The Advance License issued by the Directorate General of Foreign Trade (DGFT) offers several benefits to businesses involved in international trade. These benefits, which are designed to promote exports and facilitate imports of specific goods, include the following key advantages of obtaining an Advance License from DGFT:

Firstly, Duty Exemption: Advance License holders are entitled to import specified inputs without paying customs duties, including basic customs duty and additional customs duty. This can significantly reduce the cost of production for export-oriented businesses.

Secondly, Exemption from IGST and GST Compensation Cess: Advance License holders are exempt from paying Integrated Goods and Services Tax (IGST) and GST Compensation Cess on the imported goods covered by the license.

Moreover, Exemption from Anti-Dumping Duty and Safeguard Duty: In certain cases, Advance Licenses may also provide exemptions from anti-dumping duty and safeguard duty on imports.

Additionally, Reduced Customs Duties: For items subject to customs duties, the Advance License can enable businesses to import goods at a lower duty rate, which can enhance competitiveness in the international market.

Furthermore, No Export Obligation on Spares and Consumables: Businesses can import spares, tools, and consumables without an export obligation, allowing them to maintain and repair machinery and equipment used in the production process.

Moreover, there’s Flexibility in Export Obligation: Advance License holders are required to fulfill an export obligation by exporting goods of a certain value within a specified time frame. The license offers flexibility in meeting this obligation, allowing exporters to choose from various options such as physical exports, deemed exports, or a combination of both.

Additionally, Enhanced Competitiveness: With reduced import costs and customs duties, businesses can produce goods more competitively in the global market, potentially leading to increased export volumes and profitability.

Furthermore, Simplified Export-Import Procedures: Advance License holders benefit from simplified export-import procedures, as the license streamlines the process by allowing duty-free import of required inputs.

Moreover, Encouragement of Value Addition: The requirement to achieve a certain value addition through manufacturing or processing activities can encourage businesses to add value to the imported goods, which can lead to enhanced product quality and competitiveness.

Lastly, a Boost to Export-Driven Growth: Advance Licenses promote exports by providing essential incentives and cost advantages to exporters, ultimately contributing to the growth of the country’s export sector.

It’s important to note that the specific benefits and conditions of an Advance License can vary depending on the type of license, the goods involved, and the export-import policies in place at the time of application. Therefore, businesses interested in obtaining an Advance License should consult with DGFT or a qualified consultant to understand the eligibility criteria and tailor their applications accordingly.

An Advance License, also known as an Advance Authorization, is a trade promotion scheme in India that is administered by the Directorate General of Foreign Trade (DGFT), which operates under the Ministry of Commerce and Industry. This license is a significant part of the country’s export-import policy and aims to encourage exports and facilitate the import of specific goods.

In order to boost the country’s exports, the government has implemented a range of schemes, and among these is the Advance Authorisation Scheme, also known as the Advance License. This scheme allows businesses to import essential raw materials and inputs required for the production of export goods without incurring any customs duties, making it a duty-free process. Additionally, certain items such as oil and catalysts, which are integral to the production of export products, may also be eligible for duty-free import under this scheme. As a condition for obtaining the Advance License, businesses are required to fulfill an Export Obligation.

The procedure for obtaining an Advance License and registering it with customs in India involves several steps. Here’s an overview of the process:

