed by Foreign Trade Policy which is aimed at increasing the export and use trade expansion as an effective instrument of employment generation and economic growth.
At present Foreign Trade Policy 2015-2020 aims with the ‘Make in India’ vision and supports exports made by Special Economic Zones, Export Oriented Units, etc. It also contains various types of export promotion schemes which involve either the remission or exemption of customs duty. The Advance Authorization Scheme is a scheme for export promotion.
What is the Advance Authorization Scheme?
It is a scheme wherein inputs are allowed to be imported duty-free (after making normal allowance for wastage) if they are physically incorporated in a product that is going to be exported. For issuing Advance Authorization, the Obligation to export is usually put as a condition.
Duties exempt under the Advance Authorization Scheme
- Basic Customs Duty,
- Additional Customs Duty,
- Education Cess,
- Anti-dumping duty,
- Safeguard Duty and
- Transition Product-Specific Safeguard duty,
- Subject to certain conditions, Integrated tax and Compensation Cess, wherever applicable.
Duty-free importable items under the scheme
The following items can be imported without payment of duty:
- Inputs that are going to be physically incorporated in a product which is produced to be exported after making normal allowance for wastage
- Oil, fuel, catalysts which are consumed or utilized to obtain the export product.
- Spares that are mandatorily required to be exported along with the resultant product for export– up to 10% of the CIF value of Authorization.
- Specified spices would be allowed to be imported duty-free only for activities like crushing, sterilization, grinding, manufacture of oil or oleoresin, and not for simpler activities like cleaning, grading, re-packing, etc.
Eligibility for Advance Authorization
The Advance Authorization Scheme is available to either a manufacturer exporter directly or a merchant exporter tied with a supporting manufacturer. The authorization is available for the following:
- Intermediate supply
- Physical exports
- Supplies made to specified categories of deemed exports
- Supply of ‘stores’ on board of a foreign going vessel/aircraft provided that there are specific Standard Input Output Norms (SION) in respect of items supplied.
The validity of Advance Authorization
Advance Authorization is, from the date of issue of such Authorization, valid for 12 months. The Authorization is linked to the contracted duration of project execution or 12 months from the date of issue of such Authorization, whichever is more.