Clubbing of Advance Authorisation Licenses Guide

In the dynamic world of international trade, exporters are constantly looking for strategies to optimize their operations. One effective strategy is the clubbing of Advance Authorisation licenses, which allows exporters to offset shortfalls in one authorization with excess exports in another, simplifying compliance and redemption processes.

This blog explores the benefits, eligibility criteria, procedural steps, and recent changes in regulations regarding the clubbing of Advance Authorisation licenses. Whether you are an experienced exporter or new to the field, understanding these key aspects can greatly enhance operational efficiency and compliance with trade regulations.

1. What is Clubbing of Advance Authorization?

Clubbing of Advance Authorization means if there is a shortfall in export in one authorization and excess export in another authorization, then the Importer may opt for clubbing of authorizations at the time of closure / redemption of authorizations to set off the shortfall in exports against excess exports in the other authorization.

2. What are the eligibility criteria for clubbing Advance Authorisation Licenses under the Foreign Trade Policy?

There are certain points which need to be taken care of before applying for clubbing of Advance Authorizations – 

1. Clubbing is not allowed for the Authorizations issued on or before 31st March, 2009. 
   

2. Advance Authorizations issued for Annual requirement under FTP 2009-14, 2015-20 and 2023 can also be clubbed as per prescribed conditions provided that exports and imports under such authorizations are as per Standard Input Output Norms (SION) notified.
   

3. Clubbing facility is allowed only for redemption/regularization purpose; therefore, no import or export will be allowed after clubbing.

3. What are the steps to apply for the clubbing of Advance Authorisation Licenses?

An application has to be made in Form ANF-4C to the concerned Regional Office which has issued the advance Authorization.

4. Can Advance Authorisation Licenses issued in different financial years be clubbed together?

Yes, Advance Authorizations issued in different financial years can be clubbed, however, authorizations to be clubbed shall be issued under similar duty exemption.

5. Are there any restrictions on the types of goods or inputs that can be clubbed in Advance Authorisation Licenses?

All Inputs covered in all authorizations to be clubbed need not be the same. However, inputs which are common in all authorizations will be clubbed.

6. What recent changes in the provisions related to clubbing of Advance Authorisation?

Conditions for Clubbing of Advance Authorizations are given under Para 4.36 (vi) of the Handbook of Procedures (HBP). These conditions have been recently amended vide Public Notice No. 40/2023 dated 12th February, 2024. Revised conditions are given below – 

1. Only such authorizations which have been issued within 24 months from the date of issue of earliest authorization can be clubbed.
   

2. Imports made within 30 months from the date of issue of earliest authorization will be considered.
   

3. Exports made within 48 months from the date of issue of earliest authorization will be considered.
   

4. Exports made beyond 48 months will not be acceptable for clubbing.

7. What are the implications of shortfall in quantity or value upon clubbing of advance authorizations?

Minimum value addition as prescribed in Foreign Trade Policy (FTP) and Handbook of Procedures (HBP) for the export product need to be maintained after clubbing. Value addition shall be calculated on the basis of total CIF and FOB values arrived at after clubbing of authorizations. 

In case, there is any shortfall in value or quantity after clubbing, the same needs to be regularized under the provisions of para 4.49 of the Handbook of Procedures.

Conclusion

In conclusion, clubbing Advance Authorisation licenses is a powerful strategy that allows exporters to offset shortfalls with excesses in different authorizations, simplifying compliance and enhancing operational efficiency. By understanding the eligibility, procedures, and recent changes in regulations, exporters can optimize their international trade operations and adapt to regulatory changes effectively. This approach is invaluable for maintaining competitiveness in the global market.