India’s EMI Scheme 2026-2028: New Deferred Customs Duty Facility for Eligible Manufacturer Importers

The Central Board of Indirect Taxes and Customs (CBIC) has implemented a new reform by introducing a deferred customs duty payment facility for a new category of importers termed Eligible Manufacturer Importers (EMIs).

The initiative, effective April 1, 2026, is designed to ease working capital pressures for compliant manufacturers while strengthening a trust-based and risk-segmented customs administration framework.

Policy background and legal framework

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The deferred payment facility operates under the Deferred Payment of Import Duty Rules, 2016 (as amended). CBIC formally notified the eligibility conditions, procedures, and operational guidelines through Circular No. 08/2026-Customs dated February 28, 2026.

The scheme will remain in force till March 31, 2028.

By extending this facility to EMIs, CBIC aims to accelerate customs clearances at ports, airports, and inland container depots (ICDs), particularly for manufacturers dependent on regular imports of raw materials, components, and capital goods.

How the deferred payment mechanism works

Under the EMI scheme, approved manufacturers can clear imported consignments without paying customs duty at the time of clearance. Instead, they may discharge the duty liability on a consolidated monthly basis.

This shift from transaction-level duty payment to periodic settlement is intended to:

• Improve cash flow predictability
• Optimize working capital cycles
• Reduce immediate liquidity outflows at the point of import

The system integrates facilitation with digital monitoring, ensuring faster clearance without compromising compliance oversight.

Eligibility criteria: Who can apply?

The deferred duty benefit is available only to financially sound and compliant importers that meet clearly defined conditions.

1. Business status

The applicant must:

• Qualify as an importer under the Customs Act, 1962; and
• Be a manufacturer under the CGST Act.

Alternatively, non-manufacturer importers may apply if they send imported inputs or capital goods (without payment of tax) to a registered job worker under Section 143 of the CGST Act.

2. Registrations and trade credentials

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Applicants must possess:

• A valid Importer Exporter Code (IEC) issued by DGFT
• At least one active GST registration

Where multiple GST registrations exist, at least one must declare “factory/manufacturing” as the business activity.

In job work arrangements:

1. The principal must have filed the last two GSTR ITC-04 returns
2. The job worker must hold an active GST registration
3. The job worker must declare manufacturing activity in GST records

3. Minimum import-export activity

Applicants must demonstrate a substantive customs footprint:

• Minimum 25 Bills of Entry or Shipping Bills filed in the previous financial year
• For MSMEs, the requirement is reduced to 10 documents

This ensures participation by active and operational importers.

4. Turnover threshold

The aggregate annual turnover across all GSTINs linked to the applicant’s PAN must exceed INR 50 million in the preceding financial year.

5. Business continuity

Applicants must have conducted business operations for at least two financial years prior to applying. Relevant GST registrations reflecting manufacturing or job work activity must also meet this two-year threshold.

6. Compliance and financial integrity

Applicants must:

• File all pending GST returns (GSTR-3B)
• Have no record of collecting taxes without depositing them
• Have no unpaid collected amounts under previous Central Excise or Service Tax laws
• Demonstrate financial solvency for the preceding two years
• Not be under insolvency, liquidation, or bankruptcy proceedings
• Submit a Chartered Accountant’s (CAs) certificate confirming financial soundness

Additionally, the applicant and its key managerial personnel must have a clean legal record, with no arrests, convictions, or pending prosecutions under Customs, GST, Central Excise, or related laws. Prior EMI applications must not have been rejected or suspended due to false declarations or forged documentation.

Existing AEO-T1 entities, including MSMEs, may apply if they satisfy all eligibility conditions.

AEO progression and compliance incentives

The EMI Scheme follows a trust-based facilitation model. During the validity period, approved EMIs are expected to progress to higher accreditation levels under the Authorised Economic Operator (AEO) Programme—specifically AEO-T2 or AEO-T3.

