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What is the Advance Authorization scheme? Know eligibility, benefits, exempt duties, and export obligations

Advance Authorization scheme is issued by the DGFT to allow duty-free import of materials that are incorporated in export products. Learn more in the blog.

High import duties on raw materials and components can hurt the global competitiveness of export products. To address this issue, the Indian government implements crucial trade facilitation measures like the Advance Authorization scheme, which permits duty-free import of raw materials used in goods manufactured for export. By leveraging this scheme, businesses can cut production costs and price their products more competitively in international markets.

This blog explores the Advance Authorization scheme — covering eligibility, benefits, exempt duties, export obligations, and more. Understanding how the Advance Authorization license works can help exporters take full advantage of the scheme.

What is the Advance Authorization scheme?

The Government of India provides duty exemption for exporters under the Advance Authorization scheme (AA). Issued by the Directorate General of Foreign Trade (DGFT), it promotes the import of essential raw materials and additives that are physically integrated into export-bound products, including resources such as fuel, oil, electricity, and catalysts. The program also provides a standard allowance for the losses faced by exporters on these materials.¹

Benefits of the Advance Authorization scheme

Leveraging the Advance Authorization scheme gives exporters financial and competitive advantages, such as:

● Duty-free input procurement:

Exporters are exempted from paying basic customs duty, anti-dumping duty, safeguard duty, and other applicable duties on essential inputs such as raw materials, packing materials, and fuel for manufacturing goods that are intended for export.

● Exemption from GST levies:

A significant financial advantage under the current tax regime is the exemption from Integrated Goods and Services Tax (IGST) and compensation cess on the import of inputs.

● Enhanced global competitiveness:

By lowering manufacturing costs through duty-free input imports, the scheme helps make export products more price-competitive in international marketplaces.

● Potential for improved product quality:

Duty-free import of inputs gives exporters the flexibility to source higher-quality materials from global suppliers, helping improve the overall quality and appeal of their export goods.²

Duties exempted under Advance Authorization scheme

The Advance Authorization scheme offers major financial relief to exporters by exempting several import duties, thereby reducing manufacturing costs and boosting competitiveness. Key exempted duties include:

● Basic customs duty: This is the standard duty charged on imported goods.

● Additional customs duty: Levied on imported goods, equivalent to the excise duty on similar domestically produced items.

● Education cess: A surcharge applied to the aggregate of customs duties.

● Anti-dumping duty: Anti-dumping duty imposed on imported goods priced below the normal value in the exporting country, causing injury to the domestic industry.

● Countervailing duty: Countervailing duty charged on imported goods that have received subsidies in the exporting country.

● Safeguard duty: Safeguard duty is a temporary measure imposed on surges in imports that threaten domestic industry.

● Transition product specific safeguard duty: A specific safeguard duty applicable under certain trade agreements.

● Integrated tax (IGST): Applicable on imported goods under the Goods and Services Tax (GST) regime. This exemption is a major benefit, eliminating a significant tax component upfront.

● Compensation cess: Levied on certain specified goods under the GST regime to compensate states for potential revenue loss.³

Duty-free importable items under the Advance Authorization scheme

Under the Advance Authorization scheme, exporters can import specific categories of goods duty-free, provided they are used in the production of export items. The scheme allows for the import of:

1. Inputs that are physically incorporated:

This includes raw materials, components, intermediates, and consumables directly used in the manufacturing process of the export product.

2. Fuel, oil, catalysts:

These items can be imported duty-free if consumed or utilized during the production process to obtain the export product.

3. Mandatory spares:

Spares required for the existing plant, machinery, or equipment, up to 10% of the Cost, Insurance, and Freight (CIF) value of the authorization, can be imported duty-free, provided they are essential for the export obligation period. These spares must be related to the resultant product being exported.

4. Specified spices:

Duty-free import of certain spices is permitted only for activities like crushing, grinding, sterilization, or manufacture of specific value-added products for export.⁴

Eligibility criteria for Advance Authorization scheme

To benefit from the duty exemptions under the Advance Authorization scheme, exporters must meet specific eligibility criteria established by the DGFT. The primary eligible categories are:

● The applicant must be a manufacturer exporter or merchant exporter tied to a supporting manufacturer.

● The intended export product must be listed under the notified Standard Input Output Norms (SION).

● The exporter must complete the export within the stipulated time frame.

● Only products with measurable value addition (minimum 15%) are considered.

Documents required for Advance Authorization scheme

Proper documentation ensures smooth processing and approval. Key documents typically include:

● Importer-Exporter Code (IEC): Importer and Exporter code is mandatory for all import/export activities in India.

● Digital Signature Certificate (DSC): DSC is required for online applications on the DGFT portal.

● Registration Cum Membership Certificate (RCMC): RCMC is required if applying under certain export promotion councils or commodity boards.

● Application form ANF-4A: The prescribed application form, correctly filled out via the DGFT online portal.

● Copy of export order / Letter of credit (if available): Export Order / Letter of Credit act as evidence of the export contract or order.

● Technical details: Information regarding the inputs required, their quantities, and the resultant export product, including input-output norms justification (if not based on SION).

● Production and consumption data: Records justifying the quantity of inputs needed for the planned export volume.

● Undertaking/Declaration: Statements confirming compliance with the scheme's conditions, including the export obligation.⁶

What are the methods to issue an advance license?

There are four ways through which exporters can apply for an Advance Authorization license:

● SION (Standard Input and Output Norms):

Also known as IO (Input Output) norms, this method is applicable for products that fall into various categories like chemical, electronics, engineering, food products, handicrafts, leather, plastic, sports, and textile. It defines the number of inputs required to produce output for export purposes.

