The EMI Scheme: CBIC Extends Duty Deferment to Eligible Manufacturer Importers — What Every Manufacturer Must Know

What if your next consignment of imported raw materials could clear Customs today — and you paid the duty only next month? No interest. No bank guarantee. No bond. That is precisely what the newly launched Eligible Manufacturer Importer (EMI) Scheme offers to compliant Indian manufacturers. Announced in the Union Budget 2026‑27 and operationalised by CBIC vide Circular No. 08/2026-Customs dated 28 February 2026, the scheme extends the coveted deferred payment of Customs import duty — hitherto available only to Authorised Economic Operators (AEO T2/T3) — to a broader class of trusted manufacturers.

If you are a manufacturer importing inputs, capital goods, or raw materials, this scheme could meaningfully improve your working capital cycle. Read on for a comprehensive breakdown.

Background: The AEO Privilege, Now Democratised

Under the proviso to Section 47(1) of the Customs Act, 1962, the Government has the power to permit deferred payment of Customs import duty. This benefit has, until now, been the exclusive preserve of entities accredited under the Authorised Economic Operator (AEO) programme at the T2 and T3 levels — entities that have undergone rigorous Customs audit, demonstrated high compliance standards, and earned trusted trader status.

The EMI Scheme does not displace the AEO programme. Rather, it creates a feeder pathway: compliant manufacturers who do not yet hold AEO accreditation can now access deferred duty payment, with the expectation that they will graduate to AEO T2/T3 status before 31 March 2028 — when the scheme sunsets.

The scheme is governed by the Deferred Payment of Import Duty Rules, 2016 (as amended) and is backed by Notification No. 12/2026-Customs (N.T.) dated 1 February 2026.

What Exactly Does the Scheme Offer?

Under the EMI Scheme, an approved manufacturer importer may file a Bill of Entry and clear imported goods from a Port, Airport, or ICD without making payment of Customs duty at the time of clearance. Duty is instead consolidated and paid on a monthly basis, as follows:

Importantly, the deferred duty facility also covers IGST on imports. There is no monetary cap on the amount of duty eligible for deferment, and no interest is charged if payment is made within the prescribed due date.

Who Qualifies? The Eligibility Criteria

The scheme is trust-based, meaning the eligibility bar is deliberately calibrated to reward compliance without creating an exclusionary barrier. The conditions prescribed under the Circular are as follows:

Existing AEO-T1 entities, including MSMEs, that satisfy the above conditions are also eligible to apply.

How to Apply: The Process

The application process is entirely digital. There is no registration fee, no bond, and no bank guarantee required. Applications are filed online on the AEO India portal at www.aeoindia.gov.in under the dedicated tab “Eligible Manufacturer Importer”, in the prescribed Form as per Appendix-I, along with documents specified in Appendix-II and Appendix-III of the Circular.

The step-by-step workflow is as follows:

• File application online on AEO India portal from 1 March 2026 onwards
• Designated officer of the Directorate of International Customs (DIC), CBIC scrutinises eligibility
• Upon approval, EMI status is updated in the Customs Automated System — no further action required
• Nodal person of the EMI obtains ICEGATE login credentials
• At the time of filing each Bill of Entry, select Flag “D” (Deferred Payment) in the payment method column
• Nodal officer authenticates via OTP through ICEGATE before clearance is effected
• Duty is paid by the monthly due date as per Rule 4 of the Deferred Payment Rules

The EMI status, once granted, is valid across all Customs stations, enabling consolidation of duty payments across multiple ports and ICDs within a month.

The EMI Scheme and the AEO Programme: A Planned Progression

The EMI Scheme is expressly designed as a transition mechanism, not a standalone destination. CBIC has made clear that the facility is available only till 31 March 2028, with the expectation that approved EMIs will, within this window, obtain AEO T2/T3 accreditation.

This is a well-considered policy design. The AEO programme confers a far richer bundle of benefits — priority examination, direct port delivery, fast-track drawback, reduced examination norms, and more — in addition to deferred payment. The EMI scheme gives manufacturers a taste of deferred duty while simultaneously nudging them toward the full AEO framework.

For manufacturers who are already AEO-T1 and satisfy the EMI conditions, this is an ideal moment to consider applying for AEO-T2 upgradation as well, thereby consolidating both tracks.

Monitoring, Compliance and Safeguards

The scheme is not without teeth. CBIC has put in place a robust monitoring architecture:

• Principal Commissioners/Commissioners of Customs can monitor deferred payment reports through ICES dashboards and Commissioner dashboards
• Instances of non-payment may be reported to DIC, CBIC
• DIC retains the power to suspend or revoke EMI approval if the entity becomes ineligible at any point
• Repeated failure to pay duty by the due date may lead to suspension of the deferred payment facility

Importantly, the EMI may also choose to make payment earlier, at their convenience, for any consignment. The scheme is flexible — deferred payment can be availed for some Bills of Entry and not others, within the same period.

What This Means for Manufacturers: A Practical Assessment

The financial impact of this scheme is direct and measurable. Consider a pharmaceutical manufacturer importing APIs worth Rs. 20 Crore per month at a composite duty rate of 15%. Under normal import, Rs. 3 Crore is blocked in Customs duty at the time of each clearance. Under the EMI Scheme, that Rs. 3 Crore remains in the manufacturer’s hands for up to a full month — interest-free, and without any collateral.

Across a year, the working capital benefit runs to tens of crores for mid-sized importers. For MSMEs with the relaxed threshold of 10 EXIM documents, the scheme opens a door that was previously shut — they now share the same deferred duty privilege as AEO-T2 giants.

Beyond liquidity, the scheme promises faster clearances: once the ICEGATE authentication is done, the Customs Automated System processes the Bill of Entry without the bottleneck of duty payment at the port. Reduced dwell time translates to lower demurrage, lower warehousing costs, and a smoother supply chain.

Key Dates at a Glance

TBA’s View: Act Now, Before April

The EMI Scheme is one of the most practically meaningful trade facilitation measures to emerge from the Union Budget 2026‑27. Unlike incentive schemes that require export targets, MOOWR licences, or bonded warehouse infrastructure, the EMI Scheme imposes no operational restructuring. It slots into your existing import workflow and delivers an immediate cash flow benefit.

The window to apply is already open. Manufacturers who meet the eligibility criteria should file applications without delay — every month’s delay is a month’s deferred duty foregone.

For manufacturers who are not yet AEO-T1, the EMI Scheme also provides a compelling reason to get their compliance house in order — GST returns up to date, financial solvency certified, EXIM records audited. These are the same foundational steps that lead, in due course, to full AEO accreditation.

How Trade Bridge Advisors Can Help

At Trade Bridge Advisors, we assist manufacturers and trading houses in assessing EMI eligibility, compiling and filing applications on the AEO India portal, and planning the onward pathway to AEO T2/T3 accreditation. With 30 years of regulatory experience under the leadership of Shri R. K. Jain, IRS (Retd.), we bring practitioner-grade expertise to every stage of your Customs compliance journey.

Contact us for a complimentary EMI eligibility assessment: info@tradebridgeadvisors.com | +91 961-910-2025

Pay Later. Clear Faster. Grow Stronger.