Under the Advance Authorisation scheme, eligible exporters are granted permission to import materials required for manufacturing or processing goods that will be eventually exported. This exemption from customs duties on imports helps reduce production costs and enhances the competitiveness of domestically produced goods in the international market. 

In this blog, we will discuss the extension of the Export Obligation (EO) Period and Import Validity period under Advance Authorisation. 

As you all know, the initial Export obligation period under Advance Authorisation is 18 months, and the initial Import validity period is 12 months. This means that from the license issue date, you have 12 months to complete the import and 18 months to complete the export. 

If your Import or Export is not completed within the validity period, you can seek an extension according to the policy provisions. 

So, how many times and for how long can you get an extension? How and where do you apply for an extension? What documents are required? We will discuss all these topics in this blog. So, let’s get started. 

Revalidation of Advance Authorisation License 

We often discuss about extending the time when we can bring in imports. But in official terms, this is called “Revalidation of Advance License” as per the rules. 

The initial validity is 12 months from the License issue date, and you can apply for a one-time extension for an additional 12 months. This means a total of 24 months. 

To apply for revalidation, you need to submit an online application to the Regional Authority of DGFT. The application/government fees for revalidation are Rs.500. The required documents include a Request Letter, a Justification Letter, and Application Form ANF 4D. 

If even after 24 months have passed, you still have a remaining portion of imports to complete, you cannot obtain further extension from the RA DGFT. For this, you need to approach the PRC Committee in Delhi. The PRC Committee approves further extension of 6 months only in cases of genuine hardships. 

Export Obligation [EO] Period Extension of Advance Authorisation Licenses issued for Restricted/Prohibited Items 

Advance Licenses can come in various types. For instance, some licenses are meant for General/Normal products, while others are issued in accordance with Appendix 4J. There are also licenses specifically for restricted or prohibited items. 

In each of these cases, the Export Obligation (EO) period and the terms for extensions differ. We will go through each type with examples. 

For instance, the government recently announced that it would permit the export of Wheat flour [Atta] under Advance Authorisation. If an Advance License is obtained for Wheat flour, the initial Export obligation period is 180 days from the date of clearance of each Import consignment. In this case, no further extension of the EO period will be granted. 

This means that the normal validity for importing will remain 12 months. However, as your imports are being cleared, the proportionate quantity should be exported within 180 days. No extensions will be provided beyond this 180-day period. If your exports are not completed within this timeframe, you will be required to pay duty and interest on the excess imports. 

Export Obligation [EO] Period Extension of Advance Authorisation Licenses – General Type 

Advance Licenses that do not fall into the categories of Appendix 4J/Restricted/Deemed Project supplies will be referred to as General licenses. 

For these licenses, the initial Export Obligation (EO) period is 18 months, and you can apply for two further extensions of 6 months each through the Regional Office of DGFT. 

The first EO extension will be for 6 months, and the second EO extension will also be for 6 months. 

You can see the composition fees for the first EO extension in the image provided. 

Composition Fees for 1st EO Extension of Advance Authorisation 

So, initially, the fees that were calculated as a percentage have now been converted to flat fees by DGFT under the ease of doing business initiative, based on the CIF value of the Advance License. 

For the second EO extension, the previous requirement was that a minimum of 50% of the Export Obligation should be completed for eligibility. However, as per the new Handbook of Procedures (HBP) 2023, this condition has also been removed. The composition fee for the second EO extension is separate, as shown in the provided image. 

Composition Fees for 2nd EO Extension of Advance Authorisation 

You can see that the composition fees for the 2nd EO extension are double that of the 1st EO extension. 

After these two extensions, you cannot get any further extensions from the Regional Office of DGFT. If you still require an extension, you would need to approach the Policy Relaxation Committee (PRC) in New Delhi. 

Export Obligation [EO] Period Extension of Advance Authorisation Licenses – issued under Appendix 4J condition 

Appendix 4J is a comprehensive list of import items for which, if you obtain an Advance License, the Export obligation period is significantly reduced. 

You can view the list of Appendix 4J in the provided image 

Appendix 4J of Export Obligation Period for Specified Inputs with Pre-import conditions under Advance Authorizations 

You can observe that mainly this category covers items such as drugs imported from unregistered sources and precious metals like gold, silver, and platinum. 

For drugs imported from unregistered sources, the Export Obligation (EO) period is 12 months from the date of clearance of each import consignment, while for gold, silver, and platinum, it is 120 days from the date of clearance of each import consignment 

Advance Licenses issued under the conditions of Appendix 4J are eligible for only one EO extension, which is limited to half the duration of the initial EO period. 

For drugs, you can receive an EO extension of 6 months, and in the case of gold, silver, and platinum, you can obtain a single EO extension of 60 days beyond the initial 120 days. 

The composition fees for EO extension can be seen in the provided image 

Composition fees in case of gold, silver, and platinum 

Once again, if you require an additional EO extension beyond the mentioned limits, you will need to reach out to the Policy Relaxation Committee (PRC) in New Delhi. 