● Self-declared norms:

If the required export product is not present in the SION, an application needs to be made to the Regional Authority (RA) who will issue the Advance Authorization after a review.

● Self-ratification:

In this method, Advance Authorization Scheme is applicable to exporters who have obtained Authorized Economic Operator (AEO) Certificate.

● Applicant-specific prior fixation of norms:

You must first contact the Norms Committee to amend the norms through this procedure. DGFT will only grant a license based on predetermined standards.⁷

Application process for Advance Authorization scheme

Applying for the Advance Authorization scheme involves a structured online process through the DGFT portal. Here are the typical steps:

Step 1: Login to DGFT portal

Access the official DGFT website using valid credentials (IEC and Digital Signature Certificate).

Step 2: Navigate to scheme

Go to the ‘Services’ tab and find the section for ‘Advance Authorization scheme’.

Step 3: Fill application form (ANF-4A)

Complete the online application form ANF-4A with accurate details regarding the exporter, supporting manufacturer (if any), export product, required inputs, applicable norms (SION or self-declaration), value addition, port of registration, etc.

Step 4: Upload documents

Scan and upload all necessary supporting documents as listed previously. Ensure clarity and completeness.

Step 5: Fee payment

Pay the requisite application fee online through the portal’s payment gateway.

Step 6: Submit application

Submit the completed application electronically. An application reference number will be generated.

Step 7: Scrutiny by DGFT

The DGFT regional authority reviews the application for completeness and compliance with policy provisions. Queries may be raised if discrepancies are found.

Step 8: Issuance of authorization

If the application is approved, the Advance Authorization is issued electronically. The exporter can download it from the DGFT portal. The authorization specifies the allowed inputs, quantities, value, export obligation details (quantity, value, period), and port of registration.

Annual Advance Authorization

For exporters with a consistent export performance history and regular input requirements, the Foreign Trade Policy (FTP) provides the facility of Annual Advance Authorization. This allows eligible exporters to obtain a consolidated authorization for their estimated duty-free input requirements for the upcoming year, rather than applying for individual authorizations for each export order. The entitlement under Annual Advance Authorization is generally based on the Free on Board (FOB) value of physical exports in the preceding financial year.⁹

Calculation of Value Addition (VA)

Under the Advance Authorization scheme, calculating Value Addition (VA) is essential to determine an exporter’s compliance with the export obligation. VA refers to the increase in value achieved through the manufacturing or processing of imported inputs into the final export product.¹⁰

The DGFT defines value addition using the following formula:

VA (%) = (FOB value of export – CIF value of import) * 100/ CIF value of import

● FOB = Free On-Board value of the exported goods

● CIF = Cost, Insurance, and Freight value of the imported inputs

This formula helps ensure that the export generates sufficient economic benefit in proportion to the duty-free inputs utilized.

What is the Advance License for deemed exports?

Deemed Exports refers to transactions where goods supplied stay within India, and payment is received in Indian rupees or free foreign exchange. The Foreign Trade Policy recognizes certain categories of supply as Deemed Exports if manufactured in India. This includes:

● Supply against Advance Authorization/DFIA.

● Supply to EOUs/STP/EHTP/BTP units.

● Capital goods supply to EPCG holders.

● Supply to projects funded by specified Agencies/Funds via ICB.

● Supply to other projects that are funded by the government.¹²

Conclusion

The Advance Authorization scheme provides Indian exporters with a strategic edge by allowing duty-free import of inputs. This lowers production costs, improves cash flow, and boosts the global competitiveness of ‘Made in India’ products.

Finding efficient ways to reach international customers can help businesses fully utilize such benefits. E-commerce export programs like Amazon Global Selling equip Indian exporters with the necessary tools and resources — covering logistics, payments, and compliance — to sell their products across numerous international marketplaces, complementing the cost benefits gained through schemes like Advance Authorization.

Amazon Global Selling: Easy e-commerce exports and hassle-free shipping

If you are a business owner and you want to sell your products to the world, Amazon Global Selling enables you to list and sell ‘Made in India’ products on 18 Amazon global marketplaces. As an e-commerce export program, Amazon Global Selling provides support and guidance at every step of your export journey, connecting you to Amazon’s Service Provider Network for tailored compliance, payments, and logistics support.

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.

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Frequently Asked Questions

1. How do I get the advance license from DGFT?

The applicant can visit the DGFT website and follow this process to close their advance license: DGFT Website → Services → Advance Authorization → Closure of Advance Authorization.

2. Is Advance authorization transferable?

The Advance Authorization license is not transferable even after the completion of the export.

3. Is IGST exemption available under Advance Authorization?

Yes, IGST is exempted under the Advance Authorization scheme.

4. What is the redemption of the advance license?

When an exporter has completed export obligation, they must submit proof of export to DGFT and apply for a license for redemption for closure.

5. What is the validity of the Advance Authorization Scheme?

The Advance Authorization license is valid for 12 months from the date of issuance.

Published on September 29, 2022.
Updated on June 18, 2025.

Sources:
1. https://www.dgft.gov.in/CP/?opt=adnavce-authorisation
2. https://www.leremitt.com/blogs/advance-authorisation-scheme
3. https://afleo.com/advance-authorisation-scheme/
4. https://cleartax.in/s/advance-authorization-scheme
5. https://taxguru.in/dgft/complete-guide-advance-authorisation-scheme-availing-duty-free-inputs-export.html
6. https://content.dgft.gov.in/Website/ANF-4A.pdf
7. https://www.dgftguru.com/advancelicense/
8. https://content.dgft.gov.in/Website/Advance%20Authorisation%20Help%20Document%20V2.0.pdf
9. https://cleartax.in/s/advance-authorization-scheme
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