DGFT Simplifies Composition Fee Under the Advance Authorisation Scheme

The Directorate General of Foreign Trade (DGFT) notified the amended rules to calculate the composition fee for the extension of the export obligation period under the Advance Authorisation Scheme.

The Advance Authorisation Scheme facilitates duty-free imports of inputs that are mandatorily used in products required to be exported within a specified period. They are not permitted to sell products in the domestic markets.

The previous composition fee formula was difficult to understand and convoluted, making the process strenuous and tedious for exporters. However, the revised composition fee formula is straightforward, easier to calculate, and based on the specific rate for various levels of the CIF value of authorisation. Simplifying calculation for the composition fee helps automation and faster service delivery by making the process easier to understand and efficient.

It will help automate the export obligation extension process with minimum human intervention, thus, eliminating misconceptions and the risk of errors. Automating the process will reduce paperwork and manual calculations, leading to faster service delivery. It will benefit exporters by reducing the effort and time required to complete the export obligation extension process.

The IT revamp project of the DGFT is taking up the automation process and will separately notify the automation process. The DGFT is working towards simplification of calculation by making the process easier to understand for exporters. It will lead to trade facilitation and ease of doing business.

According to the Ministry of Commerce and Industry data, India’s merchandise exports decreased to USD 34.48 billion in December, while imports dropped by 34% to USD 58.24 billion resulting in a trade deficit of USD 23.76 billion.

For any clarifications/feedback on the topic, please contact the writer at mayashree.acharya@clear.in

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