India's Trade Overview

INDIA'S TRADE POLICY

DUTY EXEMPTION & REMISSION SCHEMES FOR INDIAN EXPORTERS

Duty exemption & remission schemes for Indian exporters provided by the Government of India include Advance Authorisation, Duty Free Import Authorisation and Duty Drawback:

Advance Authorisation is issued to allow duty free import of inputs that are physically incorporated in the export product (while making normal allowance for wastage). The incentive is also available for fuel, oil or catalysts, which are consumed/utilized in the process of production of the exported product.

AA is issued for inputs in relation to resultant product, on the following basis:

(i) As per Standard Input Output Norms (SION) notified (available in Hand Book of Procedures);
(ii) On the basis of self-declaration as per paragraph 4.07 of Handbook of Procedures.
(iii) Applicant specific prior fixation of norm by the Norms Committee.
(iv) On the basis of Self Ratification Scheme in terms of Para 4.07A of Foreign Trade Policy.

Eligibility

(a) Advance Authorisation can be issued either to a manufacturer exporter or merchant exporter tied to a supporting manufacturer.

(b) Advance Authorisation for pharmaceutical products manufactured through non-infringing (NI) process (as indicated in paragraph 4.18 of Handbook of Procedures) shall be issued to manufacturer exporter only.

(c) Advance Authorisation shall be issued for:

(i) Physical export (including export to SEZ);

(ii) Intermediate supply; and/or

(iii) Supply of goods to categories mentioned in paragraph 7.02 (b), (c), (e), (f), (g) and (h) of the FTP.

(iv) Supply of ‘stores’ on board of foreign going vessel/aircraft, subject to condition that there are specific Standard Input Output Norms in respect of item supplied.

Advance Authorisation for annual requirement is available for items notified in Standard Input Output Norms (SION). However, it shall not be available in case of adhoc norms under paragraph 4.03 (b)(ii) of FTP  and in respect of SION where any item of input appears in Appendix 4-J.

(i) Exporters having past export performance (in at least the preceding two financial years) shall be entitled for Advance Authorisation for Annual requirement.

(ii) Entitlement in terms of CIF value of imports shall be upto 300% of the FOB value of physical export and/or FOR value of deemed export in preceding financial year or Rs 1 crore, whichever is higher.

In cases where there is no SION/valid Adhoc Norms and where SION has been notified but exporter intends to use additional inputs in the manufacturing process, eligible exporter can apply for an Advance Authorisation under this scheme on self-declaration and self-ratification basis.

• Minimum value addition required to be achieved under Advance Authorisation is 15%.
• Export products where value addition could be less than 15% are given in Appendix 4D.
• Minimum value addition for Gems & Jewellery Sector is provided in paragraph 4.61 of Handbook of Procedures.
• For tea, the minimum value addition shall be 50%.

Following items are barred for self-declaration under Advance Authorisation Scheme:

i. All vegetable/edible oils classified under Chapter- 15 and all types of oilseeds classified under Chapter- 12 of ITC (HS) book;
ii. All types of cereals classified under Chapter–10 of ITC (HS) book;
iii. All spices other than light black pepper (light berries) having a basic customs duty of more than 30%, classified under Chapter-9 and 12 of ITC (HS) book
iv. All types of fruits/ vegetables having a basic customs duty of more than 30%, classified under Chapter-7 and Chapter-8 of ITC (HS) book;
v. Horn, Hoof and any other organ of animals;
vi. Honey;
vii. Rough marble blocks/slabs;
viii. Rough granite;
ix. Vitamins except for use in pharmaceutical industry.

Duty Free Import Authorisation is issued to allow duty free import of inputs. In addition, import of oil and catalyst which is consumed / utilised in the process of production of export product, may also be allowed. Imports under Duty Free Import Authorisation shall be exempted only from payment of Basic Customs Duty (BCD).

 Eligibility

(i) Duty Free Import Authorisation shall be issued on post-export basis for products for which Standard Input Output Norms have been notified.

(ii) Merchant exporter has to provide  details of the name and address of the supporting manufacturer of the product on the export document (shipping bill/bill of export/tax invoice for export prescribed under the GST rules.

(iii) Application is to be filed with the concerned Regional Authority before effecting export under Duty Free Import Authorisation.

(iv) No Duty Free Import Authorisation shall be issued for an input, which is subjected to pre-import condition or where SION prescribes ‘Actual User’ condition or Appendix-4J prescribes pre import condition for such an input.

Minimum value addition of 20% is necessary for this scheme.

Duty drawback is a special rebate under Section 75 of Indian Customs Act on exported products or materials. Duty drawback rates or concession are only applicable on products used in the processing of goods manufactured in India and then exported to foreign countries.

It is not given on inputs obtained without payment of customs or excise duty. In case of re-exports of goods, it should be done within 2 years from the date of payment of duty when they were imported. All industry drawback rates are fixed by Directorate of Drawback, Department of Revenue, Ministry of Finance and Government of India and are periodically revised – normally on June 1 every year.

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