How DGFT Norms Fixation Supports the Advance Authorisation Scheme

 
In today’s global economy, exporters play a vital role in driving trade and boosting India’s position in international markets. To support exporters and reduce the burden of import duties, the government introduced the Advance Authorisation Scheme. Alongside this, the process of DGFT Norms Fixation ensures transparency, efficiency, and fairness in duty exemptions.

This article will break down both concepts, explain their importance, and provide practical insights to help businesses make informed decisions.

What Is the Advance Authorisation Scheme?

The Advance Authorisation Scheme is a facility provided by the Directorate General of Foreign Trade (DGFT). It allows exporters to import raw materials duty-free, provided they use these inputs for manufacturing goods that are later exported.

Key Benefits:

• Duty Exemption: Save on customs duties, IGST, and other levies.

• Improved Cash Flow: Reduces upfront financial burdens for exporters.

• Global Competitiveness: Helps Indian exporters price their products more competitively in international markets.

• Flexibility: Applicable to physical exports, deemed exports, and even intermediate supplies.

Example: A textile exporter in Surat imported specialized fabric dyes under Advance Authorisation. By saving on import duties, they reduced production costs and successfully expanded into European markets.

Understanding DGFT Norms Fixation

While the scheme is highly beneficial, determining how much input material can be imported against a certain export product is crucial. This is where DGFT Norms Fixation comes into play.

What Is It?

Norms Fixation is the process by which DGFT defines the input-output ratio for a specific product. This ensures exporters don’t misuse the scheme by importing excess raw materials.

Two Approaches to Norms Fixation:

1. Standard Input-Output Norms (SION): Predefined norms for common export products.

2. Ad-hoc Norms: If no SION exists, exporters can apply to DGFT for customized norms fixation.

Why It Matters:

• Ensures transparency in exports.

• Prevents misuse of duty exemptions.

• Creates a level playing field for exporters.

Example: An engineering goods exporter applied for ad-hoc norms fixation as their product wasn’t listed under SION. DGFT evaluated their manufacturing process and approved specific input-output ratios, enabling smooth exports.

How Advance Authorisation Scheme and DGFT Norms Fixation Work Together

The Advance Authorisation Scheme and DGFT Norms Fixation are interconnected. Without proper norms fixation, exporters cannot fully utilize duty-free imports. Together, they ensure exporters receive benefits while maintaining accountability.

Benefits of This Integration:

• Ease of Doing Business: Streamlined approvals reduce delays.

• Customisation: Exporters in niche industries get tailored norms.

• Regulatory Compliance: Simplifies audit processes and ensures adherence to DGFT guidelines.

Tips for Exporters

1. Understand Your Product Category: Check if it falls under SION before applying for ad-hoc fixation.

2. Maintain Records: Proper documentation is crucial for smooth redemption and audits.

3. Leverage Technology: Use DGFT’s online portal for faster processing.

4. Seek Professional Help: Consultants can guide exporters through complex applications.

Conclusion

The Advance Authorisation Scheme and DGFT Norms Fixation are powerful tools that help Indian exporters reduce costs and compete globally. While the scheme provides financial relief through duty exemptions, norms fixation ensures fairness and accountability.