CBIC launches deferred customs duty scheme for manufacturers; EMI facility to boost cash flow

In a significant reform aimed at strengthening domestic manufacturing and improving ease of doing business, the Central Board of Indirect Taxes and Customs (CBIC) has introduced a deferred Customs duty payment facility for a new category of importers titled Eligible Manufacturer Importers (EMIs).

The measure, announced in the Union Budget 2026–27 by the Union Finance Minister, is positioned as a trust-based facilitation initiative designed to improve liquidity for manufacturers while encouraging higher compliance standards.

What the EMI Scheme Offers

Under the newly notified framework, Eligible Manufacturer Importers will be allowed to clear imported goods without paying Customs duty at the time of clearance. Instead, duties can be paid on a monthly basis, in accordance with the Deferred Payment of Import Duty Rules, 2016.

This shift from immediate payment to a structured monthly cycle is expected to significantly ease working capital pressures for manufacturing units that rely on imported raw materials and components.

The facility will be operational from April 1, 2026, to March 31, 2028, providing a two-year window for eligible businesses to benefit from the scheme.

CBIC has issued detailed eligibility criteria and operational guidelines through Circular No. 08/2026-Customs dated February 28, 2026.

Eligibility and Compliance Framework

The EMI scheme is open to manufacturers meeting prescribed benchmarks related to:

Customs compliance

GST compliance

Financial standing

Turnover thresholds

Past compliance track record

Existing AEO-T1 (Authorised Economic Operator – Tier 1) entities, including MSMEs that satisfy eligibility conditions, can also apply.

Importantly, the scheme encourages a progression pathway: approved EMIs are expected to move towards AEO-T2 or AEO-T3 certification during the validity period. Higher AEO status enables faster clearances, priority treatment, and additional trade facilitation benefits.

Trust-Based Reform with Compliance Incentives

The EMI initiative represents a broader policy shift toward trust-based governance in Customs administration. By extending deferred payment benefits to compliant manufacturers, CBIC is signaling a move from transactional oversight to risk-based facilitation.

The reform is expected to:

Improve liquidity for manufacturers

Reduce cost of capital

Encourage voluntary compliance

Increase participation in the AEO programme

Strengthen India’s manufacturing competitiveness

For sectors dependent on high-volume imports—such as electronics, pharmaceuticals, automotive components, and renewable energy—the scheme could substantially improve operational efficiency.

Application Process

Applications under the EMI scheme opened on March 1, 2026, and can be submitted online via the AEO portal (www.aeoindia.gov.in) under the “Eligible Manufacturer Importer” tab.

The digital application process aligns with CBIC’s push toward a technology-driven, transparent Customs ecosystem.

Boost to Manufacturing-Led Growth

The introduction of deferred duty payments is particularly significant as India positions itself as a global manufacturing hub under its broader economic strategy. By easing cash flow constraints, the government aims to make Indian manufacturing more globally competitive while ensuring adherence to compliance norms.

The EMI scheme complements other reforms focused on export promotion, supply chain resilience, and production-linked incentives.

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Officials say the initiative underscores CBIC’s commitment to creating a predictable, efficient, and facilitative Customs environment—a key pillar in India’s manufacturing-led and export-oriented growth model.

As the scheme rolls out in April 2026, its success will likely be measured by industry uptake, compliance progression to higher AEO tiers, and its overall impact on India’s trade facilitation rankings.