1. Eligibility Check: Before applying for an Advance License, businesses should determine if they meet the eligibility criteria for the specific type of license they require. The eligibility criteria may vary depending on the export-import policies in place at the time.
2. Online Application: The application for an Advance License is typically submitted online through the DGFT’s electronic platform, such as the DGFT website or the DGFT’s Exporter-Importer Code (IEC) portal. The applicant must complete the application form and provide all required details accurately.
3. Document Submission: Along with the application form, businesses must submit supporting documents, which may include:
   • Copy of Importer-Exporter Code (IEC) certificate.
   • Bank certificate or statement showing the financial status of the applicant.
   • Details of the export product and its specifications.
   • Details of the imported inputs/raw materials required for production.
   • Any other documents specified by DGFT.
4. Export Obligation: Applicants must specify the export obligation they are willing to undertake. This involves committing to export a certain value of goods within a specified time frame. The type of export obligation (physical exports, deemed exports, or a combination) should be clearly mentioned in the application.
5. Processing Fee: Applicants are required to pay a processing fee as specified by DGFT. The fee can be paid online through the prescribed method.
6. Application Submission: Once the application is complete, it can be submitted electronically. After submission, the application is processed by the concerned regional DGFT office.
7. Scrutiny and Verification: DGFT officials will scrutinize the application and the supporting documents. They may conduct site visits and seek clarifications if necessary. The aim is to ensure that the application aligns with the export-import policies and regulations.
8. Issue of Advance License: If the application is approved, DGFT will issue the Advance License. The license specifies the items that can be imported duty-free and the conditions for export.
9. Registration with Customs: With the Advance License in hand, businesses can register it with customs authorities at the port of import. This involves submitting a copy of the license along with the shipping documents, including the bill of entry.
10. Claiming Duty Exemption: At the time of importing the specified inputs or raw materials covered by the Advance License, customs will allow duty-free clearance, provided all conditions are met.
11. Compliance and Record-Keeping: Businesses must comply with the export obligation and maintain records of imports, production, and exports as required by DGFT.

It’s important to note that the specific requirements and procedures may change over time based on updates to export-import policies. Therefore, businesses should consult with our team who specialize in international trade to ensure they are following the latest procedures and meeting all compliance requirements.

Advance License norms refer to the specific conditions and requirements that businesses must adhere to when obtaining and utilizing an Advance License issued by the Directorate General of Foreign Trade (DGFT) in India. These norms are essential for ensuring that the benefits of the Advance License scheme are used for their intended purpose of promoting exports and facilitating imports of specified goods. The exact norms may vary depending on the type of Advance License, the goods involved, and the export-import policies in place at the time of application. However, here are some common norms associated with Advance Licenses:

1. Export Obligation: Advance License holders are typically required to fulfill an export obligation. This obligation entails exporting goods of a certain value within a specified time frame. The specific value and time frame can vary based on the type of license and the goods covered.
2. Value Addition: Some Advance Licenses may stipulate a minimum value addition requirement. This means that businesses are required to add a certain percentage of value to the imported materials through manufacturing or processing activities before exporting the final products.
3. Use of Imported Goods: The imported materials covered by the Advance License must be used exclusively for the production of export goods. Businesses are not allowed to divert these materials for any other purpose, including domestic sales.
4. Record Keeping: License holders are required to maintain accurate records of imports, production, and exports. These records are subject to inspection by DGFT officials and must be kept for a specified period.
5. Reporting Obligations: Advance License holders may have reporting obligations to DGFT or customs authorities. They must report on their progress in meeting the export obligation and other requirements as specified.
6. Prohibited Items: Some goods, such as certain chemicals, hazardous materials, or items of strategic importance, may be prohibited from being imported under an Advance License.
7. No Transfer of License: Advance Licenses are generally non-transferable. They are issued to the specific entity that applied for them and cannot be transferred to another party without prior approval from DGFT.
8. Completion of Export Obligation: License holders must ensure that they complete the export obligation within the specified time frame. Failure to do so can result in penalties or loss of benefits.
9. Compliance with Export-Import Policies: Advance License holders must comply with all relevant export-import policies, including any changes or updates that may occur during the license’s validity period.
10. Audit and Inspection: DGFT may conduct audits or inspections to verify compliance with the license norms. It is essential for license holders to cooperate fully during such audits.
11. Redemption of Export Obligation: Once the export obligation is fulfilled, the license holder may apply for redemption of the license, which involves submitting the necessary documentation to DGFT for verification.

It’s crucial for businesses applying for and utilizing Advance Licenses to carefully review the specific norms and conditions associated with their license to ensure compliance. Failure to adhere to these norms can result in penalties, loss of benefits, or other adverse consequences. Additionally, consult with us so that we can provide valuable guidance on navigating the complexities of the Advance License scheme and meeting its requirements.