Advance Licence is issued for duty free import of inputs, as defined in paragraph 7.2, subject to actual user condition. Such licences (other than Advance Licence for deemed exports) are exempted from payment of Basic Customs Duty, Surcharge, Additional Customs Duty, Anti Dumping Duty and Safeguard Duty, if any. However, Advance Licence for deemed export shall be exempted from Basic Customs Duty, surcharge and Additional Customs Duty only. Such licences are issued to:

(i) Manufacturer exporter or Main contractor in case of deemed exports.

(ii) Merchant exporter where the merchant exporter agrees to the endorsement of the name(s) of the supporting manufacturer(s) on the relevant DEEC Book and in the case of deemed exports, sub contractor(s)whose names appear in the main contract.

Such licences and/or materials imported thereunder shall not be transferable even after completion of export obligation. However, in exceptional cases, the material may be allowed to be transferred on merits by ALC.

Such licences shall be issued with a positive value addition. However, for exports for which payments are not received in freely convertible currency, the same shall be subject to value addition as specified in Appendix- 39 of Handbook (Vol.1),1997-2002

Advance Licence shall be issued in accordance with the Policy and procedure in force on the date of issue of licence and shall be subject to the fulfillment of a time bound export obligation as may be specified.