Advance Authorization Scheme: Duty-Free Imports for Exporters Explained

What is Advance Authorization (AA)?

Advance Authorization (formerly called Advance License) is a DGFT scheme that allows duty-free import of inputs — including raw materials, components, consumables, fuel, oil, catalyst, and packaging material — that are physically incorporated into the export product. The scheme is governed by the Foreign Trade Policy and administered by the DGFT.

Key Benefits of Advance Authorization

• Zero Basic Customs Duty on imported inputs
• Zero Additional Customs Duty (CVD/SAD)
• Exemption from IGST on imported inputs (with LUT)
• No upfront payment of duties — frees up working capital
• Available both before (pre-shipment) and after (post-shipment) export

What are SION Norms?

Standard Input Output Norms (SION) are pre-defined government norms specifying the quantity of inputs required to produce one unit of a particular export product. For example, how many kg of steel are needed to make one unit of a particular engineering component.

If SION exists for your product, you can directly apply for AA based on those norms. If SION does not exist, you need to apply for "Adhoc Norms" fixation, which requires submitting detailed production data to the Norms Committee.

Application Process

Step 1: Check if SION exists for your product on the DGFT website under Appendix 4B.

Step 2: If SION exists, file the AA application on the DGFT portal with the required documents — IEC, RCMC, GST registration, and a self-declaration of inputs and outputs.

Step 3: DGFT Regional Authority issues the Advance Authorization with the specific inputs, quantities, and CIF values permitted for duty-free import.

Step 4: Import the inputs duty-free by quoting the AA number in the Bill of Entry. A bank guarantee or bond is required in some cases.

Step 5: Manufacture the export product and export it, maintaining proper records of input consumption (raw material account).

Step 6: Apply for EODC (Export Obligation Discharge Certificate) after completing exports, submitting shipping bills and input consumption statements.

Important Conditions

Advance Authorization exports are excluded from RoDTEP and Duty Drawback benefits — you cannot double-claim incentives on the same duty-free inputs. Plan your incentive strategy carefully before choosing between AA and other schemes.

The minimum value addition required under AA is typically 15% — meaning the FOB value of exports must be at least 15% more than the CIF value of duty-free imports.