What is Advance Authorisation scheme?

• The Directorate General of Foreign Trade (DGFT) imposed a limit of 100 kg on gold imports under the Advance Authorisation scheme, which allows jewellery exporters to import raw or input materials at zero duty.

• The move comes a day after increasing the import duty on precious metals.

• The government has tightened the conditions for issuing and monitoring advance authorisation for the import of gold. 

• Earlier, there was no limit on gold imports under the scheme.

• The scheme allows the duty-free import of inputs that are incorporated into an export product. 

• In addition to any inputs, packaging material, fuel, oil, and catalyst that are consumed or utilised in the process of production of export product, are also allowed.

• On May 13, the government hiked the import duty on gold and silver to 15 per cent from 6 per cent to discourage purchase and trim non-essential imports amid the West Asia crisis.

• The import duty on platinum has been raised to 15.4 per cent from 6.4 per cent. 

• Consequential changes have also been made to other items such as gold/silver dore, coins, findings, etc.

• Gold and silver imports jumped 26.7 per cent year-on-year to $102.5 billion in FY2025-26, with their share in total imports rising to 14 per cent from 11.8 per cent in 2024-25.

• The duty hike came within days of Prime Minister Narendra Modi’s call for curbs on gold purchases, along with other austerity measures to reduce avoidable foreign exchange expenditure.

• India is the world’s second-biggest gold consumer after China.

Advance Authorisation scheme

• Directorate General of Foreign Trade (DGFT) implements the Advance Authorisation scheme under the Foreign Trade Policy, 2023.

• It allows duty-free import of inputs for export purposes. 

• The eligibility of inputs is determined by Sector-specific Norms Committees based on input-output norms.

• In addition to any inputs, packaging material, fuel, oil, catalyst which is consumed/utilised in the process of production of export product, is also be allowed.

• Advance Authorisation is a WTO-compliant duty exemption scheme. 

• Under the Advance Authorisation scheme, all import duties on inputs, such as basic customs duty, Integrated Goods and Services Tax (IGST), cess, anti-dumping duty, etc, are exempted. 

• Also, local procurement of inputs in place of direct imports is allowed under the scheme wherein IGST for input supplies are refunded. 

• The required quantity of inputs is calculated based on Standard Input Output Norms (SION). 

• All manufacturer exporters and merchant exporters tied to supporting manufacturers are eligible to avail of advance authorisation. 

• The inputs need to be imported within the validity of advance authorisation, which is usually 12 months from the

date of issue of advance authorisation. 

• The exports are to be completed usually within 18 months from the date of issue of advance authorisation.

• Proof of exports needs to be submitted to regional authorities of DGFT along with proof of realised payment in foreign currency after the completion of exports.