PortMatrix

Duty free import of raw materials

Advance Authorisation Scheme

The Advance Authorisation Scheme is a duty exemption scheme by DGFT that enables duty free import of raw materials for export production.

AI illustration of export-production factory store with raw copper wire coils, neatly stacked aluminum billets and packaging materials, Indian production planner checking materials list near organized racks
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What the scheme is

The Advance Authorisation Scheme (AAS) is an export incentive program promoted by the Ministry of Commerce and Industries; to encourage exports by reducing input costs for manufacturers. The Advance Authorisation Scheme allows exporters to import raw materials, components, or inputs duty-free (i.e., without paying customs duties), provided those inputs are used to produce goods that will be exported.

How PORTMATRIX helps

PORTMATRIX guides the exporters to register Advance Authorisation (AA) and Duty Free Import Authorisation (DFIA) on post export.

Key features

  • Duty-free import of inputs such as:

    • Raw materials
    • Intermediate goods
    • Packaging materials
    • Fuel (in some cases)

  • Export obligation

    The importer must export finished goods using those inputs within a specified time frame.

  • Value addition requirement

    Exported goods must have a minimum value addition over imported inputs (e.g. typically around 15%, though it can vary).

  • Wide applicability

    • Manufacturer exporters
    • Merchant exporters tied to supporting manufacturers

Simple example

A textile exporter imports fabric duty-free under AAS → uses it to manufacture garments → exports garments → fulfills Export Obligation → no duty payable.

Types of Advance Authorisation

  • Physical Exports

    Goods are physically exported out of the country.

  • Deemed Exports

    Supplies to units like EOU, EHTP, STP, BTP are treated as exports.

  • Annual Requirement Authorisation

    For exporters with regular production needs.

Benefits

  • Reduces production cost → increases global competitiveness
  • Improves cash flow (no upfront duty payment)
  • Encourages higher export volumes

Conditions and compliance

  • Must maintain detailed records of input usage
  • Must fulfill Export Obligation within deadline
  • Subject to audit by authorities like the Directorate General of Foreign Trade (DGFT)

From export order to closure of the authorisation

Stage 1Apply

  1. Exporter receives Export Order

  2. Estimate Raw Materials / Inputs Required

  3. Apply for Advance Authorisation to DGFT with the guidance of PORTMATRIX

  4. DGFT Issues Advance Authorisation License

Stage 2Import and make

  1. Import Inputs / Raw Materials Duty-Free

  2. Manufacture the Finished Goods

Stage 3Export and close

  1. Export the Finished Goods

  2. Submit Export Proof & Documents

  3. Fulfil Export Obligation

  4. Redemption / Closure of Authorisation

Key authorities involved

  • Directorate General of Foreign Trade (DGFT)
  • Central Board of Indirect Taxes and Customs (CBIC)

Common documents

  • Import Invoice
  • Bill of Entry
  • Shipping Bill
  • Export Invoice
  • e-BRC (Bank Realisation Certificate)

Frequently asked questions

What is the Advance Authorisation Scheme?
It is a duty exemption scheme by DGFT that enables duty free import of raw materials for export production. It is an export incentive program promoted by the Ministry of Commerce and Industries to encourage exports by reducing input costs for manufacturers.
Which inputs can be imported duty-free?
Raw materials, components or inputs, such as raw materials, intermediate goods, packaging materials and, in some cases, fuel, provided they are used to produce goods that will be exported.
What is the export obligation?
The importer must export finished goods using those inputs within a specified time frame, and must fulfill the Export Obligation within the deadline.
Is there a value addition requirement?
Yes. Exported goods must have a minimum value addition over imported inputs (e.g. typically around 15%, though it can vary).
What records and audits apply?
Detailed records of input usage must be maintained, and the scheme is subject to audit by authorities like the Directorate General of Foreign Trade (DGFT).

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