Objective of the AEO Program

Apart from revenue collection, Trade Security and Trade Facilitation are important areas for customs agencies around the world. In order to secure and facilitate the trade, the World Customs Organisation (WCO) has adopted the SAFE framework of standards in 2005, which includes the Authorized Economic Operator Program (AEO Program) as one of three key pillars. India, as a member of the WCO, has adopted the AEO Program through the Customs Act, 1962.

Goals of Indian Customs:

1. Ease of doing business: In 2016, India’s ranking for ease of doing business as per World Bank’s Ease of Doing Business Index was 130 out of 190. By 2020, India has improved its rank to 63. The Government, through various agencies (including Customs), looks to continue improving this number. The Digitization of Customs processes (introduction of SWIFT) and the AEO Program are some of the measures that Indian Customs has introduced to continue to progress.
   
   
2. Reducing congestion at port: The clearance of goods takes substantial time and leads to congestion at the ports. The Indian Government has stated that they are working to reduce the congestion by 80%. To accomplish this, benefits such as direct port deliver (i.e. DPD) and direct port entry (i.e. DPE) are offered via the AEO Program.
   
   
3. Ensuring increased compliance from a Customs perspective: As per Indian Customs, approximately 80% of companies operating in India are not compliant from a Customs standpoint. Through the AEO program, customs aims to reverse this percentage and achieve a target where 80% of the companies are compliant.

In the AEO Program, the economic operators need to ensure robustness of international supply chain procedures. They need to ensure that business processes follow high standards, as well as secure. Ensuring supply chain security is a major component of AEO program.

AEO is a tier-based program in India. In order for economic operators to receive optimum incentives, officials need to evaluate how robust and secure business processes are. For AEO tier-1, economic operators are verified through documented SOPs and for AEO tier-2, the customs authorities will conduct a physical verification of the processes.

Eligibility requirement:

• Entities, established in India, should be involved in international supply chain and undertake Customs or related activities with minimum 25 Bill of Entries / Shipping Bills annually
• Applicant should have business activities for at least 3 financial years preceding the date of application
• In exceptional cases, the AEO Program manager could relax 3 years’ time
• There should not be any notice involving fraud, forgery, outright smuggling, etc.

Tradewin can help:

Tradewin methodology of partnering with clients in obtaining AEO is very unique. While companies obtain the AEO status, we have noticed that companies don’t always take advantage of all of the benefits of the program. We assist clients in obtaining the AEO status, and also implement the program incentives for the companies.

Types of Certificates issued under the Program:

For any queries or assistance related to AEO, please reach out to the Tradewin India team:
Ashutosh Nath – India General Manager – Ashutosh.nath@tradewin.net