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Regarding foreign trade policy (FTP)

JANAK TANNA (STUDENT) (90 Points)

03 May 2018

can anyone explain advance authorisation scheme in simple language??
please focus on pre export and post export criteria more.

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6 Replies

Ajit Hegde (CA - Final) (1367 Points)
Replied 08 May 2018

AA scheme is available to exporters who import raw materials for the purpose of export.

Pre export criteria: you have to check whether standard input output norms (SION) are notified for your product. Mininum value addition shall be 15%

Post export : You have to close the license by submitting original EP copy of shipping bills as a proof of export using the materials imported under AA scheme, within 6 months from the date of license.

Should you require anythin in specific, feel free to ask.

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JANAK TANNA (STUDENT) (90 Points)
Replied 08 May 2018

sir this is too technical. i am not aware of even basic criteria. i tried to read from FTP 2015-20 book but couldn't understand it properly

Ajit Hegde (CA - Final) (1367 Points)
Replied 08 May 2018

Ok. the scheme goes like this.

Purpose of the scheme : To reduce cost of inputs and thereby increasing the profit margin to exporters, which makes it competetive in the international market.

you should have import export code.

You are importing some raw material, say x. Using material x you produce a product y which you would like to export.

Here you have to pay Custom duty at the time of import of X, say 10% of the cost. Since you intend to export Y using the material X, you can avail the benefit of advance authorizn or license, which will exempt you from paying 10% of the custom duty.

You need to apply for this license with the DGFT regional office (online applcn, to be submitted later in manual ).

DGFT has conditions to issue the license.

1. Min Value addition. : If material X costs you 100 rupee, your export value of Y should not be less than 115 rupees. i e to say value addition of minimum 15%.

2. Time limit : Mat X should be consumed only for the purpose of production of Y, and Y should be exported within 6 months. And a statment of calculation of material X consumed for production of Y and details of sale of Y shall be furnished to DGFT after 6 months to prove that you have fulfilled the conditions.

JANAK TANNA (STUDENT) (90 Points)
Replied 09 May 2018

ok thank you sir.
sir the example you gave above is of pre export or post export??

one more thing sir,
can we get MEIS licence on the basis of export we made to fulfill the export obligation EPCG licence??

Ajit Hegde (CA - Final) (1367 Points)
Replied 09 May 2018

It covers both pre and post. Yes you can get meis for epcg.

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JANAK TANNA (STUDENT) (90 Points)
Replied 09 May 2018

sir how can we say that it's both pre import and post export?
here the import is happening first and then export is happening afterwards

so can not we say that its pre export advance authorisation and not post export??
thank you sir ji
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