An Advance Authorization Scheme (AAS) is a policy mechanism used by many countries, including India, to promote exports by allowing duty-free import of inputs required for the production of export goods. It is primarily used by exporters who need to import raw materials, components, or inputs without paying customs duties, provided they fulfill certain export obligations.

Key Features of the Advance Authorization Scheme:

1. Duty-Free Imports: Import of inputs (raw materials, components, fuel, oil, etc.) used in the manufacture of export goods without paying customs duty.
2. Export Obligation (EO): Exporters must fulfill a minimum export requirement within a specified time period to avail of duty exemptions.
3. Minimum Value Addition: The exporter must achieve a specified percentage of value addition to qualify.
4. Applicable to Various Export Sectors: Used by manufacturing industries, including textiles, engineering goods, pharmaceuticals, and more.
5. Transferability: The license is generally non-transferable, meaning only the original holder can use it.
6. Validity Period: The authorization is valid for a specified period, usually 12 to 24 months, for imports.

Eligibility & Application Process:

1. Application: Exporters apply through the relevant government authority (e.g., Directorate General of Foreign Trade (DGFT) in India).
2. Standard Input-Output Norms (SION): The amount of inputs allowed for duty-free imports is determined based on SION or self-declared norms.
3. Execution of Bond/Bank Guarantee: Some exporters may need to provide a bond or bank guarantee to ensure compliance.
4. Redemption & Closure: After fulfilling the export obligation, exporters must submit proof of exports to get the authorization closed.

Benefits of the Advance Authorization Scheme:

• Cost Reduction: Saves costs by exempting duties on essential inputs.
• Encourages Exports: Makes products more competitive in international markets.
• Improves Cash Flow: Reduces working capital burden by deferring duty payments.

Would you like details on how a specific country implements this scheme?