Advance Authorisation explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Advance Authorisation lets an exporter import the inputs that go into an export product without payment of customs duty, on the condition that the resultant product is exported. Paragraph 4.03 of the Foreign Trade Policy, 2023 states the scheme; paragraphs 4.05 to 4.21 set out who can apply, the minimum value addition, the duties exempted, the actual user condition and the rules for restricted items. This guide covers the scheme itself. The validity period for import and the application route are in our companion guide on how an Advance Authorisation is issued, and the export obligation period, clubbing and discharge are in the guide on export obligation, clubbing and the EODC.
This article is based on the chapter-wise text of the Foreign Trade Policy, 2023 published on the DGFT website, as consulted on 2 October 2026; the copy carries no "updated up to" date. The procedure is taken from Chapter 4 of the Handbook of Procedures, 2023 as published on the DGFT website (file of July 2026), consulted on 2 October 2026. Later Notifications, Public Notices and Trade Notices should be checked before you act. If you are choosing between duty schemes for an export line, our legal consultation service can help you compare them.
Under paragraph 4.03(a), an Advance Authorisation allows import, without payment of duty, of input that is physically incorporated in the export product, making normal allowance for wastage; fuel, oil and catalyst consumed in production may also be allowed. It can be issued to a manufacturer exporter or a merchant exporter tied to a supporting manufacturer (paragraph 4.05(a)). The minimum value addition is 15% (paragraph 4.09(i)), with 50% for tea and 25% for spices. The authorisation and the material imported are subject to the Actual User condition (paragraph 4.16).
Where Advance Authorisation sits in Chapter 4
Paragraph 4.00 states that the schemes of Chapter 4 enable import of inputs for export production without payment of duty, including replenishment of inputs or duty remission. Paragraph 4.01 lists the duty exemption schemes (Advance Authorisation, which includes Advance Authorisation for Annual Requirement, and DFIA, the duty-exempt import authorisation scheme the Policy abbreviates in this way) and the duty remission schemes (Duty Drawback, RoSCTL and RoDTEP). Paragraph 4.02 says an authorisation is issued in accordance with the Policy and procedures in force on the date of issue. The Policy is made under section 5 of the Foreign Trade (Development and Regulation) Act, 1992. For a comparison of all the schemes, see our guide to duty exemption schemes under the Policy.
The four bases of issue: paragraph 4.03
An Advance Authorisation is issued for inputs in relation to the resultant product on one of four bases (4.03(b)):
| Basis | Where explained |
|---|---|
| (i) Standard Input Output Norms (SION) notified, available in the Handbook | Handbook 4.04 |
| (ii) Self-declaration, as per paragraph 4.07 of the Handbook | Handbook 4.07 |
| (iii) Applicant-specific prior fixation of norm by the Norms Committee, as per paragraph 4.06 of the Handbook | Handbook 4.06 |
| (iv) Self Ratification Scheme under paragraph 4.06 of the Policy | Handbook 4.07A |
The detail of each basis is in our articles on paragraphs 4.00 to 4.03 and 4.05 and the self-ratification scheme. Spices (paragraph 4.04) can be imported duty-exempt only for activities such as crushing, grinding, sterilisation and manufacture of oils or oleoresins, not for simple cleaning, grading or re-packing; paragraph 4.04A has a special scheme for fabric for apparel under Chapters 61 and 62 of ITC(HS).
Who can apply and for what: paragraph 4.05
An Advance Authorisation can be issued to a manufacturer exporter or to a merchant exporter tied to a supporting manufacturer (4.05(a)); for pharmaceutical products made through a Non-Infringing process it goes to the manufacturer exporter only (4.05(b)). It is issued for physical export including export to SEZ, intermediate supply, supply of goods to the categories in paragraph 7.02(b) to (g), and supply of stores on board a foreign-going vessel or aircraft where a specific SION exists (4.05(c)). Annual Requirement authorisations have their own conditions in paragraph 4.07: only for SION items, not where an input is in Appendix 4-J, for exporters with export performance in at least the preceding two financial years, and with an entitlement in terms of CIF value of up to 300% of the FOB value of physical export and/or FOR value of deemed export in the preceding financial year or Rs 1 Crore, whichever is higher.
Value addition: paragraphs 4.08 to 4.10
Value addition is (A minus B) divided by B, multiplied by 100, where A is the FOB value of export realised or FOR value of supply received, and B is the CIF value of inputs covered by the authorisation plus the value of any other input on which drawback is claimed or intended to be claimed (4.08). The gems and jewellery sector follows paragraph 4.37.
| Product | Minimum value addition | Paragraph |
|---|---|---|
| General rule | 15% | 4.09(i) |
| Export products listed in Appendix 4D | may be less than 15% | 4.09(ii) |
| Tea | 50% | 4.09(iv) |
| Spices | 25% | 4.09(v) |
Mandatory spares that must be exported or supplied with the resultant product are permitted without payment of duty up to 10% of the CIF value of the authorisation (4.10). Where the foreign buyer supplies some or all inputs without charge, the authorisation is still available; the notional value is added to the CIF value of import and the FOB value of export for value addition, while realisation of export proceeds excludes that notional value (4.19). See our article on paragraphs 4.08 to 4.10 and 4.19.
