An Authorised Economic Operator (AEO) is a business entity involved in international movement of goods requiring compliance with provisions of the national Customs law and is approved by or on behalf of national administration in compliance with World Customs Organization (WCO) or equivalent supply chain security standards. The security standards are detailed in World Customs Organisation Safe framework of standards [WCO SAFE FoS], which is the basis of the Indian Authorised Economic Operator (AEO) programme.
The Authorised Economic Operator (AEO) programme enables Customs administration to identify the safe and compliant business entity in order to provide them a higher degree of assured facilitation. This segmentation approach enables Customs resources to focus on less or non-compliant or risky businesses for control. Thus, the aim of Authorised Economic Operator (AEO) programme is to secure the international supply chain by granting recognition to reliable operators and encouraging best practices at all levels in the international supply chain. Through this programme, the Customs shares its responsibility with the businesses, while at the same time rewarding them with a number of additional benefits.
The genesis of Authorised Economic Operator (AEO) scheme dates back to September 11, 2001 event in US which made all the governments to realise that the supply chain itself could be used for terror activities and a need was felt to make the supply chain secure. Since the supply chain is controlled by the trade, the Customs administration is partnering the trade in order to secure the supply chain. The US started CT-PAT (Customs Trade – Partnership against terrorism) programme. Later WCO adopted SAFE Framework of Standards in 2005 in order to secure and facilitate the trade. The SAFE framework has three pillars comprising of Customs to Customs partnership, Customs to Business partnership and Customs to other Govt. stake holders. Authorised Economic Operator (AEO) programme is the core part of Pillar-II i.e. - Customs to Business partnership.
The SAFE FoS sets forth criteria by which businesses in supply chain can obtain Authorised status as a secure partner. The criteria are incorporated in CBEC Circular No. 28/2012 dated 16.11.2012. Thereafter a Revised Authorised Economic Operator (AEO) Program was launched vide Circular No. 33/2016-Customs dated 22.07.2016 as amended by Circular No. 03/2018 dated 17.02.2018, 26/2018 dated10.08.2018 and Circular No. 51/2018 dated 07.12.2018.
The Authorised Economic Operator (AEO) Programme was introduced as pilot project in 2011 vide Circular No. 37/2011- Customs dated 23rd August, 2011. The same was amended and the revised final Authorised Economic Operator (AEO) programme was introduced vide Circular No. 28/2012 dated 16.11.2012.
With international developments such as Trade Facilitation Agreement (TFA) on securing and facilitating the International Trade and focus of Government of India on Ease of Doing Business, a comprehensive, unified trade facilitation initiative was launched by merging the existing Accredited Client Programme (ACP) and the ongoing Authorised Economic Operator (AEO) scheme of 2012 in the form of revised Authorised Economic Operator (AEO) Programme vide Circular No. 33/2016-Customs dated 22nd July, 2016. The ACP scheme was abolished by rescinding the Circular No. 42/2005-Customs dated 24.11.2005. Further simplification for financial solvency and decentralisation of Authorised Economic Operator (AEO) application processing was done vide Circular No. 03/2018 dated. 17.01.2018. The application process for Authorised Economic Operator (AEO)-T1 accreditation was further simplified to two Annexures form only by Circular No. 26/2018 dated 10.08.2018 from five Annexure form as was stipulated in Circular No. 33/2016 dated 22.07.2016.
The Authorised Economic Operator (AEO) programme has the following objectives:
• To provide business entities with an internationally recognized certification;
• To recognize business entities as "secure and reliable" trading partners;
• To incentivize business entities through defined benefits that translate into savings in time and cost;
• Secure supply chain from point of export to import; • Ability to demonstrate compliance with security standards when contracting to supply overseas importers / exporters;
• Enhanced border clearance privileges in Mutual Recognition Agreement (MRA) partner countries;
• Minimal security related disruption to flow of cargo; • Reduction in dwell time and related costs; and
• Customs advice / assistance if trade faces unexpected issues with Customs of countries with which India has MRAs.
There is a three-tier programme for importers and exporters i.e. Authorised Economic Operator AEO-T1, Authorised Economic Operator AEO-T2 and Authorised Economic Operator AEO-T3 in the increasing degree of benefits accorded and compliance requirements. Furthermore, there is single Tier Authorised Economic Operator (AEO) Programme for Logistics Providers, Custodians or Terminal Operators, Customs Brokers and Warehouse Operators who are granted Authorised Economic Operator AEO-LO certificate.
Yes, it is valid at all Customs stations in India. In other words, an Authorised Economic Operator (AEO) status holder shall get the Authorised Economic Operator (AEO) benefits at all Customs ports/ airports/ Land Customs stations.
There are a host of benefits for all three categories of Authorised Economic Operator (AEO)s- T1, T2, T3 and LOs. These are listed in paras 1.5.1 to 1.5.4 for Authorised Economic Operator (AEO) T1, T2, T3 and LO respectively of Circular No. 33/2016-Customs dated 22nd July, 2016. Some of the major benefits are listed below: a) Recognition worldwide as safe, secure and compliant business partners in international trade and get trade facilitation by a foreign Customs administration with whom India enters into a Mutual Recognition Agreement/Arrangement; b) Facility of Direct Port Delivery (DPD) of their import Containers and/ or Direct Port Entry (DPE) of their Export Containers; c) Waiver of full or part of the Bank Guarantee requirements, Waiver of Merchant overtime fees; d) Deferred payment of duties; e) Waiver from transactional PCA. Instead Onsite PCA has been provided, the selection of the same shall be based on risk assessment of Authorised Economic Operator (AEOs); f) Waiver of solvency certification for Customs Brokers; g) A lower risk score in risk analysis systems when profiling; h) Faster disbursal of drawback amount through process eased out vide Circular 18/2017 Customs dated 29.05.2017; i) Fast tracking of refunds and adjudications; Self-certified copies of FTA / PTA origin related or any other certificates required for clearance would be accepted; k) Recognition by Partner Government Agencies and other Stakeholders as part of Authorised Economic Operator (AEO) programme.