An Overview of DFIA Scheme

Duty exemption schemes were implemented in the Foreign Trade Policy to allow the duty-free import of raw materials or inputs essential for the creation of export products, making life easier for exporters.

• The DFIA scheme replaced the Duty-Free Replenishment (DFRC) programme on May 1, 2006, and it is similar to the Advance Authorisation Scheme with several changes.
• The DFIA licence provides duty-free import of inputs or raw materials, oil, fuel, catalyst, and energy resources, all of which are required to produce the export products.
• DFIA shall only be issued for products for which standard Input and Output Norms (SION) have been announced; thus, import entitlement must be confined to the quantity specified in SION.

DFIA License is transferable; license or inputs imported can be transferred or sold under DFIA Scheme.

Duties are exempted under the DFIA Scheme.

• The Duty-Free Import Authorisation scheme exempts just the payment of basic customs duty (BCD).
• The DFIA system does not exempt IGST or compensating Cess.

Eligibility under DFIA Scheme.

• For products where standard Input-Output Norms have previously been notified, the DFIA licence will be awarded after export.
• Manufacturer and merchant exporters are both able to apply for a DFIA licence. The name and address of the supporting manufacturer must be included in all export documents, such as shipping bills and bills of export/tax invoices, as defined by the GST laws.
• Before beginning to export under duty-free import authorisation, the applicant must submit an application to the relevant DGFT RA.
• A duty-free import permission will not be provided for a pre-import conditional import. DFIA licences will also not be provided for genuine user conditions or products listed in Appendix-4J, such as spices, tea, coconut oil, precious metals/Gold/Silver/Platinum, and so on.

Minimum Value Addition under the Scheme of Duty-Free Import Authorization

Value Addition shall be:
Where,

A = FOB value of export realized or the FOR value of supply received.
B = CIF value of inputs covered by the authorisation, plus the value of any other input used on which benefit of DBK is claimed or intended to be claimed.

• The minimum Value addition required to achieved is 20% under DFIA License.

DFIA Scheme Procedure - Duty Free Import Authorisation Scheme Steps to Follow

Below are the steps to be followed Under Duty-free import authorization scheme:-

Step 1: The applicant must determine whether the exported item is eligible for DFIA in SION.
Step 2: If the export item meets SION criteria, the applicant must submit an online application to the DGFT site and obtain a File number.
Step 3: Export must be completed within 12 months of the date the file number was issued.
Step 4: The applicant must include the produced file number on all export documents such as shipping bills, tax invoices, bills of export, and so on.
Step 5: Once the export obligation has been fulfilled, the applicant must apply for a transferable DFIA licence.
Step 6: The applicant must submit appropriate papers to the relevant DGFT RA, such as a shipping bill, E-BRC, tax invoice, and so on. Step 7: The DGFT RA will review the provided documentation and, if they are clear, will issue the transferable DFIA licence within 20-25 days.
Step 8: Once the DFIA licence has been given by the DGFT RA, it must be registered in customs for verification purposes.
Step 9: The applicant can utilise the DFIA licence to import or sell it in the market.

Validity & Transferability of DFIA

• Transferable duty-free import permission is valid for 12 months from the date of the licence issued by the DGFT RA. The DGFT RA would not allow for revalidation.
• Each Standard Input Output Norms (SION) will require a separate DFIA application.
• A separate application must be made to the RA of DGFT under DFIA for EDI and non-EDI ports.

How we can assist you for DFIA scheme?

• We are a group of DGFT experts who can assess the viability of the DFIA export scheme.
• We provide our clients with documentation to avoid procedure delays.
• We create the application, make the online application, and submit the relevant hardcopy in DGFT after obtaining the required papers.
• We collaborate with the DGFT and other relevant departments until the transferable DFIA licence is issued.
• In domestic procurement, we help our clients obtain the necessary invalidations from the DGFT RA.
• Finally, we help them redeem their DFIA licence at DGFT.