Paragraph 4 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Paragraph 4.22 of the Policy says the period for fulfilling the export obligation under an Advance Authorisation, and its extension, are as prescribed in the Handbook of Procedures. The numbers are in paragraph 4.40 of the Handbook: the basic period, the longer periods for projects and defence items, two extensions of six months each against a composition fee, and several relaxations that are dated. Paragraph 4.41 deals with provisional clearance of an export consignment while an extension is pending.
This article is based on the chapter-wise text of the Foreign Trade Policy, 2023 published on the DGFT website, as consulted on 2 October 2026; the copy carries no "updated up to" date. The procedure is taken from Chapter 4 of the Handbook of Procedures, 2023 as published on the DGFT website (file of July 2026), consulted on 2 October 2026. Later Public Notices should be checked. A holder close to the end of its period can take advice on extension and regularisation through a legal consultation.
The Policy only points to the Handbook (paragraph 4.22). Under paragraph 4.40(a) of the Handbook the period is 18 months from the date of issue. A holder may get one extension of up to six months, and then a second of six months, each against a composition fee based on CIF value (paragraphs 4.40(e) and (f)); no extension may go beyond 12 months from the date of expiry. Several relaxations in paragraph 4.40 are dated and spent or time-bound; they are not the standing rule.
What the Policy says: paragraph 4.22
Paragraph 4.22 has one sentence: the period for fulfilment of the export obligation and its extension under an Advance Authorisation shall be as prescribed in the Handbook of Procedures. It states no figure. The Policy is made under section 5 of the Foreign Trade (Development and Regulation) Act, 1992 (section 5 of the FTDR Act); the Handbook is issued by the Director General under section 6 (section 6 of the FTDR Act). The Policy is not a statute: it binds through the Act and the conditions of each authorisation.
What the Handbook requires: paragraph 4.40
The standing rules: 4.40(a) to (g)
| Sub-paragraph | Case | Rule |
|---|---|---|
| 4.40(a) | General | Export obligation to be fulfilled within 18 months from the date of issue of the authorisation, unless otherwise specified. |
| 4.40(b) | Supplies to projects in India under Chapter 7 of the Policy, or projects abroad | Period co-terminous with the contracted duration of project execution, or 18 months, whichever is more. |
| 4.40(c) | Defence, military store, aerospace and nuclear energy | 24 months from the date of issue, or co-terminous with the contracted duration of the export order, whichever is more. |
| 4.40(d) | Authorisations for items under Appendix 4J | Extension not more than half the stipulated period, with a composition fee in the table below. |
| 4.40(e) | Any holder, first extension | One extension of up to six months from the date of expiry, against the composition fee below, with a self-declaration that unutilised inputs are available with the applicant. |
| 4.40(f) | Second extension | A further six months, against the larger fee below, again with the self-declaration. |
| 4.40(g) | Ban or restriction on export of a product | The period of an authorisation issued earlier is automatically extended by the duration of the ban, without composition fee. |
The composition fees as printed
The fee depends on the CIF value of the authorisation. Appendix 4J is named only.
| CIF value of the authorisation | 4.40(d) and (e): fee in Rs | 4.40(f): fee in Rs |
|---|---|---|
| Up to Rs 2 crore | 5,000 | 10,000 |
| More than Rs 2 crore up to Rs 10 crore | 10,000 | 20,000 |
| Above Rs 10 crore | 15,000 | 30,000 |
Paragraph 4.40(f) closes the door: no further extension is allowed after the two extensions of six months each, and in no circumstance may the Regional Authority allow an extension beyond 12 months from the date of expiry of the export obligation period. The self-declaration is also needed when applying for the second extension.
Fee for Policy Relaxation Committee decisions: 4.40(k)
For implementing decisions of the Policy Relaxation Committee that levy a composition fee while allowing an extension of the period or regularising exports already made, the fee is Rs 25,000 for a CIF value up to Rs 2 crore, Rs 50,000 for more than Rs 2 crore up to Rs 10 crore, and Rs 100,000 above Rs 10 crore. No refund of earlier paid composition fee is admissible. For the Committee, see our article on paragraphs 2.58 to 2.60 of the Policy.
