Foreign Exchange Management Act 1999 – Export of Goods and Services
012 Dated:- 9-9-2000 Circular
FEMA
Superseded vide A.P. (DIR Series) Circular No. 20 dated 16-01-2026 w.e.f. 01-10-2026
Foreign Exchange Management Act 1999 – Export of Goods and Services
RESERVE BANK OF INDIA
EXCHANGE CONTROL DEPARTMENT
CENTRAL OFFICE
MUMBAI-400 001
A.P. (DIR Series) Circular No.12
September 9, 2000
To
All Authorised Dealers in Foreign Exchange
Dear Sirs,
Foreign Exchange Management Act 1999 – Export of Goods and Services
Attention of authorised dealers is invited to the Notification No. FEMA 23/ 2000-RB dated 3^rd May, 2000, issued by Reserve Bank in exercise of the powers conferred by clause (a) of sub-section (1), sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), under which the “Foreign Exchange Management (Export of Goods and Services) Regulations, 2000” have been made. Syno
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serve Bank.
4. In terms of Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000, notified vide Reserve Bank Notification No FEMA 8/2000-RB dated 3^rd May 2000, authorised dealers have been permitted to issue guarantees on behalf of exporter clients on account of exports out of India.
5. Export of goods and services against repayment of state credits granted by erstwhile Soviet Union will continue to be governed by the extant directions issued by Reserve Bank, as amended from time to time. Further, Reserve Bank will continue to consider as hitherto, counter trade proposals from Indian exporters with Romania involving adjustment of value of exports from India against value of imports made into India in terms of a voluntarily entered arrangement between the concerned parties.
6. It is further clarified that the Directions contained in the Annexureshould be read with the Regulations notified by the Reserve Bank vide its Notification No. FEMA 23/2000 -RB d
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'. These Regulations have been notified vide Notification No. FEMA 23 /2000-RB dated 3^rd May, 2000.
(ii) Any reference to Reserve Bank should be made to the office of Exchange Control Department within whose jurisdiction the applicant person, firm or company resides or functions unless otherwise indicated. If for any particular reason, a firm or company desires to deal with a different office of the Exchange Control Department, it may approach the office within whose jurisdiction it functions for necessary approval.
A.2 Exemptions from Declarations
(i) The requirement of declaration of export of goods and software in the prescribed form will not apply to the cases indicated in Regulation No. 4 ibid. The requirement of declaration also shall not apply to goods sent for testing abroad, subject to re-import.
(ii) Gift of goods exceeding rupees one lakh in value require approval of the Reserve Bank.
(iii) Export of goods not involving any foreign exchange transaction di
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a.
(c) Payment out of funds held in the FCNR / NRE account maintained by the buyer.
(d) Through International Credit Cards. When payment, in respect of goods sold to overseas buyers during their visits is received in this manner the GR/SDF (duplicate) should be released by the authorised dealers only on receipt of funds in their Nostro account or on production of a certificate by the exporter from the Credit Card servicing bank in India to the effect that it has received the equivalent amount in foreign exchange, if the authorised dealer concerned is not the Credit Card servicing bank.
A.5 Guarantees against Exports
Prior approval of Reserve Bank should be obtained by authorised dealers for issue of guarantees in respect of caution-listed exporters.
A.6 (i) Foreign Currency Accounts
Reserve Bank may consider applications in form EFC from exporters having good track record for opening foreign currency accounts with banks subject to certain terms and conditions. Applica
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erve Bank of India, Central Office, Mumbai 400 001, through their authorised dealer.
A.7 Counter-trade Arrangement
(i) Counter trade proposals involving adjustment of value of goods imported into India against value of goods exported from India in terms of an arrangement voluntarily entered into between the Indian party and the overseas party through an Escrow Account opened in India in U.S. dollar will be considered by the Reserve Bank. All imports and exports under the arrangement should be at international prices in conformity with the Exim Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder. No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year (i.e. in a block of 12 months) and the banks may pay interest at the applicable rate. No fund based / or non-fund based facilities would
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ign Currency Account by a person resident in India) Regulations, 2000 notified under Notification No. FEMA 10/ 2000-RB dated 3^rd May, 2000 for opening temporary foreign currency account abroad. Exporters may deposit the foreign exchange obtained, by sale of goods, at the internationalexhibition/trade fair and operate the account during their stay outside India provided that the balance in the account is repatriated to India within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the concerned authorised dealer.
