The Duty Free Import Authorisation (DFIA) scheme allows duty-free import of export inputs subject to a minimum 20% value addition requirement under the Foreign Trade Policy.
You can apply for a DFIA licence through the DGFT portal by submitting shipping bills, export details, and supporting documents online.
In summary
- The Duty Free Import Authorisation (DFIA) scheme is a post-export duty exemption scheme administered by the Directorate General of Foreign Trade under Chapter 4 of the Foreign Trade Policy.
- It permits duty-free import of inputs used in exported products after fulfilment of export obligations and prescribed compliance conditions.
- Exporters are required to achieve a minimum 20% value addition under FTP provisions unless separate Standard Input Output Norms prescribe otherwise.
- DFIA authorisations become transferable only after export obligation fulfilment and endorsement by the Regional Authority of the Directorate General of Foreign Trade.
- Duty exemptions under the scheme generally include Basic Customs Duty, safeguard duty, and anti-dumping duty for eligible imports linked to notified export products.
What is DFIA (Duty Free Import Authorisation) scheme?
The Duty Free Import Authorisation (DFIA) scheme is an export promotion scheme introduced under the Foreign Trade Policy by the Directorate General of Foreign Trade (DGFT). It enables exporters to import inputs used in the manufacture of export products without payment of specified customs duties after completion of export obligations.
The scheme functions on a post-export basis, meaning exporters become eligible for duty-free import authorisation after exports are completed. DFIA authorisations are issued only for products covered under Standard Input Output Norms (SION) notified by the Directorate General of Foreign Trade. The scheme is intended to reduce production costs, improve export competitiveness, and facilitate replenishment of inputs consumed in exported goods.
Key objectives of DFIA scheme
The Duty Free Import Authorisation scheme is designed to support exporters by reducing customs duty burden on imported inputs used in export manufacturing.
- Reduce customs duty costs on inputs consumed in export products
- Improve competitiveness of Indian exporters in international markets
- Facilitate replenishment of imported raw materials after export completion
- Promote higher export volumes under Foreign Trade Policy incentives
- Streamline post-export duty exemption procedures through DGFT systems
- Support manufacturing sectors dependent on imported inputs
The scheme also strengthens export-linked manufacturing by connecting duty exemptions directly with completed export obligations and value addition requirements.
Duties exempted under DFIA
The DFIA scheme provides exemption from specified customs duties for eligible imports linked to export production under notified Standard Input Output Norms.
- Basic Customs Duty (BCD)
- Safeguard duty
- Anti-dumping duty
- Transitional Product Specific Safeguard Duty, where notified
The exemption applies only to inputs permitted under Standard Input Output Norms issued by the Directorate General of Foreign Trade. Goods imported beyond authorised quantities or outside notified norms are not eligible for duty exemption benefits.
Eligibility criteria for DFIA licence
Exporters applying under the DFIA scheme must comply with eligibility conditions prescribed under the Foreign Trade Policy.
- Exporter must possess a valid Import Export Code (IEC)
- Export product must be covered under notified Standard Input Output Norms (SION)
- Export obligation must be fulfilled before DFIA issuance
- Minimum 20% value addition requirement must be satisfied
- Shipping bills must contain declaration for DFIA benefit claim
- Inputs imported must correspond to materials used in exported products
Both merchant exporters and manufacturer exporters are eligible under the scheme subject to Directorate General of Foreign Trade procedural compliance.
Products covered and restricted under DFIA
The DFIA scheme covers export products notified under Standard Input Output Norms issued by the Directorate General of Foreign Trade.
Products generally covered
- Textile and garment exports
- Chemicals and pharmaceuticals
- Engineering goods
- Processed food products
- Plastic and packaging materials
Restricted categories
- Inputs prohibited under import regulations
- Products outside notified Standard Input Output Norms
- Restricted or banned goods under environmental and safety regulations
- Inputs unrelated to exported products
The Directorate General of Foreign Trade determines product eligibility and input-output ratios through notified Standard Input Output Norms.
Minimum value addition requirement
The Foreign Trade Policy prescribes a minimum 20% value addition requirement under the DFIA scheme unless sector-specific norms state otherwise.
- Value addition is calculated using export value and imported input cost
- Exporters must maintain documentary evidence supporting calculations
- Sector-specific norms may apply where separately notified under SION
- Failure to achieve required value addition can result in denial of DFIA benefits
The value addition condition ensures the scheme supports genuine export manufacturing activity rather than duty-free trading operations.