Such progression enables:

1. Assured facilitation
2. Reduced inspections
3. Priority clearance
4. Access to expanded AEO benefits

CBIC has also indicated that benefits available to AEO-accredited entities will be broadened, reinforcing the compliance incentive structure.

EMI scheme: Application and approval process

Eligible manufacturers may apply electronically from March 1, 2026, via the AEO portal (www.aeoindia.gov.in) under the “Eligible Manufacturer Importer” tab.

The Directorate of International Customs (DIC), CBIC, will review applications. Upon approval:

• EMI status is updated in the Customs Automated System
• The deferred payment facility becomes operational without additional procedural steps

ICEGATE registration and authentication

After approval, the EMI must nominate a nodal person who:

1. Obtains an ICEGATE login through icegate.gov.in
2. Authenticates all customs transactions on behalf of the EMI

When filing a Bill of Entry, the importer must select the deferred payment option (flag “D”) and complete OTP-based authentication. Clearance under the deferred mechanism is granted only after such authentication. Multiple Bills of Entry can be authenticated simultaneously.

ALSO READ: CBIC Automates Customs IFSC Registration Approval for Exporters

Payment schedule

Deferred duty payments must be made:

1. By the 1st of the following month for goods cleared between the 1st and last day of any month (except March)
2. By March 31 for goods cleared during March

EMIs may choose to pay earlier than the due date at their discretion.

Monitoring and compliance oversight

Customs authorities can track deferred payments through ICES dashboards and standard reports. Jurisdictional Commissioners monitor timely payment compliance.

If an EMI fails to meet eligibility conditions or defaults on payment, DIC and CBIC may suspend or revoke the approval.

A dedicated helpdesk has also been established to address queries and implementation challenges in a time-bound manner.

Strategic significance for manufacturing and trade

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The 2026 EMI scheme reflects a calibrated reform that balances facilitation with accountability. By allowing deferred duty payments for compliant manufacturers, CBIC aims to:

• Improve ease of doing business
• Strengthen tax discipline
• Deepen AEO participation
• Enhance customs clearance efficiency
• Support manufacturing-led and export-oriented growth

Overall, the scheme represents a decisive shift toward a digitally monitored, compliance-driven, and trust-based customs ecosystem aligned with India’s long-term industrial and trade objectives.

Eligibility and compliance under the EMI scheme—FAQs

1. Who is an “Importer” under the EMI Scheme?

The applicant must have a valid IEC issued by DGFT.

2. Are new importers eligible under the EMI Scheme?

Yes, if the importer has filed at least 25 EXIM documents in the previous financial year preceding the date of application.

3. Are service providers eligible to apply?

No. Pure service providers cannot apply unless they also operate as a manufacturer importer.

4. Is there a minimum turnover requirement?

Yes. Applicants must have an annual aggregate turnover of at least INR 50 million in the previous financial year.

5. Are MSMEs eligible for the scheme?

Yes. MSMEs can apply, provided they are registered on the Udyam Portal.

6. Are there any relaxations for MSMEs?

Yes. MSMEs are subject to a reduced compliance requirement—they must have filed at least 10 EXIM documents in the financial year preceding the application.

7. Can new businesses or startups apply?

Yes. Businesses are eligible if they have been operational for at least two financial years.

8. Is GST registration mandatory?

Yes. Applicants must have at least one active GST registration. Additionally, their GST registration (FORM REG-01) must reflect “factory/manufacturing” as the nature of business activity.

9. Is GST compliance required?

Yes. Applicants must have filed all due GSTR-3B returns up to the date of application.

10. What factory-related information must be provided?

Applicants must submit details of all manufacturing units, including the number of factories and their addresses.

11. Can insolvent or bankrupt companies apply?

No. Entities undergoing insolvency, liquidation, or bankruptcy proceedings are not eligible.

12. Is a self-declaration enough to prove financial solvency?

No. Applicants must submit a CA certificate in the prescribed format (Appendix III of Circular 08/2026 dated February 28, 2026) as proof of solvency.

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