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An Overview of Authorized Economic Operator(AEO)
After meeting specific eligibility requirements, an economic operator is given the status certification of Authorised Economic Operator (AEO).
The World Customs Organisation came to understand that the global supply chain needed to be secured after the 2001 US terror incident known as 9/11. The SAFE Framework of Standards (FoS) was developed by the WCO in 2005 to secure the global supply chain, which includes the AEO.
The government of India introduced the Indian AEO Programme on August 23, 2011, with the goal of enhancing global supply chain security and facilitating the movement of legal commodities. There is a single-tier AEO LO programme for logistics providers, as well as a three-tier AEO Programme with AEO T1, AEO T2, and AEO T3 for importers and exporters with increasing degrees of incentives.
Why we need AEO Certification?
If you are a business owner, you will always require some sort of acknowledgment to demonstrate your reliability and sincerity. Licences, honorific medals, and diplomas are only a few examples of the recognition that may be given. An example of a certification that denotes a company's authority and dependability in international trade is an Authorised Economic Operator (AEO). Business owners that obtain this accreditation enjoy a host of advantages and conveniences.
Who can apply for AEO? AEO Eligibility Criteria.
AEO Certification is typically available to companies that participate in the global supply chain and also happen to do customs-related business locally.
The size of the company is unimportant. Exporters, importers, logistic service providers, custodians or terminal operators, warehouse owners, and customs house agents are among the professions that are eligible for AEO Certification. Organisations not engaged in work related to customs are exempt from needing AEO accreditation. The criteria to obtain AEO certification are shown in the figure below.
Only the applicant's legal company is covered by the AEO application; a group of businesses is not. The company's headquarters should be in India. The applicant must have been actively conducting business for at least three fiscal years prior to the date of application, though the AEO Programme Manager may waive this requirement. Only the legal entity acting in its individual capacity is entitled to AEO status. Not on its customer importers and exporters, who must seek for the status independently. Small and medium-sized businesses are also eligible for the AEO certification provided they had at least 25 shipping bills or bills of entry during the previous fiscal year.
To apply for an AEO certificate, the following documents will be required
- A registration certificate issued by the company's registrar.
- Information on the locations or places where things are handled.
- Evidence of a company having its own accounts.
Simplified Requirements for MSMEs Seeking AEO Certification
The CBIC has examined the obstacles faced by all MSMEs in obtaining the AEO certification in accordance with the Aatma Nirbhar Bharat Abhiyan, which seeks to assist MSMEs in overcoming challenges brought on by the COVID-19 Pandemic. The board has agreed to ease up on all of the MSMEs' security and compliance standards.
The following relaxations for awarding the AEO certificate are available to applicants who have the MSME certificate from the relevant ministry. Following AEO approval, MSME must make sure to keep their status as an active MSME for the duration of the AEO certification.
Minimum Import – Export Documents requirement
To obtain the AEO Certification, the minimum number of documents has been reduced from 25 to 10, subject to handling at least 5 documents during each half-year of the prior financial year.
Relaxations in business activities period
The requirement to have business activities for at least three financial years before the date of application has been relaxed to two financial years for the Applicant having MSME certificate and wish to get AEO accreditation.
Time Limit for processing the Application
- The MSME AEO T1 application processing time limit has been lowered to 15 working days, or one month.
- The MSME AEO T2 application processing time limit has been lowered from six months to three months.
AEO T1 and T2 requirements for MSMEs with less documentation
To receive the AEO accreditation, all MSMEs must now submit just two annexures for AEO T1 and three annexures for AEO T2.
Following are the two common annexures for AEO T1 and AEO T2
- Annexure 1 (General Compliance) of the MSME
- Legal, Managing Commercial Records, and Financial Solvency Compliance: MSME Annexure 2
Safety and Security Requirements, MSME Annexure 3, is the third annexure for AEO T2. These are made to satisfy the MSMEs' reduced documentation needs for AEO accreditation.