Duties exempted and drawback: paragraphs 4.14 and 4.15
Paragraph 4.14 says imports under Advance Authorisation are exempt from Basic Customs Duty, Additional Customs Duty, Education Cess, Anti-dumping Duty, Countervailing Duty, Safeguard Duty and Transition Product Specific Safeguard Duty, wherever applicable, using the names as the paragraph prints them. Imports against supplies covered by paragraph 7.02(c) and (f) are not exempt from the anti-dumping, countervailing, safeguard and transition safeguard duties. Imports for physical as well as deemed exports are also exempt from the whole of Integrated Tax and Compensation Cess under section 3(7) and (9) of the Customs Tariff Act, 1975; the paragraph prints "Compensation Cess" as shown, and the present levy should be checked. Paragraph 4.15 allows drawback at the rate fixed by the Customs authority for duty-paid imported or indigenous inputs not specified in the norms, which the application must disclose. See our article on paragraphs 4.12 to 4.15.
Actual user, restricted items and domestic sourcing
- Actual User (4.16). The authorisation and the material imported under it are subject to the Actual User condition and are not transferable even after the export obligation is completed; the holder may dispose of the product manufactured from the duty-exempt input once the obligation is complete. Waste or scrap may be disposed of on payment of applicable duty even earlier. See paragraph 4.16.
- Prohibited, restricted and STE items (4.18). No item prohibited for import or export is allowed under the scheme, unless a prohibited export item is separately notified. Items reserved for import by State Trading Enterprises cannot be imported against the authorisation but can be procured from them against an ARO or Invalidation Letter. The STE may issue a No Objection Certificate for a fee up to a maximum of Rs 5000. See paragraph 4.18.
- Domestic sourcing (4.20). The holder may procure inputs from an indigenous supplier, State Trading Enterprise, EOU, EHTP, BTP or STP against an Advance Release Order or Invalidation Letter, valid co-terminously with the authorisation. See paragraph 4.20.
- Realisation and re-import (4.21, 4.23). Export proceeds follow paragraph 2.53 of the Policy as printed, noting that paragraphs 2.52 and 2.53 were substituted on 20 August 2026; goods exported may be re-imported in the same or substantially the same form on Department of Revenue conditions, with intimation to the Regional Authority within one month. See paragraphs 4.21 and 4.23.
A practical example
Narmada Fasteners, an invented manufacturer exporter, wants to import steel wire for fasteners it exports. It applies for an Advance Authorisation on the SION basis. Under paragraph 4.03(a) the wire must be physically incorporated in the fasteners, with normal allowance for wastage. It must achieve the 15% minimum value addition of paragraph 4.09(i), calculated on the FOB value realised against the CIF value of the inputs. If it later wants to sell the leftover wire in the home market it cannot, because the material is subject to the Actual User condition of paragraph 4.16; waste or scrap arising in manufacture may be disposed of on payment of applicable duty.
Need help choosing or running a duty scheme?
The right scheme depends on the inputs, the export product and the period over which exports will happen. Our legal consultation service can review the Policy conditions against your plan, and our dispute resolution team can assist where an authorisation is the subject of a notice.
Key takeaways
- Advance Authorisation allows duty-exempt import of inputs that are physically incorporated in the export product (paragraph 4.03(a)).
- It is issued on four bases: SION, self-declaration, prior fixation of norms or self-ratification (paragraph 4.03(b)).
- The minimum value addition is 15%, with 50% for tea and 25% for spices (paragraph 4.09).
- The authorisation and the material imported are subject to the Actual User condition (paragraph 4.16).
- Periods for import validity and for the export obligation are in the Handbook, not in the Policy (paragraphs 4.17 and 4.22 point to it).
Read next
- Paragraphs 4.00 to 4.03 and 4.05: Advance Authorisation, basis and eligible applicant
- Paragraph 4.17: validity, revalidation and enhancement of Advance Authorisation
- Paragraph 4.22: export obligation period and extension
- Section 5 of the Foreign Trade (Development and Regulation) Act, 1992
Disclaimer: Based on the chapter-wise text of the Foreign Trade Policy, 2023 and the Handbook of Procedures, 2023 published on the DGFT website, and on the later Notifications named in this article, as consulted on 2 October 2026. The copies carry no "updated up to" date. Notifications, Public Notices, Trade Notices, the ITC(HS) schedules, Appendices and forms change often; the current text on the DGFT website should be checked before acting. This article is general information, not legal advice; check the official text before acting.