(AN ARTICLE WRITTEN FOR CHAIRMAN, AEPC FOR ET RISE)
AEO is a worthwhile investment for any garment
manufacturer whose organization
is involved in international supply chain. The status is attributed to only
those organisations that maintain safe, secure and compliant international
trade procedures. For those of you who are new to this, AEO or Authorised
Economic Operator is an internationally recognised status which demonstrates
that your organisation operates both efficient and compliant customs controls
and procedures. In this era where business efficiencies are defined by speed,
AEO accreditation can help fast-track shipments through customs and security
procedures by providing quicker access to simplified custom procedures. In some
cases, the benefit may also include waivers for guarantees. AEO offers a number
of other benefits, including lower rate of physical inspections of
imported/exported goods, faster release of shipments, preferential treatment by
Customs Authorities, and deferred payment of duties, to the companies that meet
compliance criteria and demonstrate the security of supply chain. Therefore,
there is undeniable wisdom in getting the certification even though it is not mandatory.
Customs
organizations all over the world face the twin challenge of securing the
borders from unlawful trade and simultaneously facilitating and speeding up
legitimate trade. These are exactly the objectives that AEO works towards achieving.
Globally, AEO certification is
gradually evolving into an industry standard for claiming eligibility to any
administrative and governmental discretions, priority and facilitation. In my
opinion, it will not be any different in India as well, very soon.
While
AEO certification has been offered since 2012 in our country, the Central Board
of Excise and Customs has re-launched a more effective and reworked three-tier
AEO programme merging the ongoing Accredited Clients Programme (ACP) & AEO
programme recently. This has certainly been received well by the exporter
fraternity and found to be very useful. Further, the Government has made the
process of AEO certification a time bound exercise, which implies that AEO-T1
certification can be obtained within a period of one month after submission of
required documents by your organization. Further, AEO-T2 & T3 certification
can be obtained between a reasonable three-five month period.
If you
are an organization, established in India involved in global trade such as
Importers, Exporters, Cargo Agents, Warehouse Operators, Port Operators,
Carriers and Customs House Agents irrespective of the size of your business,
you are eligible for AEO certification. Also since AEO status is not location
specific, it applies to a particular entity as a whole. Each entity needs to
apply for AEO certification separately. It is no uphill task to be eligible for
AEO or apply for it. An applicant needs to provide the Standard Operating
Procedures and details of the following at the time of application:
- Site
plan details
- Business
partner details
- Legal
compliance, i.e., no issuance of show cause notice/ prosecution case
- Security
plan details
- Safety
and Security standards
- Managing
commercial and transport records
- Process
map for movement of goods
- Financial
solvency status
If you
an exporter, there is a three tier system of certification, with varying levels
of benefits- T1, T2 and T3 What makes
the process faster and efficient is also that in case of T1 certification, no
physical verification is conducted and only the application is reviewed.
Physical verification by AEO
Programme Team is conducted to verify compliance with the above requirements
for the grant of T2 and T3 certification within 90 days of application. The AEO
specialists conduct onsite visit of domestic facilities to confirm the security
practices are in place and operational in case of higher certification levels. The team prepares the reports with
recommendation to the AEO Programme Manager within 60 days of completion of
onsite verifications.
Once
you are an AEO certified exporter in India, you are likely to get varying levels
of benefits from the importing country, as per India’s MRA (Mutual Recognition Agreement)
with the respective country. Under the Mutual Recognition Agreements (MRA), the
customs authority of exporting countries or regions ensures the safety and
authenticity of export shipments before export and the customs authority of the
importing country or region ensures the preferential customs treatment for AEO
certified entities at time of import. While India has a well negotiated MRA
with a few countries, the MRA with few other significant importing destinations
is underway.
With
more and more countries committing themselves to the efficient implementation
of AEO or frameworks similar to AEO, this is certainly the trade language that
the future will speak. Numerous Mutual Recognition Agreements have been
concluded and many more are in negotiation, as I write this. There is, thus, an undisputed merit
for an MSME in Apparel export to enrol for AEO certification.
One
can know further by writing to aeo.india@icegate.gov.in or visit http://dgicce.nic.in/dgicceAEOGuide.htm.
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