Customs Department Pushes AEO Adoption Among Auto Ancillary Firms

The customs department has urged MSMEs and auto ancillary companies to adopt the Authorised Economic Operator (AEO) programme, noting that the scheme can help reduce logistics costs and improve cargo movement as manufacturers face global supply chain disruptions.

Speaking at an industry event organised by the Automotive Component Manufacturers Association, Manish Mohan Govil, principal commissioner at the Directorate of Logistics, Customs and Central Excise under the Central Board of Indirect Taxes and Customs, said companies registered under the programme could benefit from faster customs clearance, lower cargo inspections and deferred duty payments.

“If you are a company which fulfils certain criteria, in that case, you get certain advantages from the government,” Govil said.

He said the benefits include “faster customs clearance, reduced customs examination of cargo, deferred duty payments, priority during port congestion, direct port delivery, and mutual recognition agreements with other countries.”

“Overall, what it leads to is the reduction of transaction costs,” he added.

The government has been trying to encourage wider participation in trade facilitation schemes, particularly among MSMEs and ancillary manufacturers that form a key part of India’s automotive supply chain.

The AEO programme is a voluntary initiative designed to secure and facilitate legitimate international trade. It is implemented by the Central Board of Indirect Taxes and Customs under the World Customs Organisation’s SAFE Framework.

Govil said many government programmes often see limited participation from industry despite their potential benefits. “The problem is that certain budget announcements are made, and we find that the industry doesn't come forward to take these programmes,” he said.

According to him, the reasons could include a lack of awareness, procedural bottlenecks, higher onboarding costs, and concerns over whether the schemes suit existing business models.

He urged industry members to share feedback with customs officials to improve implementation and make the programmes more useful for businesses.

The customs department also highlighted the government’s new Eligible Manufacturing Scheme (EMI), announced in the Budget, which offers benefits such as deferred duty payments aimed at easing working capital pressures for manufacturers.

Govil said India was also moving towards a more technology-driven customs framework, including a new customs integrated system and wider use of cargo-scanning infrastructure at ports.

He said the measures were aimed at improving trade efficiency and supporting industry growth amid global uncertainties.