India’s economic landscape is now poised for even greater brilliance as the industry steps into the realm of Authorised Economic Operator (AEO) Programme. Siddharth Surana, Director, RSM India, unveils the prospects that await the industry in the global arena.
Siddharth Surana, Director, RSM India
The gem and jewellery sector, a cornerstone of India’s economy, has recently been incorporated into the Authorised Economic Operator (AEO) Programme initiated by the Central Board of Indirect Taxes and Customs (CBIC) in 2011. This program, designed to enhance security and efficiency in cross-border trade, has traditionally encompassed various sectors but has now extended its scope to include the gem and jewellery industry. This expansion is a recognition of the sector’s significance in India’s international trade landscape and underscores the need for tailored customs procedures to support its growth.
India’s gem and jewellery sector, renowned globally for its craftsmanship and quality, faces unique challenges in international trade, including stringent regulatory compliance and supply chain security. The inclusion of the gem and jewellery industry in the AEO Scheme presents an opportunity to address these challenges effectively. AEO certification ensures that gem and jewellery businesses adhere to the highest security and safety standards throughout their supply chains, enhancing their reputation for compliance and boosting confidence among foreign buyers and customers. Moreover, AEO status provides various trade facilitation benefits, including expedited Customs clearance, reduced compliance costs, and mutual recognition arrangements with other countries’ Customs authorities.
Eligibility and Benefits
To qualify for AEO status, gem and jewellery businesses must meet specific eligibility criteria, including handling a minimum number of Customs documents and maintaining approved security standards. Once certified, AEOs enjoy a plethora of benefits, such as worldwide recognition as secure trade partners, expedited clearances, and waivers for bank guarantees. Additionally, AEOs receive priority treatment for inspections, faster cargo release times, and access to deferred duty payments, among other privileges.
The recent inclusion of the gem and jewellery sector in the AEO Programme signifies a strategic move to support and promote India’s gem and jewellery exports in the global marketplace. AEO certification offers gem and jewellery businesses a competitive edge by ensuring compliance with stringent security standards and streamlining Customs procedures.
The benefits of AEO status extend beyond mere trade facilitation; they bolster the sector’s credibility and position it for sustained growth and competitiveness on the world stage.
Types of AEO Certification
The AEO certification program provides businesses in India with a range of benefits related to supply chain security and facilitation of international trade. There are three tiers of AEO certification – Tier 1, Tier 2, and Tier 3 – each with increasing levels of requirements for compliance, security, and safety to achieve. These are explained below:
How do I get these benefits?
Navigating the complexities of AEO certification can be daunting for gem and jewellery businesses. The first step is to do a cost/benefit analysis and mapping your eligibility to obtain these benefits. Also, it is important to assess which Tier of Certification most suits your business.
One important aspect that needs to be kept in mind is that certain AEO status applies only in case of exports to countries which have Mutual Recognition Agreements with Indian Customs. Thus, it is important to also map the exports countrywise to assess if the benefits from AEO Scheme would accrue to your organisation.
It is also important to study one’s internal processes and supply chain to ascertain that it meets the security, compliance, and safety standards that the certification requires. This requires an honest assessment and a commitment on part of company to professionalise these processes.
Once the readiness is assessed, the next step is to make an application for the AEO certification. It is important to note that AEO status is not automatic and after application, one needs to appear before the Customs authorities and provide various documents in support of the status. Thus, given that most gem and jewellery firms would not have in-house Customs expertise, they would need assistance of consultants for this process.
Conclusion
The inclusion of the gem and jewellery sector in the AEO Programme represents a significant milestone for the industry and underscores its importance in India’s international trade landscape. By obtaining AEO certification, gem and jewellery businesses can enhance their competitiveness, mitigate risks associated with international trade, and position themselves for sustained growth and success in the global marketplace. It is also important to read the fine print of the AEO Scheme and understand all the legal and regulatory aspects before one takes the decision to embark on this Scheme.
The author Siddharth Surana is Director, Strategic Initiatives and Taxation with RSM India. Views expressed in this article are personal, and do not necessarily represent those of the GJEPC.