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Special Advance Authorization for Garments

Special Advance Authorization for Garments

Special Advance Authorization for Garments

Directorate General of Foreign Trade (DGFT) has introduced the Special Advance Authorization Scheme for the promotion of the export of garments. This Scheme allows duty-free import of input fabric, including interlining for shipping articles of apparel and clothing accessories. The Authorization is issued based on the Standard Input Output Norms or prior fixation of DGFT.

Advance Authorization for Garments

The Advance Authorization for Garments allows the duty-free imports of inputs (after making standard allowance for wastage) if they are physically incorporated into a product being exported. An export obligation is a condition for issuing Special Advance Authorization for Garments.

Duty Drawback

Under this Scheme, exporters shall be eligible for All Industry Rates of Duty Drawback for non-fabric inputs, as determined by Central Government for this Scheme.

Duty-free importable items under the Scheme

Duty-free import of fabric under the Special advance Authorization Scheme for the export of garments is allowed for shipping items covered under Chapter 61 and Chapter 62 of the ITC (HS) Classification of export and import. The detailed list of products is as follows:


Eligibility for Advance Authorization

The Special Advance Authorization for Garments is available to the manufacturer exporter directly or a merchant exporter tied with a supporting manufacturer. The Authorization is possible for the following:

  • Physical exports
  • Intermediate supply
  • Supplies made to specified categories of deemed exports

Actual user condition for Special Advance Authorization

The Authorization and the fabric imported are subject to the exact user condition; this means that the existing user alone may import such goods. The Authorization will not be transferable even after the completion of the export obligation. However, the imported fabric may be transferred for work as permitted by the Central Excise.

Condition for Special Advance Authorization

Special Advance Authorization for Garments issued based on the following situation:

Inputs allowed for Special Advance Authorization: The Authorization issues for importing relevant fabrics, including inner lining, only as input. No other information, packing materials, fuel oil, and catalyst are allowed for import under the Special Advance Authorization.

Standard Input-Output Norms (SION): On the recommendation of the Norms Committee, the Director-General of Foreign Trade (DGFT) issues conventional norms that define the amount of input required to manufacture a unit of the output product that will be exported.

Self-declaration: Sometimes, the SION is not available for a particular product. In such a case, an application may be made to the Regional Authority, which will issue the Advance Authorization upon review.

Annual Advance Authorization: If the fabric material is specified in SION, subject to certain conditions, advance authorization is issued for the annual requirements. To be entitled to such Authorization, exporters must have past performance in at least two preceding financial years.

Note: It is not available on a self-declaration basis.

Value Addition (VA)

Exporters are eligible for all industry duty drawback rates for non-fabric inputs as determined by the Central Government for the Special Advance Authorization for Garments Scheme. The value of any information used on which benefit drawback is claimed or intended to be claimed is equal to 22% of the Free On Board (FOB) value of export realized.

Minimum Value Addition

Under Special advance authorization, the minimum Value Addition to be achieved is 15%, except for physical exports for which payments are not received in freely convertible currency and other specified export products.

Brand Rate

Suppose the exporter desires to claim a drawback determined and fixed by the Central excise authority (brand rate). In that case, they need to submit an application for Authorization and make a claim export under the claim for brand rate. In such cases, the value addition will be calculated as follows, and the minimum Value Addition to be achieved is 15%

Special Advance Authorization for Garments - Value Addition
Special Advance Authorization for Garments – Value Addition

Export Obligation

The whole reason for allowing duty-free inputs is to boost exports. Export Obligation (EO), in the case of Special Advance Authorization for Garments, is the commodity’s value that must be achieved compulsorily within a prescribed period. The Export Obligation is usually mentioned in the Authorization issued. After attaining the EO, the entity has to provide evidence of the same. Not achieving the Export Obligation in the prescribed period could result in penalties.

The Validity of Special Advance Authorization

The Special Advance Authorization for Garments is valid for 12 months from the date of issue of such Authorization. In the case of deemed exports, the Authorization is linked to the contracted duration of project execution or 12 months from the date of issue of such Authorization, whichever is more.

However, the export obligation may be fulfilled within 18 months from the date of the authorization issue or as notified by the DGFT. Unless specified, the export proceeds should be realized in freely convertible currency.

Application Procedure

Application for grant of Special Advance Authorization Scheme for export of Articles of apparel and clothing accessories can be filled online through the official website of the Directorate General of Foreign Trade (DGFT). The application procedure is as follows:

From the home page of DGFT, select the advance Authorisation Scheme option under the Service option; the link will redirect to the application page. The application procedure for filling out the special advance authorization is similar to filling out an application for the regular advance authorization. After furnishing the details, upload the following documents:

Documents for Special Advance Authorization Scheme

  • Bank Receipt, Electronic funds transfer, or Credit Card details evidencing payment of application fee
  • Statement of exports made in the preceding financial year duly certified by a Chartered Accountant or Company Secretary
  • Self-certified copy of the manufacturing license of the applicant firm
  • Invalidation Letters in case of supplies to an Advance Authorization holder
  • In the case of Deemed Export: Project Authority Certificate
  • Production and Consumption data of the manufacturer

After scrutinizing the details, the prescribed authority will issue a Special advance authorization letter for the export of articles of apparel and clothing accessories.

Note: The usual advance authorization scheme is in operation and is still available for exporters. The exporter can choose any of the schemes of their choice.