Authorised Economic Operator (AEO)

The World Customs Organisation defines an Authorized Economic Operator (AEO) as a party involved in the world-wide movement of goods, in whatever function, that has been approved by, or on behalf of, a national Customs administration as complying with WCO or equivalent supply chain security standards.

Custom duty

The World Customs Organisation (WCO) in 2005 embraced Standards to Secure and Facilitate Trade (SAFE) framework, a set of recommendations to customs organisations. The foundation of SAFE is based on two pillars; Customs-Customs network and Customs to business partnerships. It aims to enhance international supply chain security and facilitate movement of legitimate goods. Some of the key elements of this framework entail harmonizing advance cargo information; introducing risk management approach; sending country’s customs inspection of high-risk containers by customs authorities; and benefits program for compliant traders.

The WCO SAFE Framework of Standards refers to the concept of Authorized Economic Operator (AEO) as a party involved in the world-wide movement of goods, in whatever function, that has been approved by, or on behalf of, a national Customs administration as complying with WCO or equivalent supply chain security standards. Thus, an AEO encompasses various players in the international supply chain. Examples of AEOs include inter alia manufacturers, importers, exporters, brokers, carriers, consolidators, intermediaries, ports, airports, terminal operators, integrated operators, warehouses and distributors.

The WCO AEO Implementation Guidance offers a phased approach to the implementation of an AEO programme. In addition, the organisation also lists the benefits of AEOs. These are lesser inspections and priority treatment for inspections, mutual recognition with foreign AEO programmes, reduced security and guarantee requirements, quicker release and pre-clearance, simplified procedures, priority treatment in emergency situations, etc. Industry insiders also opine that AEO programmes deliver tangible cost-saving advantages to companies of all sizes and sectors by facilitating cross-border trade and streamlining traders’ relationships with local Customs administrations. They also allow resources to be subsequently reallocated towards inspections of unknown high-risk cargo.

The International Chamber of Commerce has released recommendations for successful AEOs programmes that would promote greater global harmonization and secure maximum benefits:

1. Offer clear benefits: Ensure faster release of goods, self-assessment and relief from bond requirements.
2. Follow WCO SAFE Framework: Don’t diminish trade facilitation for non-AEO traders and SMEs
3. Design with business: Customs-business cooperation is key – utilize Chamber of Commerce networks.
4. Complement existing programmes: Make AEO status compatible with other domestic trade compliance schemes.
5. Recognize status beyond Customs: AEO status should have effect with all border agencies.
6. Ensure Customs capacity: Ensure capacity to implement effectively – including training.
7. Facilitate foreign recognition: Expand mutual recognition between countries for regional coherence.
8. Open up AEO status to all: Include all supply chain operators, not just importers and exporters.

AEOs in India

In accordance with the Framework of Standards to Secure and Facilitate Global Trade, Indian Customs has collaborated with several foreign customs administrations to align with their AEO programs. The process for AEO accreditation has been systematically decentralized. This will result in speedier and more streamlined processing of AEO applications. This vision is in sync with the Indian Prime Minister’s ambitious vision of ‘Under 50’ rank in World Bank’s Ease of Doing Business Report.

Indian Customs is organizing extensive outreach programs and regular awareness dialogue with the trade community to make them aware about this program and the benefts associated with it. For any query regarding the AEO Programme, the AEO Cell in the jurisdictional Custom Chief Commissioner’s office can be approached. The AEO cell is the nodal agency to take the applicant through the complete AEO accreditation process and help the applicant as and when the support is required for fling of AEO application.

Indian Customs offers its AEO members with certain benefits:

1. Self-declaration of Standard Input Output Norms (SION) under Para 4.07A of Foreign Trade Policy (FTP) 2015-20 for AEO status holder Exporters in cases where SION is not notified.
2. Inclusion of Direct Port Delivery of imports to ensure just-in-time inventory management by manufacturers – clearance from wharf to warehouse for AEO T1, T2 and T3.
3. Inclusion of Direct Port Entry for factory stuffed containers meant for export by AEOs for AEO T1, T2 AND T3.
4. ID cards to be issued to AEO’s personnel for allowing entry to Customs House, CFS and ICD.
5. Investigation related to AEO status holder shall be fast tracked within 6-9 months.
6. Dispute resolution related to AEO status holder shall be completed/ adjudicated within 6 months.
7. AEO status holder will get an e-mail regarding arrival/ departure of vessel carrying their consignment.
8. Faster disbursal of drawback amount within 72 hours of EGM submission.
9. The assessment/examination shall be done processed on priority basis.
10. Faster disbursal of refund, including IGST refund and rebate for AEO status holder within 45 days of submission of complete documents.
11. Automatic activation of Deferred Duty Payment option for AEO – T2 and AEO T3 status holder.
12. Benefits of Mutual Recognition Agreements with other Customs Administrations for AEO T2 and AEO T3.
13. Extension of facilitation to exports in addition to imports depending on the tier of certification.
14. Self-certified copies of FTA / PTA origin related or any other certificates required for clearance would be accepted.
15. Request based on-site inspection /examination.
16. Paperless declarations with no supporting documents.
17. Recognition by Partner Government Agencies and other Stakeholders as part of this programme.

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