The Advance Authorisation Scheme (AAS) is a crucial export promotion scheme under India's Foreign Trade Policy (FTP). Its core objective, often summarized as "Taxes should not be exported," is to make Indian goods globally competitive by neutralizing the cost of import duties on inputs. The scheme originated as the Advance Licensing Scheme or Duty Entitlement Exemption Certificate (DEEC), introduced in the FTP in 1976 to provide exporters with raw materials at international prices. The name was formally changed to Advance Authorisation Scheme under FTP 2004-09, effective from September 1, 2004.
The AAS permits the duty-free import of inputs, including raw materials, packaging material, and items like fuel, oil, and catalysts, provided they are physically incorporated or consumed in the production of an export product. The exemption covers duties such as Basic Customs Duty (BCD) and Integrated Tax (IGST). The quantity of inputs allowed is determined by the Standard Input-Output Norms (SION), which are fixed by the administering body, the Directorate General of Foreign Trade (DGFT). A mandatory Export Obligation (EO) must be fulfilled, generally requiring a minimum Value Addition (VA) of 15%. The standard EO period is 18 months from the date of issue of the Authorisation.
The scheme is governed by the Foreign Trade (Development and Regulation) Act, 1992, and is administered by the DGFT under the Ministry of Commerce and Industry. Recent changes under the updated FTP 2023 include the extension of the EO period for inputs under mandatory Quality Control Orders (QCOs) from 6 months to 18 months (August 2025), harmonizing the timeline. Furthermore, a relaxation (May 2025) allows exporters to claim duty-free benefits even if goods were shipped before the AA license was issued, provided the Bill of Entry is submitted after the license date, simplifying compliance. The entire application process is now largely online through the DGFT portal.