India’s foreign trade ecosystem offers numerous schemes that empower exporters to grow globally while maintaining cost efficiency. Among these, the Advance Authorisation Scheme stands out as a crucial export promotion policy that allows duty-free import of raw materials used in manufacturing export products.
However, compliance doesn’t end with obtaining the authorisation — completing the Advance License EODC (Export Obligation Discharge Certificate) is equally important. Both elements work together to ensure businesses not only enjoy the benefits of duty exemption but also meet their export commitments responsibly.
This article explains how the Advance Authorisation Scheme works, the importance of Advance License EODC, and best practices for maintaining compliance.
Understanding the Advance Authorisation Scheme
The Advance Authorisation Scheme, governed by the Directorate General of Foreign Trade (DGFT), enables exporters to import inputs without paying customs duty, provided that these inputs are used in products meant for export.
Key Features of the Advance Authorisation Scheme:
Duty-free import of raw materials and components for export production.
Applicable for manufacturer-exporters and merchant-exporters tied with supporting manufacturers.
Export obligation must be fulfilled within a specified timeframe.
Issued based on Standard Input Output Norms (SION) or through self-declaration in special cases.
Example:
An automobile parts manufacturer can import specialized steel components without paying import duties under the Advance Authorisation Scheme. In return, the company must export finished products equivalent to the duty-free benefit received, within the export obligation period set by DGFT.
This scheme enhances competitiveness, reduces production costs, and boosts India’s export potential globally.
Fixation of Norms and Export Obligation
Each Advance Authorisation specifies the quantity of imported materials allowed, based on Standard Input Output Norms (SION) determined by DGFT. These norms define how much raw material is required to produce a specific quantity of finished export goods.
Businesses that cannot find an applicable SION can apply for ad-hoc norms fixation, ensuring flexibility across diverse industries.
To comply fully, exporters must meet their export obligation (EO) within the prescribed time, usually 18 months. Failure to fulfill the EO can result in penalties or blocking of future authorisations.
Understanding Advance License EODC (Export Obligation Discharge Certificate)
Once the exporter fulfills the required export obligation, they must obtain an Advance License EODC from the DGFT. The EODC serves as an official closure of the authorisation, confirming that the exporter has completed the necessary exports against the duty-free imports.
Steps to Obtain Advance License EODC:
Fulfilling the Export Obligation: Export products as per the authorisation terms.
Compiling Export Documents: Maintain all shipping bills, invoices, and bank realisation certificates (BRCs).
Filing EODC Application: Submit the online EODC application on the DGFT portal.
DGFT Verification: The DGFT office verifies exports and documentation.
Issuance of EODC: Once verified, DGFT issues the Export Obligation Discharge Certificate, officially closing the license.
Example:
A pharmaceutical exporter imported chemicals duty-free worth ₹1 crore under Advance Authorisation. After exporting the finished medicines worth ₹3 crore within 18 months, the company submitted the required documents and obtained the Advance License EODC. This completion not only ensured compliance but also allowed them to apply for future authorisations seamlessly.
Why Advance License EODC is Important
Obtaining the EODC is more than a formality — it’s a legal necessity. It certifies that the exporter has met all obligations under the Advance Authorisation and prevents any future demand for customs duty or penalties.
Without the EODC, the duty benefits availed under the scheme are considered unpaid, and the company may face recovery actions from customs or DGFT.
In short, EODC compliance ensures peace of mind, protects financial benefits, and strengthens your credibility as an exporter.
Best Practices for Managing Advance Authorisation and EODC Compliance
Maintain meticulous records of all imports, exports, and corresponding documentation.
Monitor export obligation deadlines to avoid delays.
Use digital tools or professional consultants for filing and compliance tracking.
Apply for ad-hoc norms fixation if your product category isn’t covered under SION.
Always apply for EODC immediately after completing exports to avoid compliance gaps.
These proactive steps help exporters avoid penalties, improve operational efficiency, and maintain a strong relationship with DGFT and customs authorities.
Conclusion
The Advance Authorisation Scheme and Advance License EODC together form the foundation of a smooth, compliant export operation. While the scheme reduces production costs by allowing duty-free imports, obtaining the EODC ensures legal closure and continued eligibility for future trade benefits.
For exporters aiming to scale globally, timely EODC compliance is not just a regulatory step — it’s a strategic move toward sustainable business growth.
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