Relaxations throughout the period of conformity with the law and finances
To qualify for the certification, the legal and financial compliance term has been shortened from the previous three financial years to the most recent two.
Relaxation of the Bank Guarantee (BG) Furnishing Process
For MSME AEO T1
The benefit of relaxation in the furnishing of BG for MSME AEO T1 has been relaxed to 25% to 50%.
For MSME AEO T2
The benefit of relaxation in the furnishing of BG for MSME AEO T2 has been relaxed to 10% to 25%. Visit the custom website to know more about the relaxation given to MSMEs -
Advantages of Authorised Economic Operator (AEO) Certification
Gaining AEO certification for your company can give you unheard-of levels of commercial flexibility. As you advance through the certification tiers, you receive more import/export benefits. The accompanying table contains a list of each tier's advantages.
Note: The Self-Ratification Advance Authorisation Scheme is another significant benefit for holders of AEO status. Only those with AEO Status are eligible for this programme. Exporters who are utilising the advantages of an advance authorization can obtain an advance licence under this scheme on the basis of self-declaration and self-ratification.
Therefore, there is no need to approach the Norms Committee for Fixation of Norms in circumstances where SION (Standard Input Output Norms) / Valid Ad-hoc Norms for an Export Product are not set or where SION has been notified but the exporter wants to employ extra inputs in the manufacturing process. Exporters have the option to self-ratify the advance licence redemption. The aforementioned Scheme follows FTP 2015-20's para 4.07 A.
Documents required for AEO Certification
The AEO certification procedure is made simple and organised with the use of appropriate documents, which also cuts down on processing time. The AEO Procedure is greatly aided by proper documentation since it makes it simple for the AEO Programme staff to review the application.
Find the list of Company documents and Application forms for the AEO Application under each tier.
What is the AEO Registration Procedure?
- Error-free documentation is crucial to get AEO status in order to prevent the AEO Programme team from rejecting your application. The SOPs must also be accompanied by copies of other firm documentation and AEO application forms.
- Standard Operating Procedures (SOPs) are developed to give the necessary details about the process used in the organisation to manage the following:
- How are licences and authorizations related to exports and imports administered?
- Procedures for managing the business records related to exports and imports?
- Establish methods for confirming the correctness of customs declarations, including alternatives for the tariff categorization and determination of customs value.
- How should you go about preventing unauthorised access to your computerised record system?
- How to archive, back up, restore, and retrieve your business records.
- There are two modes for the AEO application procedure:-
- Online Application - AEO T1 applications may be submitted online at https://aeoindia.gov.in/.
- Manual Application - Manual applications must be submitted in order to receive status information for the subsequent tiers.
- If the information provided in the application does not match the papers attached, the AEO Programme Manager will not process the application. Within 30 days of receiving the application, the applicant must be informed of this.
- The Custom team conducts physical verification to determine whether or not the statements provided in the application about fulfilment of AEO eligibility criteria are true before granting AEO T2, AEO LO.
- The AEO team has given an AEO Certificate or Status after confirming the applicant's eligibility, document verification for AEO T1, and document plus physical verification for the other statuses.
- AEO Certification must be maintained by the company once it is issued, for example, if any changes are made in the firm that has an AEO certificate.
How can the AEO Status be preserved to prevent status cancellation?
Once you have been granted AEO status, you must take the essential steps to retain your AEO certification. Maintaining status is crucial to maximising the benefits of the AEO Scheme.
As the holder of an AEO Certificate is seen as a secure trader and a trustworthy business partner, they must adhere to the standards that have been established for them by the AEO Programme team. Any firm changes must be reported to the AEO Programme team in order to maintain the status, and the modifications must take the following forms:
- Changes in the person responsible for custom.
- Changes in the accounting and computing system.
- Changes in the location in the international supply chain.
- Changes in the business name or address.
- Changes in the nature of business.
- Changes in the legal entity.
