Advance Authorisation, still called the advance licence by most exporters, is the workhorse duty exemption of Indian export policy. It lets you import the inputs that go into an export product without paying customs duty or IGST, provided you export the finished goods within the time allowed. It suits regular exporters with significant imported content, and it keeps RoDTEP available, which is why it often beats MOOWR for export-only businesses. The cost is paperwork: norms, a licence-wise export obligation and a redemption process that many exporters leave open for years.
Under Chapter 4 of the Foreign Trade Policy 2023, an Advance Authorisation allows duty-free import of inputs physically incorporated in an export product, together with fuel, oil and catalysts consumed in making it. It exempts basic customs duty, IGST, compensation cess and anti-dumping, countervailing and safeguard duty. It is issued by the DGFT on an online ANF-4A application, based on Standard Input Output Norms or self-declared norms. Imports are allowed for 12 months, and the export obligation, with at least 15% value addition, must be met within 18 months of issue. It is closed with an Export Obligation Discharge Certificate.
Who can apply
An Advance Authorisation is issued to a manufacturer exporter, or to a merchant exporter tied to one or more supporting manufacturers whose names are endorsed on the licence. It covers physical exports and specified deemed-export supplies, such as supplies to EOUs, against international competitive bidding or to mega power projects. A separate annual-requirement version is available to exporters with a past export record, based on their previous year's exports.
What is exempt
Para 4.14 of the Foreign Trade Policy 2023 exempts imports under an Advance Authorisation from:
- basic customs duty, the social welfare surcharge and additional customs duty;
- anti-dumping, countervailing, safeguard and transitional product-specific safeguard duty, wherever applicable, except on certain deemed-export supplies under para 7.02;
- the whole of IGST and compensation cess, for both physical and deemed exports, subject to the actual user condition.
The anti-dumping exemption is often the largest single benefit. Anti-dumping duty on inputs such as printed circuit boards, chemicals and steel products from China can run to a large share of the CIF value, and an Advance Authorisation removes it outright for goods that are exported.
Norms: SION, self-declaration and self-ratification
The quantity of each input allowed is fixed by input-output norms for the export product.
| Route | When it applies | Practical effect |
|---|---|---|
| SION | A Standard Input Output Norm is notified for the product | Fastest. The licence follows the published norm |
| Self-declaration (HBP 4.07) | No SION exists | The licence is issued on the exporter's declared norms and later ratified by the Norms Committee, which may ask for technical justification |
| Self-ratification (HBP 4.07A) | Eligible status holders and exporters meeting the conditions in para 4.06 | Norms are ratified on the exporter's own declaration with a Chartered Engineer certificate, without Norms Committee review |
| Norms fixation (HBP 4.06, ANF-4B) | Applying to have a norm fixed in advance | Slowest, but gives certainty for repeat licences |
A clean bill of materials, with every component, its tariff code, quantity per unit and process wastage, is the most important document in the whole process. The same document drives the export obligation, the EODC and any later customs audit.
Applying: ANF-4A, fee and port registration
- Prepare the technical fileExport product description and tariff code, bill of materials, the norm relied on, the supporting manufacturer's details and the CIF value of inputs and FOB value of exports.
- File ANF-4A onlineOn the DGFT portal with the IEC holder's digital signature. The application fee under Appendix 2K is calculated on the CIF value of imports allowed, subject to a minimum and maximum; MSMEs pay a reduced fee.
- Issue by the Regional AuthorityThe authorisation is generated electronically and transmitted to the port of registration.
- Register at the port and execute the bondRegister the licence at the port, then execute a bond, with a bank guarantee where required, before the first duty-free import.
- Import against the licenceEach bill of entry quotes the authorisation number and debits the licence. Only the listed inputs, in the listed quantities, can be imported.
Bond and bank guarantee
The licence holder executes a bond with customs for the duty saved. Whether a bank guarantee is also needed is decided under Customs Circular 58/2004, as amended. Status holders are exempt, and so are exporters with a clean export record who meet the past-performance conditions, supported by a declaration that no specified penalties have been imposed in the last three years. Others may be asked for a guarantee of up to the full duty saved. Where the bank asks for a fixed deposit as collateral for the guarantee, that is the bank's requirement, not customs'. Testing the exemption is a short exercise and should be done before anyone concludes that the scheme is unaffordable.
Export obligation, value addition and extensions
| Item | Rule |
|---|---|
| Import validity | 12 months from issue (HBP 4.39), with one revalidation of 12 months |
| Export obligation period | 18 months from the date of issue (HBP 4.40); 24 months for specified defence, aerospace and nuclear items |
| Extensions | Up to two extensions of six months each, on a composition fee scaled to the CIF value, never beyond 12 months after the original expiry |
| Minimum value addition | 15% (FTP 4.09), with product-specific exceptions in Appendix 4D |
| Consequence of default | Duty saved on the unutilised inputs, with interest at 15% a year, and possible penal action |
DGFT periodically grants automatic extensions for specific windows; one in March 2026 extended obligation periods expiring between 1 March and 31 May 2026 to 31 August 2026 without a fee. Check for any current relief before paying a composition fee.
Every shipping bill must carry the authorisation number and the correct scheme code. A shipping bill filed under the wrong code does not count towards the obligation and is very hard to correct afterwards, so brief the customs broker before the first export.
