Standard Input Output Norms (SION) for Customs under DGFT

CA Yash Shah

Introduction:

Standard Input Output Norms (SION) are benchmarks that specify the quantity of inputs required to produce a unit of output for a particular product or service. These norms are established by the Directorate General of Foreign Trade (DGFT) in India to regulate and facilitate international trade. SION plays a crucial role in determining the eligibility of exporters for various benefits and incentives provided by the government.

Purpose of SION:

• Ensure uniformity and transparency in determining the entitlements of
• Facilitate the assessment of export performance and compliance with international trade regulations.
• Promote efficiency and competitiveness in the export sector by optimizing resource utilization.
• Encourage value addition and technological upgradation in manufacturing

Components of SION:

• Product Description: Each SION specifies the product for which the norms are applicable, along with its detailed description and classification under the Harmonized System of Nomenclature (HSN).
• Input-Output Ratios: SION delineates the quantity and type of inputs required to produce a unit of output. Inputs may include raw materials, components, consumables, energy, and utilities.
• Normative Values: Normative values indicate the permissible limit of inputs for a given output. These values are expressed in physical quantities, such as weight, volume, or units.
• Productivity Parameters: Some SIONs also incorporate productivity parameters, such as yield, wastage, and process efficiencies, to account for variations in manufacturing practices.
• Validity Period: SIONs are periodically reviewed and revised by DGFT to align with changing market dynamics, technological advancements, and trade policies. Each SION specifies its validity period to ensure relevance and accuracy.

Types

There are two primary categories of norms established by the Directorate General of Foreign Trade (DGFT) to regulate international trade and facilitate export processes:

1. Standard Input-Output Norms (SION):

Definition: Standard Input-Output Norms (SION) are predetermined benchmarks that specify the quantity and type of inputs required to produce a unit of output for a particular product or service.

Characteristics:

• Predefined Benchmarks: SIONs provide standardized benchmarks for various products, ensuring consistency and uniformity in determining the entitlements of
• Comprehensive Coverage: SIONs cover a wide range of products across different industries, including manufacturing, agriculture, and services.
• Periodic Review: SIONs are periodically reviewed and revised by DGFT to accommodate changes in market dynamics, technological advancements, and trade policies.
• Publication: Approved SIONs are published in the Handbook of Procedures (HBP) issued by DGFT, making them accessible to exporters and stakeholders.

2. Ad-hoc Norms:

Definition: Ad-hoc norms refer to norms that are fixed on a case-by-case basis for specific products or situations where standard benchmarks may not be applicable or available.

Characteristics:

• Customized Solutions: Ad-hoc norms are tailored to the specific requirements and circumstances of individual exporters or products, providing flexibility and
• Exceptional Cases: Ad-hoc norms are applied in exceptional cases where standard SIONs may not accurately reflect the input-output ratios or where exporters face unique challenges or constraints.
• Approval Process: Exporters seeking ad-hoc norms submit applications to DGFT, providing detailed justifications and supporting documents for the proposed
• Limited Validity: Ad-hoc norms may have a limited validity period, after which they require reevaluation and renewal by DGFT to ensure continued relevance and

Searching Norms

~ To access existing Standard Input-Output Norms (SION), exporters can follow these steps:

• Visit the DGFT website at [https://www.dgft.gov.in/CP/].
• Navigate to the “Regulatory Updates”
• Select “SION” from the options provided. This will display a list of chapter-wise
• Choose the relevant chapter
• By clicking on the chapter notes, exporters can view the existing SION for that particular chapter.

These steps provide a straightforward process for exporters to search and access the specific SION norms they require for their export activities.

~ To access the Application Master Data containing information on SION, Ad-hoc norms, and No norms/Self Declaration Norms, exporters can follow these steps:

• Visit the DGFT
• Navigate to the “Regulatory Updates”
• Click on “Application Master “
• Then, choose from options such as “Standard IO Norms,” “Ad-hoc norms,” or “SION Chapter-wise Notes.”
• Within the selected category, exporters can view details including the types of norms, Export Product Group, ITS(HS Code), and corresponding descriptions.

By following these steps, exporters can conveniently access and explore the specific norms relevant to their export activities.

Roles of Norms Committee (NC) for Fixation of Norms:

1. Composition and Scope:

• There are 7 Norms Committees (NC) aligned with the Indian Trade Classification (Harmonized System) – ITC (HS) categories of export products (refer to Annexure A).
• Each Norms Committee is responsible for specific product groups and corresponding HS Chapters related to norms fixation.

2. Review of Ad-hoc Norms Applications:

• Exporters submit project reports along with ad-hoc form applications to the respective Norms Committee.
• The Norms Committee conducts a thorough review of the ad-hoc norms
• Utilizing input from various technical consultants, the committee determines the permissible wastage proportion that exporters are eligible for.

3. Appeals Process:

• Exporters dissatisfied with the decisions of the Norms Committee have the right to represent their case again to the concerned NC.
• This representation must be made within 4 months from the date of the decision on ad-hoc norm fixation.

4. Setting and Control of SION List:

• The Norms Committee is responsible for establishing and managing the Standard Input Output Norms (SION) list.
• This list serves as a benchmark for determining the quantity of inputs required to produce a unit of output for various products or services.

5. Conversion of Ad-hoc Norms to SION:

• The NC endeavors to convert ad-hoc norms into Standard Input Output Norms (SION) within a specified timeframe.
• Efforts are made to accomplish this conversion within 6 months from the date of ratification of ad-hoc norms.
• Ideally, this conversion should be completed positively within 12 months from the date of ratification.

