If you're an exporter or manufacturer in India, chances are you've already heard of the Advance License (or Advance Authorization) scheme. It's one of the most powerful incentives under the Foreign Trade Policy (FTP), allowing duty-free import of raw materials used to manufacture export products.
Sounds incredible? You get to import the items without paying customs duty, provided you export the goods within a particular time frame. The bottom line is that this will improve liquidity, minimize working capital blockage, and keep Indian exporters at a competitive advantage in the global marketplace.
However, here is where it gets complicated: Though the scheme is intended to facilitate trade, executing Advance Authorization manually often leads to a compliance nightmare, where exporters are tasked with various responsibilities, including ensuring documentation for DGFT, tracking SION revisions, monitoring export obligations, and customs reconciliations.
That's where automation steps in. In this blog, let's explore:
What Advance Authorization really means for businesses,
Why manual management creates risks,
And how COVORO EXIM automation transforms Advance Authorization compliance from a headache into a strategic advantage.
What is Advance Authorization (Advance License)?
The Advance Authorization Scheme , which is managed by the Directorate General of Foreign Trade (DGFT) , permits the duty-free import of inputs that will be incorporated physically into the products for export.
Scheme Highlights:
Duty Exemption: There is no duty levied on raw materials and components.
Export Obligation: The importer is obliged to comply with an export obligation (usually in 18 months).
Eligibility: Exporters, manufacturers, and merchant-exporters linked to supporting manufacturers.
Types of Authorization:
Standard Advance Authorization issued against the inputs required.
Advance Authorization for Annual Requirement bulk licenses based on past export performance.
Norms: Inputs are specified under the Standard Input Output Norms (SION) or self-declared with approval
Understanding SION: The Core of Advanced Authorization
SION = Standard Input Output Norms
SION is a set of norms that the DGFT has notified, which specifies the amount of input (raw material) that is allowed to be imported duty-free, given a specific amount of output (finished goods).
For example, for the export of 1,000 shirts, the DGFT may allow duty-free import of 1,200 meters of fabric, 2,000 buttons, and 50 kg of thread under SION.
Why SION matters:
Defines eligibility : Exporters can't just import unlimited duty-free inputs; they must stick to SION norms.
Prevents misuse : Ensures imports are proportionate to export products.
Simplifies compliance: With predefined norms, DGFT and Customs can easily verify usage.
Flexibility: Exporters can also apply under "self-declaration" if their input-output ratio isn't listed, but this requires DGFT approval.
On paper, the scheme is a win-win: import raw materials duty-free → manufacture → export → boost competitiveness.
But in practice? The DGFT paperwork, SION compliance, and license monitoring can slow businesses down.
The Manual Struggle with Advanced Authorization
If you have ever attempted manual management of Advance Authorization compliance, you already know the situation. Here are the main issues exporters face:
1. Documentation Overload
There are endless forms and documents to manage; application forms, shipping bills, bills of entry, and EO statements to follow, and manually monitoring the compliance process can be time-consuming and challenging, like completing a jigsaw puzzle where many pieces are missing.
2. SION Compliance Management
If imports are not aligned to SION norms, manual compliance tracking is laborious and time-consuming. If any of the imports are misaligned, you will be exposed to penalty or demand notices.
3. Data Entry Mistakes
An incorrect HSN code, value or quantity can lead to a DGFT rejection or conflicting with the EO demand to penalties for non-compliance.
4. License Utilization
The scheme requires constant tracking contests as you need to monitor each license and ensure utilization does not exceed SION-approved quantities. Entering and tracking amounts in a spreadsheet can lead to over-utilization or under-utilization.
5. Export Obligation Management
Manually tracking the progress of the export obligations within the first 3-month validity period is dangerous, as compliance can become hit and miss on timing.
6. Reconciliation Issues
Reconciling import data (bills of entry) to export data (shipping bills) and ensuring compliance with SION is tedious and encourages errors if not done correctly.
7. Customs & DGFT Interface Issues
DGFT portals are not exactly "user-friendly." Manual uploads, revalidations, and amendments consume huge amounts of compliance team bandwidth.
8. Audit & Penalty Risks
A minor lapse in SION compliance or license monitoring can snowball into demand notices, penalties, or loss of duty-free privileges.
In short, manual management feels like spending more time proving compliance than focusing on exports.
Why Automation is a Game-Changer for Advanced Authorization Management
The positive news is that automation resolves 80% of these headache issues. With smart systems that collect and analyze compliance data like COVORO EXIM, exporters will no longer need to chase spreadsheets or stress about non-compliance with SION guidelines.
How Automation Changes Compliance:
One-Click Data Extraction: Import shipping bill, invoice, and bill of entry details instantaneously.
License usage monitoring: Monitor license usage against approved limits via online dashboards.
License validation File: System automatically validates against SION norms for each import.
