Advanced authorization is a promotion scheme for export businesses, allowing businesses to import inputs by paying only basic customs duty, on the condition of exporting the final products. The scheme benefits the manufacturers by lowering the upfront cost of imported inputs.
Issued by the Directorate General of Foreign Trade (DGFT), Advanced authorization scheme allows the business for duty free imports under specific conditions, such as export obligations. The imported inputs are exclusively used for the finished or semi-finished goods that are ultimately exported out of the country.
How it Works:
- The exporter applies for Advance Authorization through DGFT.
- The authorization specifies the eligible inputs and export requirements.
- Approved inputs can be imported with the applicable customs duty exemption.
- The inputs are used to manufacture export products.
- The exporter completes the required export obligation within the prescribed period.
Benefits:
- Reduces the cost of imported inputs
- Improves export price competitiveness
- Helps manage manufacturing costs
- Supports businesses involved in regular exports
Example:
A garment exporter in India needs to import fabrics for an order. If it is eligible for advance authorization, the exporter should only have to pay basic customs duty on imported fabrics, which will help lower the per-unit manufacturing cost of the finished products for export.