(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. ——————————