Advance Authorization Scheme (AAS)

Context: Recently, the Directorate General of Foreign Trade (DGFT) said it has simplified the process of Levying Composition fees in case of extension of the Export Obligation Period under the Advance Authorisation Scheme (AAS).

About Advance Authorization Scheme:

• It allows duty free import of inputs, which are physically incorporated in an export product.
• In addition to any inputs, packaging material, fuel, oil, catalyst which is consumed / utilized in the process of production of export product, is also be allowed.
• The quantity of inputs allowed for a given product is based on specific norms defined for that export product, which considers the wastage generated in the manufacturing process.
• DGFT provides a sector-wise list of Standard Input-Output Norms (SION) under which the exporters may choose to apply.
• Alternatively, exporters may apply for their own ad-hoc norms in cases where the SION does not suit the exporter.
• Advance Authorisation covers manufacturer exporters or merchant exporters tied to supporting manufacturer(s).

Prerequisites for Applying:

• To apply for an Advance Authorisation scheme, an Import-Export Code (IEC) is required.
• Other prerequisites are mentioned in the Chapter 4 of Foreign Trade Policy and Handbook of Procedures.

About Directorate General of Foreign Trade:

• Directorate General of Foreign Trade (DGFT) Organization is an attached office of the Ministry of Commerce and Industry and is headed by Director General of Foreign Trade.
• Right from its inception till 1991, when liberalization in the economic policies of the Government took place, this organization has been essentially involved in the regulation and promotion of foreign trade through regulation.
• Keeping in line with liberalization and globalization and the overall objective of increasing of exports, DGFT has since been assigned the role of “facilitator”.
• This Directorate, with headquarters at New Delhi, is headed by the Director General of Foreign Trade.
• It is responsible for implementing the Foreign Trade Policy with the main objective of promoting India’s exports.
• The DGFT also issues licenses to exporters and monitors their corresponding obligations through a network of 25 Regional Offices.
• All regional offices provide facilitation to exporters in regard to developments in International Trade i.e. WTO agreements, Rules of Origin and anti-dumping issues, etc to help exporters in their import and export decisions in an internationally dynamic environment.

Additional Information:

About Directorate General of Trade Remedies (DGTR):

• The DGTR (earlier known as Directorate General of Anti-Dumping & Allied Duties) is an attached office of the Department of Commerce, Ministry of Commerce & Industry.
• The DGAD which was formed in 1997 has been restructured as DGTR in May 2018 by restructuring and re-designing DGAD into DGTR by incorporating all the trade remedial functions i.e. Anti-Dumping Duty (ADD), Countervailing Duty (CVD), Safeguards Duty (SGD), Safeguards Measures (QRs) under a single window framework.
• Thus, the DGTR has been formed by merging of functions of DGAD, Department of Commerce, Directorate General of Safeguards, Department of Revenue and Safeguards (QR) functions of DGFT into its fold.
• The DGTR is a quasi-judicial body that independently undertakes investigations before making its recommendations to the Central Government.
• It is the single national authority for administering all trade remedial measures including anti-dumping, countervailing duties and safeguard measures.
• The DGTR provides a level playing field to the domestic industry against the adverse impact of the unfair trade practices like dumping and actionable subsidies from any exporting country, by using trade remedial methods under the relevant framework of the WTO arrangements, the Customs Tariff Act and Rules and other relevant laws and international agreements, in a transparent and time bound manner.
• It also provides trade defence support to our domestic industry and exporters in dealing with instances of trade remedy investigations instituted against them by other countries.

Source: PIB

Previous Year Questions

Q.1) With reference to the Indian economy, consider the following statements:

1. An increase in Nominal Effective Exchange Rate (NEER) indicates the appreciation of rupee.
2. An increase in the Real Effective Exchange Rate (REER) indicates an improvement in trade competitiveness.
3. An increasing trend in domestic inflation relative to inflation in other countries is likely to cause an increasing divergence between NEER and REER.

Which of the above statements are correct? (2022)

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. 1, 2 and 3

Q.2) With reference to India, consider the following statements:

1. Retail investors through Demat account can invest in Treasury Bills and Government of India Debt Bonds in the primary market
2. The “Negotiated Dealing System-Ordering Matching” is a government securities trading platform of the Reserve Bank of India.
3. The “Central Depository Services Ltd” is jointly promoted by the Reserve Bank of India and the Bombay Stock Exchange.

Which of the statements given above is/are correct? (2021)

1. 1 only
2. 1 and 2
3. 3 only
4. 2 and 3