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Standard Input Output Norms (SION): Meaning and types
SION are mandatory rules for exporters that define the number of inputs needed to produce a unit of output for export. Learn more about it in the blog.
Understanding export laws and regulations is vital for any business engaged in global trade. In India, the Directorate General of Foreign Trade (DGFT) plays a key role in regulating foreign trade and ensuring compliance with export laws. One of its significant contributions is the establishment of Standard Input Output Norms (SION). These norms, also known as SION DGFT, are crucial for exporters because they define the quantity of inputs or materials needed to produce each unit of export product or output. In this blog post, we will cover what SION is, its purpose, types, components, and how it applies to different products.
What are Standard Input Output Norms (SION)?
In India, Standard Input Output Norms (SION) are guidelines established by the Directorate General of Foreign Trade (DGFT) that specify the quantity of inputs required to produce a unit of output of an export product. SION applies to many products, including electronics, engineering, chemicals, handicrafts, plastic, leather, and food products like fish. They are crucial for exporters as they allow them to import raw materials duty-free under various export promotion schemes.1
What is the purpose of SION?
The main function of SION is to specify the number of inputs needed to produce export products and facilitate duty-free imports of raw materials. Some other purposes of SION are as follows:
● Ensuring fair and clear export entitlements.
● Helping assess export performance and adherence to international trade rules.
● Boosting efficiency and competitiveness by improving resource use.
● Promoting value addition and technology upgrades in manufacturing.2
● Ensuring fair and clear export entitlements.
● Helping assess export performance and adherence to international trade rules.
● Boosting efficiency and competitiveness by improving resource use.
● Promoting value addition and technology upgrades in manufacturing.2
SION for Advance Authorization and conditions for exports
The Advance Authorization (AA) scheme permits duty-free import of inputs that are incorporated into export products, covering raw materials, packaging, fuel, oil, and catalysts used in the production process of these export goods, with allowances for normal wastage.
The following duties are exempt under the Advance Authorization Scheme:
• Basic customs duty
• Education cess
• Social welfare cess
• Anti-dumping duty
• Countervailing duty
• Safeguard duty
• IGST and compensation cess.
By providing these exemptions, the scheme helps reduce production costs and makes Indian products more competitive in international markets. SION helps Indian exporters claim benefits under the Advance Authorization Scheme by specifying the precise input quantities needed for export products, facilitating efficient and compliant imports. It streamlines the application process, ensures regulatory compliance, and promotes operational efficiency by minimizing wastage.
The following duties are exempt under the Advance Authorization Scheme:
• Basic customs duty
• Education cess
• Social welfare cess
• Anti-dumping duty
• Countervailing duty
• Safeguard duty
• IGST and compensation cess.
By providing these exemptions, the scheme helps reduce production costs and makes Indian products more competitive in international markets. SION helps Indian exporters claim benefits under the Advance Authorization Scheme by specifying the precise input quantities needed for export products, facilitating efficient and compliant imports. It streamlines the application process, ensures regulatory compliance, and promotes operational efficiency by minimizing wastage.
Conditions for exporters
The following are some conditions exporters must comply with to claim benefits under the Advance Authorization scheme:
• Raw materials imported under the Advance Authorization Scheme must be used solely for producing export goods and cannot be sold domestically.
• Exporters must fulfill their export obligations within the specified time, using the materials as intended, and comply with SION norms for input-output ratios.3
• Raw materials imported under the Advance Authorization Scheme must be used solely for producing export goods and cannot be sold domestically.
• Exporters must fulfill their export obligations within the specified time, using the materials as intended, and comply with SION norms for input-output ratios.3
What are the types of norms under DGFT?
The Directorate General of Foreign Trade (DGFT) has established two main types of norms to streamline export processes:
Standard Input-Output Norms (SION):
Ad-hoc norms:
What are the components of Standard Input Output Norms (SION)?
Standard Input Output Norms (SION) typically consist of the following key elements:
SION in different product groups
SION regulations specify that input-output ratios vary by product group, with each group having its own assigned rates. Here are two examples of SION for different product groups:
SION for rubber products
● Input materials : Miscellaneous chemicals like paraffin, wax, softeners, etc.
● Output products: All types of steel truck radial tires (tube type).
● Standard ratios: The predetermined ratios make sure that the number of raw materials used corresponds with the quantity of the manufactured product.
● Output products: All types of steel truck radial tires (tube type).
● Standard ratios: The predetermined ratios make sure that the number of raw materials used corresponds with the quantity of the manufactured product.