The AEO Programme Team must be informed of the changes as soon as they are made, or at the very least 14 days after they are made. If a firm employee makes a mistake in the CRM system that has to do with supply, the problem needs to be fixed right away and should also be fixed in the AEO Programme Team and the CRM system.
The AEO status will not get affected if the AEO team has
- 1) Examined the reason for errors.
- 2) Taken appropriate remedial action to prevent a recurrence.
Who is not entitled?
Applications for AEO accreditation are not accepted from companies that are not involved in customs-related work or activities. Banks, insurance providers, consultants, and the rest of the business sector are therefore not eligible to apply for AEO accreditation because it serves no purpose for them.
What we do and how can we assist you?
- AFLEO CONSULTANTS walks you through each step of the process and offers advice and support to make it easier for you.
- At Afleo, our multidisciplinary team serves as your "one-stop solution" and helps you through each step of obtaining the AEO certification.
- Together, we develop a plan of action to quickly obtain the certification.
- Our team of professionals submits applications manually for the remaining tiers and online for AEO T1.
- Help with physical verification.
- Assist in preserving the AEO status.
With so many benefits associated with having an AEO Certification, your company can grow more quickly as a result of the increased freedom and speed with which you can conduct business. The Authorised Economic Operator Certification, which many nations have already embraced as a standard for performing lawful import/export, has great promise for the future by upholding crucial relationships in international trade.
Frequently Asked Questions
Authorised Economic Operator, or AEO, is a designation or status bestowed upon an economic operator by the AEO Programme team.
The government established the authorised economic operator (AEO) programme to grant Indian economic operators the status certificate.
A company that participates in an international supply chain can apply for the AEO certificate through its AEO programme.
Any company that participates in an international supply chain is eligible to apply for AEO membership.
In India, there are two methods for requesting an AEO certificate: 1) Online mode, which is available for AEO T1 and must be completed on the AEO Portal at https://aeoindia.gov.in For the remaining statuses, utilise manual mode.
AEO Registration is done to get AEO status/Certificate. Registration is done online on AEO Portal for AEO T1.
The following are the key advantages of AEO Certification for a business entity participating in an international supply chain:
Quicker facilitation of trade.
shorter time for cargo release.
decrease in the bank guarantee.
on-demand approval available at all seaports and airports around-the-clock.
Under the AEO Programme, there are three levels of AEO status for exporters and importers, each of which offers the certificate bearer a different and gradually rising level of facilitation. The first AEO tier, T1, is awarded solely on the basis of document verification and offers fewer rewards than the other AEO categories.
AEO T2 is one of three-tier under the AEO programme, and granted to an Importer & Exporter on the basis of Physical verification in addition to Document verification.
The following forms must be submitted along with all the necessary supporting documentation for an AEO application, including the IEC, GST Certificate, Certificate of Incorporation, MSME Certificate, and extra documents like an Import-Export Process Map, Site Plan, Solvency Certificate, Audit Report, etc.
Annexures 1 and 2 - For AEO T1
Annexure A to E5 - For AEO T2, AEO T3, AEO LO.
MSME Annexure 1 and 2 - For AEO T1 (Applicant having MSME Certificate)
MSME Annexure 1, 2, and 3 - For AEO T2 (Applicant having MSME Certificate)
It is a legal document that details the financial stability of a company for a specific Financial Year. The AEO team demands that the firm's financial credibility be guaranteed.
Any organisation that wants to maximise the advantages of the AEO Scheme should consider AEO Maintenance to be a critical component. As the AEO certificate is regarded as the one that guarantees, the respective company must adhere to the standards that are set for them after acquiring the AEO status.
If a business entity involved in the International supply chain fulfilling the following criteria, can get the AEO Certification and become an Authorized economic operator.
Handled 25 documents (s/B & Bills of Entry) in the last Financial Year.
Should Undertake Customs Related Work.
Be a part of the international supply chain.
AEO can only be given to a legal entity and not a group company.
Have had business activities for three Financial Years (can be waived in deserving cases)..