ADVANCE LICENSING SCHEME

  


Ø       Duty free import of inputs are permitted which are physically incorporated in the  export product. Normal allowance for wastage is permitted. In addition, fuel, oil, energy, catalysts which are consumed/utilized in the course of their use to obtain the export product are also permitted. Spares upto 10% of the CIF value are also permitted for export with the export product. These licences are issued based on standard input-output norms. Where no such norms are fixed, licences can be issued on adhoc norms or self-declared norms basis. These licences are issued either to a manufacturer export or merchant exporter tied to supporting manufacturer for physical exports including exports to Special Economic Zones; for intermediate supplies; to the main contractors for supply of goods to the categories covered under deemed exports in paragraph 8.2(b),(c),(d),(e),(f),(g),(i) and (j) of the Foreign Trade Policy. Sub-contractor of the main contractor is also eligible for such licences.

These licences are also issued for supplies made to United Nations Organisations or under the Aid Programme for the United Nations or other multilateral agencies and paid for in free foreign exchange.

Ø       Advance licences are issued with a positive value addition. Where payments are not received in freely convertible currency, the same are subject to value addition norms as specified in Appendix 11 of the Handbook of Procedures Vol.1.

Ø       Where inputs are supplied free of cost to the exporter, advance licence is also granted.

Ø       One to Five Star Export House are entitled to Advance Licence for Annual Requirement. All other categories of exporters having past export performance in the preceding two years are also entitled for the Advance Licence for annual requirement. The entitlement in terms of CIF value of imports is 300% of the FOB value of physical export or FOR value of deemed export in the preceding licensing year or Rs.1 Crore, whichever is higher.

Ø       An Advance licence holder intending to source requirement from local sources or State Trading Enterprises, Export Oriented Units, Special Economic Zone, etc. can source them against Advance Release Orders denominated in free foreign exchange/Indian rupees.

Ø       These licences are subject to actual user condition. These licences are also not transferable even after completion of export obligation. But the licensee has the option to dispose of the product manufactured out of the duty free inputs once the export obligation is completed.