The Advance Authorisation Scheme (AAS) is a flagship initiative under India’s Foreign Trade Policy (FTP) that provides exporters with significant cost-saving benefits. Designed to enhance the competitiveness of Indian exports, the scheme allows duty-free import of inputs required to manufacture export products. If you're an Indian exporter aiming to boost profitability and stay competitive in the global market, understanding the Advance Authorisation Scheme is crucial.


In this detailed guide, we’ll explain the scheme, who is eligible, how to apply, export obligations, validity, and key benefits—all tailored to make the process clearer and actionable for exporters.



What Is Advance Authorisation?

The Advance Authorisation Scheme allows businesses to import raw materials and inputs without paying customs duties, provided that the finished goods made from these materials are exported within a specified timeframe. This exemption applies to Basic Customs Duty (BCD), IGST, and Compensation Cess, making it one of the most cost-effective tools for Indian exporters.


It is particularly useful for manufacturers who rely on imported components, raw materials, chemicals, packaging items, and consumables. The idea is to encourage value-added exports by reducing the input cost burden.



Eligibility Criteria for Applying for the Advance Authorisation Scheme

The following entities are eligible to apply for Advance Authorisation:

Manufacturer Exporters: Those involved in producing goods for export.
Merchant Exporters: In association with supporting manufacturers.
Exporters of Deemed Exports: Supplies considered as exports under FTP (e.g., to EOU/SEZ units).
Project Exporters: Involved in overseas contracts that require input imports.


Applicants must ensure that:
The product to be exported is listed in the Standard Input Output Norms (SION) or is eligible under self-declaration norms.
There is a clear correlation between imported inputs and the finished export product.
The export product is not on the prohibited or restricted list under India’s trade policies.


Application Process for Advance Authorisation
The application process for Advance Authorisation has been digitized under the *DGFT (Directorate General of Foreign Trade)* portal. Here’s how to apply:

1. Register on DGFT Portal: Obtain a valid IEC (Importer Exporter Code) and register on [https://dgft.gov.in](https://dgft.gov.in).
2. Prepare Documents: Key documents include:
    Copy of IEC
    Digital Signature Certificate (DSC)
    CA-certified production and export data
    Technical specifications and BOM (Bill of Materials)
3. File Online Application: Use ANF 4A form to apply for Advance Authorisation.
4. Select Norm Type: Either under SION or Self-Declared Norms (SDN) if SION isn’t available.
5. Pay Application Fee: As per the DGFT fee structure.
6. Await Authorisation: If approved, DGFT issues the Advance Authorisation licence electronically.

Failure to fulfill EO will result in recovery of duties, interest, and possible penalties under Customs law.

Advance Authorisation Validity Period – How Long Is It Valid?


The validity of an Advance Authorisation is as follows:


Import Validity: Typically 12 months from the date of issue for import of inputs.
Export Obligation Period: 18 months from the date of authorisation. Extensions may be granted on request.
For annual requirement authorisations, the validity is aligned with the financial year or 12 months from the date of issue.

Timely compliance ensures you avoid penalties, maintain your exporter status, and keep your eligibility for future schemes.


Major Benefits of the Advance Authorisation Scheme for Exporters

The Advance Authorisation Scheme offers several strategic and financial benefits:

1. Cost Savings: Save on customs duty, IGST, and cess—significantly reducing the cost of production.
2. Improved Cash Flow: Duty-free imports mean less capital is tied up in tax payments.
3. Enhanced Competitiveness: Reduced input costs make your products more price-competitive globally.
4. Supports MSMEs: Especially beneficial for smaller exporters with tight margins.
5. Access to High-Quality Inputs: Without the added burden of duty, exporters can access better materials and technology inputs.
6. Deemed Export Benefit Compatibility: Can be availed along with other FTP incentives.


Advance Authorisation Scheme – Everything Indian Exporters Should Know

Before applying, Indian exporters should be aware of a few additional pointers:


No IGST Exemption under GST Refund: If you avail of Advance Authorisation, you won’t be eligible for IGST refunds under GST.
Can’t Sell in Domestic Market: Inputs imported under this scheme must be used for exports only.
Transferability: Advance Authorisations are generally non-transferable. Inputs and final products must remain within the specified supply chain.
Third-Party Exports: Allowed with proper documentation and permissions.
Redemption Process: Must apply for Export Obligation Discharge Certificate (EODC) after fulfilling EO.

Final Thoughts

The Advance Authorisation Scheme is an incredibly effective tool for Indian exporters, especially in high-volume manufacturing sectors such as textiles, engineering goods, chemicals, and electronics. By reducing the input cost burden and facilitating seamless imports, it helps businesses remain globally competitive.


If you’re an exporter or planning to start your export journey, understanding and leveraging this scheme can be a game-changer for your profitability and compliance.


Need assistance with Advance Authorisation compliance or application?
Get in touch with our export consultants to streamline your documentation, filing, and fulfilment process.