Documents Required for EO Extension of Advance Authorisation 

In the image, you can see the list of documents that are required for extending the Export Obligation (EO) period of Advance Authorisation: 

• • Covering Letter 

• • ANF-4D 

• • Declaration as per para 4.42 

• • Justification letter 

• • Import & Export Statement 
  

The required documents for extending the Export Obligation (EO) period of Advance Authorisation are as follows: 

• • Covering letter or Request Letter: This is a letter explaining the purpose of the extension request. 

• • ANF-4D Application Form: This form needs to be properly filled and submitted. 

• • Declaration as per para 4.42: In this declaration, you self-declare that the duty-free raw materials you imported under Advance Authorisation are still available. 

• • Justification Letter: This letter explains the reason for requesting the extension. 

• • Duly-certified Import and Export Statement: A statement detailing the imports and exports must be certified and submitted. 
  

These documents are necessary for the process of extending the Export Obligation period for Advance Authorisation. 

What is the Advanced Authorization Scheme (AAS)? 

The Foreign Trade Policy of India contains the Advanced Authorization Scheme (AA), also known as Advance Authorization. If exporters meet certain conditions, they can import inputs free of customs duty. The scheme is designed to encourage exports through the duty-free importation of components, raw materials, and intermediates required to produce export goods. 

The Key Components for Advanced Authorization Scheme Compliance 

Application Process 

The following are the steps involved in obtaining Advanced Authorization: 

1. Submission of Application: Submit your application with all required documents to the designated authority. 

2. Verification: After ensuring the guidelines are followed, the authority verifies and issues the authorization. 

Fulfilling Export Obligations 

Exporters who have received an Advanced Authorization must comply with their export obligations before: 

• Exporting goods within the specified timeframe. 
• Exporting the required quantity and value. 
  

The Advantages of the Advanced Authorization Scheme 

Duty Exemption 

This scheme exempts importers from paying duty on imported inputs. It reduces production costs and increases competitiveness in international markets. 

Export Competitiveness Increased 

The Advanced Authorization Scheme allows exporters to compete on price by enabling them to access duty-free inputs. This increases their market reach and profits. 

Simple Compliance Procedures 

The scheme simplifies compliance procedures by providing a framework for import and export transactions. This reduces bureaucratic obstacles and administrative burdens to businesses. 

Compliance requirements under the Advanced Authorization Scheme 

Record-keeping 

To comply with the scheme, exporters are required to keep accurate records of their imports, production, and exports. 

Reporting Obligations 

Reporting regularly on export performance and the use of imported inputs is necessary to ensure accountability and transparency in trade. 

Compliance with Export Obligations 

If you fail to comply with your export obligations, you may be penalized or lose the benefits of the Advanced Authorization Scheme. This emphasizes the importance of meeting your commitments on time. 

The conclusion : 

The Advanced Authorization Scheme is a valuable tool that exporters can use to expand their global footprint and optimize their operations. Understanding and adhering to the compliances associated with this scheme will allow businesses to leverage its benefits to drive growth, competitiveness, and compliance for international trade. 

Two of the most significant schemes are the EPCG scheme and the Advance License scheme.  

Both schemes aim to provide incentives to exporters and enable them to import goods without paying customs duties. 

The EPCG scheme, or the Export Promotion Capital Goods scheme, allows exporters to import capital goods at zero duty.  

The scheme is designed to encourage exporters to upgrade their technology and equipment, which will help them to increase productivity and competitiveness.  
 
On the other hand, the Advance License scheme allows exporters to import raw materials and inputs at zero duty, which they can use to manufacture products for export. 

A comparative analysis of the EPCG scheme and the Advance License scheme reveals that both schemes have their advantages and disadvantages. While the EPCG scheme is more suitable for capital-intensive industries, the Advance License scheme is more suitable for labor-intensive industries.  

Furthermore, the EPCG scheme requires exporters to export a certain percentage of their products, while the Advance License scheme does not have such a requirement. However, both schemes require exporters to comply with various regulatory bodies and procedures to ensure that they are not misusing the incentives provided by the government. 

Overview of EPCG Scheme 

The Export Promotion Capital Goods (EPCG) scheme is a government initiative that aims to encourage exports by providing duty-free import of capital goods.  

The scheme helps exporters import capital goods required for production at zero customs duty. The EPCG scheme is one of the most popular export promotion schemes in India. 

What is EPCG Scheme 

The EPCG Full Form is Export Promotion Capital Goods. The scheme was introduced in the Foreign Trade Policy (FTP) on 1st April 1992.  

The scheme allows import of capital goods at zero customs duty. The EPCG scheme enables Indian exporters to import capital goods for pre-production, production, and post-production at zero duty.  

The scheme is valid for 6 years from the date of the authorization. 

What is Advance License 

An Advance License is a document issued by the Director General of Foreign Trade (DGFT) that permits duty-free import of inputs required for export production.  

The Advance License is issued under the Advance License Scheme, which is designed to facilitate duty-free import of inputs required for export production. 

Advance License Framework 

The Advance License Scheme allows exporters to import duty-free inputs required for export production.  

The scheme is available to manufacturers and service providers who export goods and services.  

The scheme is also available to merchant exporters who procure goods from manufacturers for export. 

EPCG Vs Advance License