A Practical Guide to Advance Authorisation Scheme
The Advance Authorisation scheme offers Indian exporters a legitimate, well-established route to import inputs duty-free when those inputs are physically used in export production — improving cost competitiveness in international markets. But the Advance Authorisation is not a filing exercise. It involves SION norm validation or self-declared norm submission, export obligation binding, DGFT portal compliance, post-export redemption, and often customs coordination across bonded ports.
What You're Really Buying
An Advance Authorisation (AA) is a licence issued by the Directorate General of Foreign Trade (DGFT) under the Foreign Trade Policy (FTP) that allows an Indian exporter to import specified inputs — raw materials, components, intermediates, packing materials — without payment of Basic Customs Duty (BCD), Additional Customs Duty, Education Cess, and Anti-Dumping Duty (where applicable), provided those inputs are used in the production of export goods and the stipulated export obligation is fulfilled within the prescribed period. The scheme operates under Chapter 4 of the current Foreign Trade Policy. The quantity and value of inputs that may be imported duty-free is determined by Standard Input Output Norms (SION) published by DGFT — sector-specific norms covering a wide range of export products.
For the full scope, current process and what PNPC includes, see the dedicated Advance Authorisation Scheme service page.
Is This Relevant to Your Business?
- You are a manufacturer-exporter who imports specific raw materials, components, or packing materials that are physically incorporated into export products — and the inputs attract customs duty that erodes export competitiveness
- Your export product has a well-defined SION (Standard Input Output Norm) on the DGFT SION database — application is straightforward and redemption proceeds on standard norms
- You are on a confirmed export order or regular export relationship where the production cycle is reasonably predictable within the 18-month export obligation period
- You export products where the duty-free input saving is material relative to the administrative cost of maintaining Advance Authorisation compliance
When It Isn't the Right Fit
- Your export product does not have a published SION and the self-declared norm route requires extensive technical documentation that your production team cannot support — explore EPCG or Duty Drawback instead
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- Your inputs are not duty-bearing — if you are already importing under a zero-duty category, concessional rate, or exemption notification, the incremental benefit of an AA is negligible
Questions We're Actually Asked
What is the export obligation under an Advance Authorisation — and how is the 15% value addition calculated?
Every Advance Authorisation carries a mandatory Export Obligation (EO): the exporter must export goods of a minimum FOB value within the prescribed period (18 months from issuance, subject to extension). The minimum EO is computed as the CIF value of duty-free imports under the licence plus 15% — this is the 15% value addition requirement. Exports made prior to AA issuance can also be counted toward the EO — provided they are within the 12-month period before the AA was issued and the licensing conditions are met.
What is a SION — and what happens if my product does not have one?
Standard Input Output Norms (SIONs) are pre-approved norms published by DGFT that specify the maximum quantity of each input that may be imported duty-free per unit of export output for a given product. ) and are updated periodically by the Norms Committee. If your product has a published SION, the AA application is relatively straightforward — you declare the SION number, the import quantities follow automatically. If your product does not have a published SION, you must apply for ad-hoc norm fixation (submitted with the AA application for post-export verification) or, for certain categories, file a self-declared norm. Ad-hoc norm applications require a technical justification of the production process, input consumption per unit of output, and any waste/by-product generation.
What duties does an Advance Authorisation exempt — and which duties are not covered?
An Advance Authorisation exempts: Basic Customs Duty (BCD), Additional Customs Duty (surrogate CENVAT, now largely subsumed into IGST), Countervailing Duty, Anti-Dumping Duty (ADD) where specifically granted, and Education Cess on customs duties. The position on IGST has been specifically addressed in successive FTPs: currently, imports under AA are also exempt from IGST (Integrated Goods and Services Tax) on inputs — this was a significant clarification introduced through the GST implementation amendments to the Customs Exemption Notifications. Safeguard Duty and Social Welfare Surcharge are not exempt under the standard AA. The exact notification reference must be verified at the time of each import — duty exemption notifications are amended periodically.
Getting This Right From the Start
Speak with a PNPC Chartered Accountant about whether the Advance Authorisation scheme is the right instrument for your export inputs — and what the full compliance commitment looks like before you apply. The scheme is valuable when managed correctly. It is costly when it is not.
PNPC Global has advised Chennai, Bangalore and Hyderabad businesses since 1986. Explore the full Registrations & Licences practice for related services, or go straight to the Advance Authorisation Scheme page for specifics.
This is a general explainer, not a substitute for checking today's rules with PNPC or the relevant authority — figures and deadlines move, so none are quoted here as fixed.