These roles underscore the pivotal responsibilities of the Norms Committee in regulating and optimizing the norms fixation process, ensuring fairness and efficiency in resource allocation for exporters across different product categories.

Document required for Norms Fixation under Advance License:

1. DGFT DSC (Digital Signature Certificate):

A valid Digital Signature Certificate issued by the Directorate General of Foreign Trade (DGFT) is required for online submission of the application and other related documents. It ensures the authenticity and security of electronic documents.

2. Copy of IEC (Importer Exporter Code):

The Importer Exporter Code is a mandatory registration required for carrying out import and export activities in India. A copy of the IEC certificate must be submitted to validate the exporter’s identity.

3. Application form ANF – 4B:

This is the prescribed application form for seeking fixation of norms under the Advance License scheme. It contains essential details about the exporter, product, and proposed norms.

4. Copy of Valid RCMC (Registration-cum-Membership Certificate):

The RCMC is issued by Export Promotion Councils or Commodity Boards and is required for availing various benefits under export promotion schemes. A valid copy of the RCMC specific to the exporter’s industry is necessary.

5. Copy of GST Certificate:

The Goods and Services Tax (GST) certificate is necessary to validate the exporter’s registration under the GST regime in India.

6. Appendix – 4E – Chartered Engineer Certificate:

This certificate is issued by a Chartered Engineer and provides technical validation of the manufacturing process, including the justification for claimed wastage at each stage.

7. Appendix 4K:

This appendix likely contains additional details or declarations required for the norms fixation process under the Advance License scheme.

8. Application Fees Receipt:

Proof of payment of the prescribed application fees is required to complete the application process.

9. Production & Consumption Data of Preceding 3 Financial Years:

Detailed data regarding production and consumption for the preceding three financial years are essential for assessing the exporter’s historical performance and determining the norms.

10. ADVANCE LICENCE Copy if Taken:

If the exporter has previously obtained an Advance License, a copy of the license should be provided for reference.

11. Details of Earlier Licenses Obtained:

Information about any licenses obtained for the resultant product during the preceding two licensing years is necessary for tracking the export history.

12. Copy of SSI/IEM/MSME:

If applicable, copies of Small Scale Industry (SSI), Industrial Entrepreneur Memorandum (IEM), or Micro, Small, and Medium Enterprises (MSME) registrations should be included.

13. Detailed Technical Notes on Manufacturing Process:

A comprehensive explanation, including a manufacturing flowchart, along with technical justifications for claimed wastage at each stage of the process, is required to support the norms fixation application. This document provides insight into the manufacturing process and helps in assessing the validity of the proposed norms.

How does the Norms Fixation work?

We can get norms fixed in two ways:

Prior Fixation of Norms:

Fixation of Norms after obtaining the Advance Authorization:

In this method, exporters seek fixation of norms before obtaining an Advance Authorization. The process typically involves the following steps: Application Submission: Exporters submit an application to the concerned authority (often the Norms Committee) detailing the proposed manufacturing process, input-output ratios, and justifications for the norms Technical Evaluation: The submitted application undergoes technical evaluation by experts or technical consultants appointed by the authority. They assess the feasibility and reasonableness of the proposed norms, considering factors such as industry standards, technological advancements, and wastage rates. Norms Fixation: Based on the technical evaluation, the Norms Committee or relevant authority determines the norms for the specific product or manufacturing process. These norms include input-output ratios, wastage allowances, and any other relevant Approval and Notification: Once the norms are fixed, the authority approves the application and notifies the exporter of the approved norms. These norms are typically published in official documents or guidelines for reference by exporters and customs authorities.

In this method, exporters obtain an Advance Authorization from the relevant authority before seeking fixation of norms. The process involves the following steps: Advance Authorization Obtained: Exporters first obtain an Advance Authorization from the concerned authority, which allows them to import raw materials, inputs, or components duty-free, subject to the condition of export obligation. Actual Production: The exporter utilizes the imported materials to manufacture the export product as per the terms and conditions specified in the Advance Application for Norms Fixation: After completing the manufacturing process, the exporter submits an application to the Norms Committee or relevant authority for fixation of norms. This application includes details of the actual production process, input-output ratios observed, wastage incurred, and other relevant information. Technical Evaluation: Similar to the prior fixation method, the submitted application undergoes technical evaluation by experts or consultants. They assess the actual production process and determine whether the observed input-output ratios and wastage levels are in line with industry standards and norms. Norms Fixation: Based on the technical evaluation, the Norms Committee or authority determines the norms applicable to the actual production process. These norms may differ from initially proposed norms based on the observed production data and technical Approval and Notification: Once the norms are fixed based on actual production data, the authority approves the application and notifies the exporter of the finalized norms. These norms are applicable for future exports under similar conditions.

Conclusion: Understanding SION is paramount for exporters navigating international trade. By comprehending the purpose, components, types, and the norms fixation process, exporters can optimize their resource utilization, ensuring fair entitlements and fostering efficiency in the competitive global market.

Overall, both methods involve a rigorous process of application, technical evaluation, and approval by the relevant authority to ensure transparency, fairness, and compliance with international trade regulations.

Views expressed are strictly personal and cannot be considered as a legal opinion in case of any query. For feedback or queries email us yash@hnaindia.com.