Actual user, pre-import and job work
- Actual user condition (FTP 4.16). The inputs must be used by the licence holder or its supporting manufacturer. The authorisation and the imported inputs are not transferable, even after the obligation is met; the export product can be disposed of freely once the obligation is complete.
- Pre-import condition. The blanket pre-import condition was removed in January 2019. DGFT can still impose it on specific inputs listed in Appendix 4J or in the SION, in which case inputs must be imported before the export they relate to.
- Job work. A supporting manufacturer or job worker must be named on the licence. Inputs can move to it directly from the port, which is one of the practical advantages over MOOWR for businesses that outsource assembly.
Redemption: EODC
Once the export obligation is met, the licence holder applies on ANF-4F for an Export Obligation Discharge Certificate, with:
- shipping bills showing the authorisation number, and e-BRCs or bank realisation evidence;
- bills of entry for every import against the licence;
- the consumption statement in Appendix 4H, certified by a Chartered Accountant or Cost Accountant;
- for self-declared norms, the ratification or self-ratification record.
The Regional Authority issues the EODC and transmits it to customs, after which the bond and any bank guarantee are cancelled at the port. Allow three to nine months. Unredeemed licences are the commonest Advance Authorisation problem we see: they keep securities blocked, attract demand notices years later, and can put an exporter on the DGFT's denied list for future authorisations.
RoDTEP, drawback and GST refunds
- RoDTEP is available on Advance Authorisation exports at the Appendix 4RE rates. The coverage lapsed between February and May 2025, was restored from 1 June 2025, and is currently extended to 31 December 2026 by DGFT Notification 41/2026-27. Deemed exports remain excluded.
- Duty drawback at All Industry Rates is not available on Advance Authorisation exports (condition 9 of Notification 77/2023-Customs (N.T.)). A brand rate can be claimed on duty-paid inputs used outside the norms (FTP 4.15).
- GST refunds. The IGST-paid refund route is open again: Rule 96(10), which used to bar it for Advance Authorisation importers, was omitted from October 2024, and the Supreme Court held in August 2026 that the omission covers pending cases. See our guide to GST refunds on exports.
Where a business also sells the same product in India, the domestic portion cannot use duty-free inputs, and MOOWR may be the better fit. Our comparison of MOOWR vs Advance Authorisation works through both on the same numbers, and our export incentives service covers the licence from application to EODC.
Frequently Asked Questions
Eighteen months from the date of issue of the authorisation under para 4.40 of the Handbook of Procedures 2023, or 24 months for specified defence, aerospace and nuclear items. Up to two six-month extensions are available on payment of a composition fee, but not beyond 12 months after the original expiry.
Fifteen per cent under para 4.09 of the Foreign Trade Policy 2023, with lower or higher thresholds for specified products listed in Appendix 4D, such as gems and jewellery, tea and spices.
Yes. Para 4.14 of the Foreign Trade Policy 2023 exempts the whole of IGST and compensation cess on Advance Authorisation imports for physical and deemed exports, subject to the actual user condition, along with basic customs duty and anti-dumping, countervailing and safeguard duty.
It depends on the exporter. Under Customs Circular 58/2004, as amended, status holders and exporters with a clean record who meet the past-performance conditions are exempt. Others may have to give a guarantee for up to the full duty saved, alongside the bond.
Yes, at the Appendix 4RE rates, while the scheme is notified for such exports. DGFT Notification 41/2026-27 extends it up to 31 December 2026. All Industry Rate drawback is not available on Advance Authorisation exports.
The licence holder must pay the customs duty saved on the unutilised inputs with interest at 15% a year, and may face penalty. The bond and any bank guarantee can be enforced, and an exporter with unredeemed licences can be barred from new authorisations.
By applying on ANF-4F for an Export Obligation Discharge Certificate, with shipping bills, realisation evidence, bills of entry and the Appendix 4H consumption statement certified by a Chartered Accountant or Cost Accountant. Once the EODC reaches customs, the bond and any bank guarantee are cancelled.
Sources and law referred to
- Authority: Directorate General of Foreign Trade. Title: Foreign Trade Policy 2023, Chapter 4, paras 4.03 to 4.16 and 4.55; Handbook of Procedures 2023, Chapter 4, paras 4.06, 4.07, 4.07A, 4.39, 4.40 and 4.47; Appendices 2K, 4D, 4H, 4J and 4RE. View Source. Accessed: November 2026.
- Authority: Directorate General of Foreign Trade. Title: Notification 11/2025-26 (RoDTEP restored for AA, EOU and SEZ from 1 June 2025) and Notification 41/2026-27 (extension to 31 December 2026). View Source. Accessed: November 2026.
- Authority: CBIC. Title: Circular 58/2004-Customs, as amended; Notification 77/2023-Customs (N.T.), condition 9. View Source. Accessed: November 2026.
Positions are as read on November 4, 2026. Export incentives are notified for fixed periods and change often; confirm the notification in force on the date of your shipment or filing. This article is general information, not advice on your facts.
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Written by CA Karan Shah
Founder of KC Shah & Associates, Chartered Accountants, Andheri East, Mumbai (ICAI Membership No. 190724). Advises manufacturers and exporters on MOOWR, Advance Authorisation, RoDTEP and drawback, and GST export refunds, alongside GST compliance and outsourced accounting in Tally and Zoho Books.