DFIA application process
Exporters can apply for a DFIA licence through the DGFT online portal after completion of export obligations.
- Obtain a valid Import Export Code (IEC).
- Complete exports under products covered by Standard Input Output Norms.
- Ensure shipping bills contain DFIA declaration details.
- Prepare export documents including invoices, shipping bills, and e-BRC records.
- Submit DFIA application through the DGFT portal.
- Upload supporting documents and complete digital verification formalities.
- DGFT verifies export obligation fulfilment and application details.
- DFIA authorisation is issued after successful verification.
The authorisation permits duty-free import of eligible inputs within the prescribed validity period.
Documents required for DFIA application
Exporters are required to submit supporting documents specified by the Directorate General of Foreign Trade for DFIA processing.
- Import Export Code (IEC) certificate
- Shipping bills containing DFIA declaration
- Export invoices and packing lists
- Bill of export or customs clearance records
- Electronic Bank Realisation Certificate (e-BRC)
- Digital Signature Certificate (DSC) for online filing
- Input consumption details linked to exported products
Incomplete or inaccurate documentation can result in processing delays or rejection of the application.
Validity and transferability of DFIA licence
DFIA authorisations are subject to validity and transferability conditions prescribed under the Foreign Trade Policy.
- DFIA authorisation is generally valid for 12 months from the date of issue
- Imports must be completed within the prescribed validity period
- DFIA becomes transferable only after fulfilment of export obligation
- Transferability requires endorsement by the Regional Authority of DGFT
- Transferability applies to both authorisation and imported inputs subject to FTP conditions
Transferability provisions improve procurement flexibility for exporters managing inventory and supply chain operations.
Penalties for non-compliance with DFIA obligations
Non-compliance with DFIA conditions can result in recovery proceedings and penalties under customs and foreign trade laws.
- Recovery of exempted customs duties with applicable interest
- Suspension or cancellation of DFIA authorisation
- Penalties under Customs Act, 1962 provisions
- Restriction on future DGFT authorisations
- Investigation for misdeclaration or fraudulent claims
Exporters are required to maintain accurate records of imports, exports, and input consumption for audit and verification purposes.
DFIA vs Advance Authorisation scheme
| Parameter | DFIA scheme | Advance Authorisation scheme |
|---|---|---|
| Basis of scheme | Post-export scheme | Pre-export scheme |
| Timing of import benefit | After export obligation fulfilment | Before export completion |
| Transferability | Transferable after export fulfilment | Generally non-transferable |
| Value addition requirement | Minimum 20% value addition | As prescribed under FTP |
| Duty exemption scope | Specified customs duties | Broader exemption structure |
| Compliance monitoring | Post-export verification | Export obligation monitoring before closure |
The DFIA scheme is generally preferred where exporters seek post-export replenishment flexibility, while Advance Authorisation is used where imported inputs are required before manufacturing and export completion.
Sector-wise benefits of DFIA
The DFIA scheme supports multiple export-oriented sectors by reducing customs duty exposure on imported production inputs.
Textile sector
- Reduces import duty burden on specialised fibres and fabrics
- Supports export competitiveness in garment manufacturing
Pharmaceutical sector
- Enables duty-free import of active ingredients and chemicals
- Helps reduce manufacturing cost pressure for exporters
Engineering sector
- Supports import of specialised components and industrial inputs
- Improves export pricing flexibility in international markets
Food processing sector
- Facilitates import of packaging materials and additives
- Supports export-oriented food manufacturing operations
Chemical sector
- Reduces customs costs on raw materials used in export production
- Supports large-scale export manufacturing supply chains
Conclusion
The Duty Free Import Authorisation scheme enables exporters to import eligible inputs without payment of specified customs duties after fulfilment of export obligations under the Foreign Trade Policy framework. The scheme supports export competitiveness, reduces production costs, and facilitates replenishment of materials used in export manufacturing.
- It requires fulfilment of minimum 20% value addition norms under Foreign Trade Policy provisions
- It operates through Directorate General of Foreign Trade digital application procedures
- It provides transferable benefits only after export obligation fulfilment and Regional Authority endorsement
Export-oriented businesses managing procurement cycles, production expansion, or working capital requirements can evaluate structured funding through business loans. Businesses can also assess repayment planning using a business loan EMI calculator and review applicable business loan interest rate details before financing export operations.