Correct Mapping File: All HSN codes will be automatically mapped and validated against SION norms.
Alerts File: Alert notifications for approaching license thresholds and impending deadlines.
Integrated DGFT/Custom Clearance File: Auto-sync with DGFT or Custom portals will be achieved.
Easily searchable, audit-ready records: Robust record management so all compliance activity is easily retrievable,
Exporters can then stay two steps ahead of DGFT compliance, instead of playing catch-up.
How COVORO Automates Advance Authorization Compliance
Let’s get into the details! Here's how COVORO EXIM cures the burden of Advance Authorization management in relation to license monitoring, SION updates, and being advised of off-boarding compliance:
1. Intelligent License Monitoring
COVORO continually analyzes the license utilization against approved quantities in real time. The program performs some of the following monitoring activities:
Import vs. Licensed Quantity: Establish how much of the licensed quantity has been imported.
Export vs. Obligation: Determine progress on exports against required obligations.
License validity: Alert before license expiry dates.
Usage: Identify underutilized licenses to improve your duty savings.
2. Automated SION Compliance & Updates
The system maintains an updated SION database and automatically:
Validates imports against SION norms during bill of entry processing.
Flags deviations from approved input-output ratios instantly.
Updates SION changes from DGFT notifications automatically.
Calculates permissible quantities based on export commitments.
3. Proactive License Usage Alerts
COVORO's smart alert system ensures you never miss critical compliance actions:
Usage threshold alerts when license utilization reaches 80% or 90%.
SION deviation warnings for imports exceeding approved norms.
Export obligation reminders with timeline tracking.
Document submission deadlines for timely compliance.
4. Real-Time Data Extraction & Validation
No more manual entry of bills of entry or shipping bills. COVORO uses AI to:
Extract and validate data directly from customs documents.
Cross-check against license terms automatically.
Verify SION compliance during import processing.
Generate exception reports for immediate action.
5. Smart Reconciliation Engine
The system auto-reconciles:
Imports vs. exports with SION norm adherence.
Bills of entry vs. shipping bills with license mapping.
License utilization vs. export obligations with timeline compliance.
DGFT portal data with internal records.
6. Centralized Compliance Dashboard
All stakeholders get unified visibility into:
License portfolio overview with utilization status.
SION compliance metrics across all licenses.
Export obligation progress with deadline tracking.
Audit-ready compliance reports with just one click.
7. Seamless Audit Preparedness
Generate comprehensive reports covering:
License-wise utilization summaries with SION compliance status.
Export obligation fulfillment records with supporting documents.
Exception handling documentation for audit trails.
Regulatory compliance certificates for DGFT submissions.
With COVORO, managing Advance Authorization becomes less about "avoiding penalties" and more about maximizing duty savings, optimizing license usage, and ensuring seamless SION compliance.
A Real Scenario – Manual vs. Automated License Management
Let's take an example:
Company A (Manual Process):
Imports raw material worth ₹5 Cr under Advance Authorization.
Tracks license usage and SION compliance in Excel sheets.
Misses SION deviation for one shipment → imports exceed approved norms.
Discovers a compliance issue during DGFT audit → faces penalty demand.
Spends weeks reconciling documents and preparing a defense.
Company B (Automated with COVORO):
Imports raw material worth ₹5 Cr under Advance Authorization.
System auto-monitors license usage against SION norms.
Gets an instant alert when the import quantity approaches SION limits.
Automatically adjusts subsequent imports to stay compliant.
Submits audit-ready compliance reports in minutes.
Outcome? Company A faces penalties and compliance stress. Company B saves duties, ensures compliance, and maintains audit readiness.
The Future of Advance Authorization Compliance – Digital by Default
With India pushing for paperless trade and digital-first EXIM systems, manual processes are quickly becoming outdated. The DGFT is moving towards:
End-to-end digital filing systems.
Real-time license monitoring capabilities.
AI-driven SION compliance verification.
Automated penalty and reward mechanisms.
Exporters who still rely on manual compliance risk being left behind. Automation isn't just a convenience anymore; it's becoming the default mode for global competitiveness.
Conclusion – Turn License Management into a Competitive Edge with COVORO
The Advance Authorization program is a unique value proposition for exporters wishing to be price-competitive. Though manual compliance, particularly around license management, SION compliance monitoring, and SION updates, can turn what should be a valuable tax-deferral program into a time-consuming compliance liability.
With COVORO EXIM to automate Advance Authorization management, companies can:
Remove SION compliance errors and penalties.
Maximize duty savings by optimizing license usage.
Be proactively compliant with real-time monitoring.
Save time and labor performing routine compliance tasks.
Gain visibility into the performance of license portfolios.
Be audit-ready with complete documentation.
Are you ready to shift Advance Authorization compliance into a competitive advantage?
Contact COVORO EXIM today to explore how you can turn license management from the back office into your next competitive advantage.