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Authorized Economic Operator (AEO) Program

 

MARCH 16, 2023

By Abhishek Jain, Partner at RSA Legal Solutions

Introduction

THE Authorized Economic Operator (AEO) Program is a voluntary program established by the Government of India to promote the safe and secure facilitation of trade. The program is open to importers, exporters, warehouse operators, custodians, logistics service providers, and customs brokers who have fulfilled all the compliances with the customs laws and the World Customs Organization (WCO) SAFE Framework of Standards.

Background and Purpose

The AEO program was established in 2005 as part of the global effort to enhance supply chain security after the 9/11 attacks. It is a business-to-customs partnership for the secure facilitation of trade. The program is based on the principle of mutual recognition of customs controls and security measures between countries, which means that an AEO certified in one country is recognized and given benefits in another country. It is a certification program developed by the WCO to enhance international supply chain security and facilitate trade.

Categories and Validity of AEO Certification in India

In India, the AEO program was first implemented in the year 2016. The program for importers and exporters is classified into three categories - AEO T1, AEO T2, and AEO T3. For logistics service providers, warehouse operators, customs brokers, and terminal operators, there is the AEO-LO program.

AEO T1 and T2 certifications are valid for 3 years, while AEO T3 and AEO-LO certifications are valid for 5 years. Any importer or exporter can apply for AEO T1 or T2 directly. However, to apply for AEO T3 status, they need to have and maintain the AEO T2 status for at least two years.

Eligibility Criteria for the Indian AEO Program

To be eligible for the Indian AEO program, a company should have been established in India and be engaged in custom-related activities. They should have filed at least 25 custom shipments in the previous financial year and fulfilled certain compliances, including general compliances, legal compliances, financial compliances, business partner security details, safety and security of the entity, transport and commercial records, security plans, and process maps.

Benefits of the AEO Program for Importers, Exporters, and Logistics Service Providers

There are several benefits of the AEO program for importers, exporters, and logistics service providers. Some of these benefits include a deduction in the bank guarantee, direct port delivery, deferred payment of duty, and higher priority for goods clearance. Additionally, AEO-certified companies receive the security that their goods will be facilitated at a much better rate than non-AEO-certified companies.

Reduction in Compliance for MSMEs in the AEO Program

Recently, the Government of India announced a reduction in compliance for Micro, Small, and Medium Enterprises (MSME) importers and exporters who are part of the AEO program. This means that MSMEs will be facilitated at a faster rate than non-MSMEs to provide them with higher opportunities for facilitating and securing global trade.

Nature of the AEO Program and Assistance Available

It is important to note that the AEO program is not mandatory but voluntary. However, companies that opt for the program are likely to benefit from the advantages that come with it. Companies can seek assistance from experts knowing the field to expedite their application process and achieve their goal of obtaining AEO certification.

Conclusion

In conclusion, the AEO program is a voluntary program established by the Government of India to promote the safe and secure facilitation of trade. The program is open to importers, exporters, warehouse operators, custodians, logistics service providers, and customs brokers who have fulfilled all the compliances with the customs laws and the WCO SAFE Framework of Standards. Companies can seek assistance from experts to expedite their application process and achieve their goal of obtaining AEO certification.

(The views expressed are strictly personal.)

(DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site)

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