How to Use Self-Declared Norms vs SION in Advance License Approvals

In the realm of export incentives in India, the Advance Authorisation Scheme (often referred to simply as the Advance License) plays a crucial role in enabling exporters to import raw materials duty-free, provided they are used in the manufacture of goods for export. One of the key decisions for an exporter is which basis of input-output norms to apply under: the predefined Standard Input Output Norms (SION) or the self-declared norms route (also referred to as ad-hoc or self-declaration). This article examines self-declared norms versus SION, explains the differences, outlines the practical implications, and provides guidance on selecting the appropriate approach.

What are SION Norms?

Sions are pre-notified norms issued by the Directorate General of Foreign Trade (DGFT) which specify for a given export product the exact quantities of inputs that can be imported duty-free under an Advance License. These inputs must be physically incorporated in the export product, after accounting for normal allowances for wastage.

When to Use SION and When to Opt for Self-Declared Norms

Use SION when:

• Your export product appears in the SION list of DGFT, and the fixed input-output norms are reasonable for your process.

• Your manufacturing process matches the standard assumptions (standard wastage, standard inputs).

• You prefer a smoother approval cycle and lower risk of post-audit adjustments.

• You are targeting a standard output product with well-established norms.

Opt for Self-Declared Norms when:

• Your product is not covered under the SION list.

• You have a newer or specialised manufacturing process, greater waste, or additional input requirements that the standard SION does not capture.

• You are prepared for extra documentation (flow-charts, justification) and are comfortable with possible scrutiny by the Norms Committee.

• You prefer to tailor input quantities to your exact process instead of being constrained by the standard SION.

Step-by-Step: How to Apply for an Advance Licence Under Each Route

1. Under SION norms:

1. Check the DGFT website or handbook to verify that your export product is covered under the SION list and note the applicable norm.

2. Gather documentation: IEC, RCMC, ANF-4A application, manufacturing/ex-factory details, etc.

3. Apply online in the DGFT portal specifying the licence type and SION number, input items and quantities per the norm.

4. On approval, import inputs duty-free, ensure the actual user condition, and export the finished goods to discharge EO.

5. After fulfillment, apply for EODC (Export Obligation Discharge Certificate) / Redemption of licence.

2. Under Self-Declared Norms route:

1. Check that no SION exists or that you need a deviation from the standard norm.

2. Prepare justification: process details, wastage analysis, input-output calculations, manufacturing flow-chart, etc.

3. Fill ANF-4A (or ANF-4B if prior norms fixation) and submit online; specify the inputs and quantities you declare as required.

4. The application will be forwarded to the Norms Committee for ratification. The licence may be issued on a provisional/ad-hoc basis until norms are fixed.

5. On ratification, you must ensure actual consumption/import of inputs aligns with approved norms. Deviations may lead to duty demands, interest, or penalties.

6. Discharge export obligation and apply for EODC.

Tips & Best Practices for Exporters

• Check the SION list early: Before you apply, verify whether a SION exists. If it does, understand whether the standard norms are workable for your process.

• Keep documentation ready: Regardless of route, maintain manufacturing process data, input usage records, and export linkage; for self-declared norms, especially, details of wastage, scrap, and process losses matter.

• Be conservative in input declaration: Especially under self-declared norms, it may be tempting to declare higher input quantities to cover all wastage. But post-ratificatio,n you may be asked to refund duties for excess imports.

• Monitor licence usage: Keep track of how much of the licence quantity has been used/imported and how much export obligation has been discharged — non-compliance can raise red flags.

• Prefer SION when feasible: Unless your process truly requires deviation, using SION norms simplifies compliance and lowers audit risk.

• Involve specialist help: For self-declared norms, engaging an export-compliance consultant may help in preparing the justification and managing Norms Committee interactions.

• Plan for audits: Even with SION, audits may happen. Ensure the actual user condition is met, and inputs are physically incorporated in the export product.

Strategic Implications and Why This Matters

Why should exporters care about self-declared norms vs SION? Because this choice affects cost, risk, and processing time:

• Cost impact: Duty-free import allowed under the Advance License reduces raw material cost and enhances export competitiveness. But if norms are not properly aligned, you may incur duty demands.

• Risk exposure: Wrong norm choice or deviation can trigger demands of customs duty + interest + penalty, increasing cost and operational risk.

• Competitive agility: Using self-declared norms may allow you to customise inputs for newer products or processes, giving you agility. On the flip side, a longer approval time may delay your project.

• Compliance credibility: If you consistently use SION and meet obligations, you build trust with DGFT; if you use self-declared norms, strong documentation and compliance are essential to avoid future scrutiny.
  

Conclusion

Choosing between predefined SION norms and self-declared norms is a vital decision in the application of the Advance License (Advance Authorisation) scheme. While SION provides speed, clarity, and lower risk, self-declared norms offer flexibility for non-standard products or processes but demand stronger justification and expose you to higher compliance risk. By understanding the distinctions — self-declared norms vs SION — exporters can ensure they apply under the most suitable route, handle documentation proactively, and manage compliance effectively.

If you are preparing to apply for an Advance License, take time to evaluate your product category, manufacturing process, wastage assumptions, and export.