Dated, spent or time-bound sub-paragraphs: 4.40(h), (i), (j) and (l)
These are printed in the file but are not part of the standing rule.
- 4.40(h). The revised composition fee applies only to requests made on or after 01.01.2023; existing and pending applications were governed by the earlier provision of the Handbook (2015-20). This is a transitional line. The sub-paragraph is printed as "requests made on or after 01.01.2023" and is given here as printed.
- 4.40(i). For authorisations whose period was expiring between 01.02.2020 and 31.07.2020, the period stood automatically extended by six months, with no separate application or composition fee. This relates to a past window and is spent.
- 4.40(j). For authorisations whose original or extended period was expiring between 01.08.2020 and 31.07.2021, the period was extended till 31.12.2021 without composition fee, subject to an additional export obligation of 5% in value terms in foreign exchange on the balance on the date of expiry; fee-based extensions under 4.40(d), (e) and (f) remained available; a composition fee already paid was not refundable. This is also spent.
- 4.40(l). For all Advance Authorisations, including those for annual requirement and the Special Advance Authorisation, whose period (original or extended) was expiring during 01.03.2026 to 31.05.2026, the period stood automatically extended up to 31.08.2026. That is a time-bound relaxation, and its end date has passed as of 2 October 2026. Check later Public Notices for anything that followed.
Paragraph 4.41: provisional clearance
Customs may allow provisional clearance of an export consignment as and when the holder produces documentary evidence that it has applied for an extension of the export obligation period to the concerned Regional Authority. The paragraph says "may", so it is the Customs officer's call, and it gives no time limit or form. Customs procedure is outside this article; the Customs Act articles on shipping bills and clearance of goods for exportation, such as section 51 of the Customs Act, 1962, are the place to read it.
A worked example
Patel Auto Components Private Limited, an invented manufacturer, holds an Advance Authorisation whose CIF value is within the lowest band. Its 18-month period (paragraph 4.40(a)) is about to end with exports short. It applies for the first extension of up to six months and pays the Rs 5,000 fee printed for that band under paragraph 4.40(e), with a self-declaration that unutilised inputs are available. A consignment is ready before the Regional Authority decides: it shows the extension application to Customs and asks for provisional clearance (paragraph 4.41). The extension runs out, and it applies for the second, paying Rs 10,000 under paragraph 4.40(f). No third extension is possible, and nothing can go beyond 12 months from the original expiry. For the exports still short, it would have to look at regularisation under paragraphs 4.49 and 4.50 of the Handbook.
Need help with an export obligation extension?
The cost of an extension is small; the cost of missing the window is not. Our team can check which sub-paragraph of 4.40 applies to your authorisation, and what the self-declaration should say, in a legal consultation.
Key takeaways
- The Policy points to the Handbook; the figures are in paragraph 4.40 (Policy paragraph 4.22).
- The basic period is 18 months from issue (paragraph 4.40(a)); projects and defence items have their own rules (4.40(b), (c)).
- Two extensions of six months each, with composition fees by CIF value, and nothing beyond 12 months from expiry (paragraphs 4.40(e) and (f)).
- A ban on export extends the period automatically, without composition fee (paragraph 4.40(g)).
- Sub-paragraphs (h), (i), (j) and (l) are dated; do not apply them as the standing rule.
- Customs may allow provisional clearance if an extension has been applied for (paragraph 4.41).
Read next
- Paragraph 4.17 of the Foreign Trade Policy, 2023: validity, revalidation and enhancement of Advance Authorisation
- Handbook of Procedures, 2023 paragraphs 4.49 and 4.50: regularisation of bona fide default
- Handbook of Procedures, 2023 paragraph 4.36: clubbing of Advance Authorisations
- Advance Authorisation: export obligation, clubbing and the EODC
Disclaimer: Based on the chapter-wise text of the Foreign Trade Policy, 2023 and the Handbook of Procedures, 2023 published on the DGFT website, and on the later Notifications named in this article, as consulted on 2 October 2026. The copies carry no "updated up to" date. Notifications, Public Notices, Trade Notices, the ITC(HS) schedules, Appendices and forms change often; the current text on the DGFT website should be checked before acting. This article is general information, not legal advice; check the official text before acting.