Government relaxed AEO process for MSMEs

The Central Board of Indirect Taxation & Customs (CBIC) in order to promote import and export related ease of doing business among MSMEs with respect to their Authorised Economic Operator (AEO) accreditation has eased the custom compliance and security requirements involved in the process. A circular issued by CBIC’s Directorate of International Customs (DIC) in December 2020, noted that “the relaxation has been carried out to ensure that the MSMEs are facilitated through rationalized compliance requirements and minimum but effective security requirements.”

AEO is a voluntary programme under the aegis of the World Customs Organization (WCO) SAFE Framework of Standards that aims to secure and facilitate global trade by enhancing international supply chain security and facilitating the movement of goods. Under AEO, a business engaged in international trade is approved by Customs as compliant with supply chain security standards and granted AEO status and certain benefits. “It enables Indian Customs to enhance and streamline cargo security through close cooperation with the principle stakeholders of the international supply chain viz. importers, exporters, logistics providers, custodians or terminal operators, custom brokers and warehouse operators,” according to CBIC.

The relaxations made by CBIC, as per the circular issued on December 15, for AEO accreditation for MSMEs included first, relaxing the eligibility requirement of handling a minimum of 25 documents during the last financial year to 10 documents. However, it is subject to handling at least five documents in each half-year period of the preceding financial year. Second, the requirement to have “business activities for at least three financial years preceding the date of application” has been relaxed to two financial years. Third, the qualifying period for legal and financial compliance has been reduced from the “last three financial years” to the last two financial years.