SION for electronic products
● Input materials: Materials like cathode foil, electrolyte, lead tab, aluminum can, etc.
● Output products: Electronic devices like aluminum electrolytic capacitors.
● Standard ratios: These norms define the use of miscellaneous raw items for making a specific unit of electronic devices.6
● Output products: Electronic devices like aluminum electrolytic capacitors.
● Standard ratios: These norms define the use of miscellaneous raw items for making a specific unit of electronic devices.6
Technical details for modifying SION
Exporters can modify SION to accommodate changes in production processes or new products. To request for modification, exporters must submit an online application in ANF 4B to the DGFT Norms Committee. The form requires details such as IEC number, RCMC number, excise registration number, application purpose, products covered, and existing SION number. Other required details may include the following:
• Technical details of the export products.
• Chartered Engineer Certificate certifying the import requirements for raw materials.
• Production and consumption data for the past three licensing years, certified by a Chartered Accountant, Cost & Works Accountant, or Jurisdictional Excise Authority.7
• Technical details of the export products.
• Chartered Engineer Certificate certifying the import requirements for raw materials.
• Production and consumption data for the past three licensing years, certified by a Chartered Accountant, Cost & Works Accountant, or Jurisdictional Excise Authority.7
Conclusion
Standard Input Output Norms (SION) are crucial for exporters, as they define the input-output ratios for each export product. By adopting SION, exporters can obtain advance authorizations and meet DGFT standards more easily. SION can be especially beneficial for e-commerce exporters as it can ensure faster processing of export benefits and streamline compliance with export regulations. For more support on compliance or other aspects of e-commerce exports, Indian exporters can avail the tools and services offered by e-commerce exports programs like Amazon Global Selling.
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Registered sellers can choose to ship their products by themselves through Merchant Fulfilled Network (MFN) or they can opt for Fulfillment by Amazon (FBA) and outsource order
fulfillment to Amazon including packing, storage, delivery, and returns. Amazon Global Selling simplifies the process of international shipping to the world, helping businesses navigate customs and reach a vast audience.
Frequently Asked Questions
What is the SION code?
The SION code is used to identify and differentiate each Standard Input Output Norm, making it easier for exporters and regulatory authorities to reference and apply the correct norms accurately.
What is Advance Authorization?
Advance Authorization Scheme is a duty exemption scheme offered by the Government of India that allows exporters to import goods without paying duties if they meet the prescribed export commitments. The scheme aims to help exporters lower production costs and encourages them to participate in global trade.
Are there specific industries or products that SION norms cover?
Yes, SION norms apply to specific sectors and products and are adjusted to the needs of each industry. This allows for the establishment of correct input-output relationships for specific products and processes.
Published on September 30, 2024.
Sources:
1. https://www.indiafilings.com/learn/standard-input-output-norms-sion/
2. https://www.taxmann.com/research/goods-services-tax/top-story/105010000000023796/standard-input-output-norms-sion-for-customs-under-dgft-experts-opinion
3. https://www.dripcapital.com/en-in/resources/blog/advance-authorization
4. https://www.taxmann.com/research/goods-services-tax/top-story/105010000000023796/standard-input-output-norms-sion-for-customs-under-dgft-experts-opinion
5. https://www.taxmann.com/research/goods-services-tax/top-story/105010000000023796/standard-input-output-norms-sion-for-customs-under-dgft-experts-opinion
6. https://www.dgft.gov.in/CP/?opt=sion
7. https://www.indiafilings.com/learn/standard-input-output-norms-sion/
Sources:
1. https://www.indiafilings.com/learn/standard-input-output-norms-sion/
2. https://www.taxmann.com/research/goods-services-tax/top-story/105010000000023796/standard-input-output-norms-sion-for-customs-under-dgft-experts-opinion
3. https://www.dripcapital.com/en-in/resources/blog/advance-authorization
4. https://www.taxmann.com/research/goods-services-tax/top-story/105010000000023796/standard-input-output-norms-sion-for-customs-under-dgft-experts-opinion
5. https://www.taxmann.com/research/goods-services-tax/top-story/105010000000023796/standard-input-output-norms-sion-for-customs-under-dgft-experts-opinion
6. https://www.dgft.gov.in/CP/?opt=sion
7. https://www.indiafilings.com/learn/standard-input-output-norms-sion/
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*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.
*Map not to scale. The map has been used for design and representational purpose only, it does not depict the geographical boundaries of the country. These do not conform to the external boundaries of India recognized by the Survey of India.