Procedure for Norms Fixation for Advance Authorisation
As per the Standard Input-Output Norms (SION), it is essential for the exporter or applicant to ensure that the imported goods/input items are utilised in the production of the export/output items.
However, if the exporter plans to incorporate additional inputs in the manufacturing process or claims higher wastage, they have the option to request a modification of norms within the existing SION.
Alternatively, if the export product is not listed in the SION, the exporter can establish norms under para 4.07 of HBP. The application for norm fixation can be submitted by both manufacturer exporters and merchant exporters.
The DGFT may request the exporter to determine the norms for the quantity of inputs required per unit of the final export product. This process, known as Norms Fixation or Fixation of Norms under Advance Authorisation, is carried out at the DGFT Headquarters in New Delhi.
The DGFT offers a comprehensive list of Standard Input-Output Norms (SION) categorised by sectors, outlining the necessary quantity of input required to produce a unit of export output.
Multiple segments and product groups fall under the purview of SION, including but not limited to Chemical and allied products, Electronics, Engineering, Food products, Handicrafts, Leather, Plastics, Sports, Textile, and food products like fish and other marine items. Notifications regarding the fixation and addition of SION are regularly issued by DGFT on its website.
This discussion focuses on the various procedures related to Norms Fixation and the establishment of ad-hoc Norms utilised in the processing of Advance Authorisations.
Category of Norms
There are two types of Norms, the Standard Input Output Norms (SION) and Ad-hoc norms fixed. Let us first understand the basics about them.
1. Standard Input-Output Norms (SION)
SION can be understood as a list of standard norms that specify the number of inputs required for manufacturing a unit of output for exports. It comprises a list of above 10,000 products under various sectors.
To modify the existing SION, manufacturer exporter and merchant exporter can submit an application to the DGFT head office.
2. Ad-hoc norms fixed
In instances where standard norms are not available for a specific export product, the exporter is required to engage with the Norms Committee at DGFT New Delhi to establish norms for the export item.
This can be achieved through either the prior fixation of norms or the fixation of norms after obtaining the Advance License. These norms, determined under this category, are referred to as “Ad-hoc Norms Fixed”.
How Can Exporters Search Norms?
If you are into export-import and want to Search existing SION norms, follow this procedure:
- Go to the website- https://www.dgft.gov.in/CP/
- Then go to Regulatory Updates
- Click on SION – you will find a list with Chapter notes
- Go to the Chapter notes. Now the exporter can will be able to see the existing SION of that chapter notes
- Click on the Chapter notes and then the exporter can view the existing SION of that chapter notes
The exporter can also view the Application Master Data of SION, Ad-hoc Norms, No norms/Self Declaration Norms by following this procedure:
- Visit the DGFT website
- Go to Regulatory Updates
- Click on Application Master Data
- Then click on Standard IO Norms or Ad-hoc norms or SION Chapter-wise Notes
- Now the exporter can view the norms types, Export Product Group, ITS(HS Code) and its description
Norms Committee (NC) Role for Fixation of Norms
According to the Indian Trade Classification (Harmonised System)- ITC (HS) of export products (Annexure A)- there are 7 Norms Committees.
For different commodities, there are different Norms Committees.
Below are the details of the Norms Committees and the product groups dealt with by each Norms Committee and respective HS Chapters related to norms fixation.
Responsibilities of Norms Committee
Let us go through the core roles and responsibilities of the Norms Committee.
- The application includes project reports when submitting the ad-hoc form application.
- The Norms Committee assesses the application of the ad-hoc norms and, in collaboration with various technical consultants, establishes the allowable wastage percentage for the exporter.
- Exporters dissatisfied with the Norms Committee’s decisions can submit a representation to the relevant committee within four months from the date of the ad-hoc norm fixation decision.
- The SION List is established and overseen by the Norms Committee.
- Efforts are made by the committee to transition ad-hoc norms to Standard Input-Output Norms (SION) within six months, with a goal of completing the process within 12 months from the date of ad-hoc norm ratification.
Documents Needed for Fixation of Norms/Norms Fixation
Exporters must have the following documents in order to get Norms Fixation under the Advance License:
- DGFT DSC
- Application fees receipt
- Copy of IEC
- Application form ANF – 4B
- Copy Valid RCMC
- Appendix – 4E – Chartered Engineer Certificate
- Copy of GST Certificate
- Appendix 4K
- Advance License copy if taken
- Production & Consumption data for the preceding 3 financial years
- Details of previous licenses obtained (if any) for the resultant product during the previous two licensing years.
- Copy of SSI/IEM/MSME.
- Detailed technical Notes with the manufacturing process along with technical justification for claimed wastage at every stage of the process
Procedure for Fixation of Norms - How does the Norms Fixation work?
There are two ways through which exporters can get norms fixed:
1. Prior Fixation of Norms
In situations where norms haven’t been officially notified, and the applicant wishes to establish ad-hoc norms before applying for Advance Authorisation, it is referred to as Prior Fixation of Norms.
- The applicant can physically submit the ANF 4B form and the required documents to the relevant Norms Committee at DGFT headquarters.
- Alternatively, an online submission can be made, where the appropriate Norms Committee is automatically selected based on the specified products for SION/Ad-hoc norms fixation.
- It’s crucial to ensure the error-free preparation of ANF 4B and the prescribed documents.
- Once all necessary data is provided in the application, it can be submitted.
- The Norms Committee will then either set these norms or establish ad-hoc norms based on the application.
- Decisions made by the Norms Committees will be accessible on the DGFT website.
- Any ad-hoc norm determined through this process is valid for a single authorisation for which the application is submitted, and no repeat authorisations will be issued. However, the Norms Committee has the authority to extend the validity period by two years from the date of fixation of such ad-hoc norms.
- The applicant will apply for Advance Authorisation, utilising the established adHoc norms.
- Following this, the authorisation will be granted for the import, taking into account the specified ad-hoc norms.
- Subsequently, the applicant can proceed to fulfil both the import and export obligations.
2. Fixation of Norms
The process of prior fixation of norms is both time-consuming and expensive. In response to this, DGFT has decided, as outlined in Para 4.07 of the HBP, to streamline the Norms Fixation process by concurrently processing applications along with the Advance Authorisation application.
- An application for an Advance License, along with the required documents, is submitted to the DGFT, and simultaneously, a copy of the application is forwarded to the relevant Norms Committee.
- This application must be certified by an Independent Chartered Engineer.
- The Norms Committee reviews, approves, and finalises the application.
- Subsequently, the committee prepares minutes of the decision, which are then uploaded on the DGFT website.
- During this process, the applicant has the flexibility to proceed with the import.
- The remaining procedures, including the fulfilment of export obligations within the stipulated period, remain unchanged for the exporter.
To Sum Up
Now you must have developed a good understanding of SION, Ad-hoc norms and the procedure of norms fixation, you might have felt things to be quite complicated right? So what you can do is connect with professional DGFT consultants who would help you smoothly get through the entire process.
DGFT consultants who have been in the field for years have a trustworthy and reliable network, they can easily coordinate with the Norms committee and the technical members for proper presentation of the cases. Also, they can help you effectively analyse the products that are being manufactured.