(ii) Firms/Companies and other organisations participating in Trade Fair/ Exhibition abroad should obtain approval on GR Form from the concerned office of Reserve Bank for export of exhibits and other items for display-cum-sale in the trade fair/exhibition. On closure of the fair/exhibition, they should re-import the exhibits or repatriate the value of goods sold within one month of the closure of the fair/ exhibit
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rom the date of export and the balance amount within a maximum period of two years from the date of export are not treated as deferred payment exports, provided the exporter does not require/avail of any funded or non-funded facility/ies for such exports from authorised dealers.
A.11 Export on Elongated Credit Terms
Exporters intending to export goods on elongated credit terms may submit their proposals giving full particulars through their banks to the concerned Regional Office of Reserve Bank for consideration.
A.12 Forfaiting
Export-Import Bank of India (Exim Bank) and authorised dealers have been permitted to undertake forfaiting, for financing of export receivables. It would be in order for authorised dealers to allow remittance of commitment fee/ service charges, etc. payable by the exporter as approved by the Exim Bank/ the concerned authorised dealer. Such remittance may be permitted in advance in one lumpsum or at monthly intervals as approved by the concerned agen
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d. After examination of the goods and certifying the quantity passed for shipment on the duplicate copy, Customs will return it to the exporter for submission to the authorised dealer for negotiation or collection of export bills.
(b) Within twenty one days from the date of export, exporter should lodge the duplicate copy together with relative shipping documents and an extra copy of the invoice with the authorised dealer named in the GR form. After the documents have been negotiated/sent for collection, the authorised dealer should report the transaction to Reserve Bank in statement ENC under cover of appropriate R-Supplementary Return. The duplicate copy of the form together with a copy of invoice will be retained by the authorised dealer till full export proceeds have been realised and thereafter submitted to Reserve Bank duly certified under cover of appropriate R-Supplementary Return.
NOTE: (i) In the case of exports made under deferred credit arrangement or to joint venture
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ended for being submitted to the authorised dealer within 21 days from the date of export. The authorised dealer should accept the Exchange Control (EC) copy of the shipping bill and form SDF appended thereto, submitted by the exporter for collection/ negotiation of Shipping documents. The manner of disposal of EC copy of shipping Bill (and form SDF appended thereto) is same as that for GR forms.
(d) In cases where ECGC initially settles the claims of exporters in respect of exports insured with them and subsequently receives the export proceeds from the buyer/buyer's country through the efforts made by them, the share of exporters in the amount so received is disbursed through the bank which had handled the shipping documents. In such cases, ECGC will issue a certificate to the bank which had handled the relevant shipping documents after full proceeds have been received. The certificate will indicate the number of declaration form, name of the exporter, name of the authorised d
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ealer for countersignature. Authorised dealer will countersign the forms in accordance with directions in paragraph B.2 and return the original copy to the exporter, who should submit the form to the post office with the parcel. The duplicate copy of the PP form will be retained by the authorised dealer to whom the exporter should submit relevant documents together with an extra copy of invoice for negotiation/collection, within the prescribed period of twenty one days.
B.2 Counter signature on PP forms
PP forms will be presented by the exporter to an authorised dealer for countersignature. Authorised dealers should countersign the PP forms after ensuring that the parcel is being addressed to their branch or correspondent bank in the country of import. The concerned overseas branch or correspondent should be instructed to deliver the parcel to consignee against payment or acceptance of relative bill. Authorised dealers may, however, countersign PP forms covering parcels addressed
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, the exporters should bill their overseas clients periodically, i.e. at least once a month or on reaching the 'milestone' as provided in the contract entered into with the overseas client and the last invoice/bill should be raised not later than 15 days form the date of completion of the contract. It would be in order for the exporters to submit a combined SOFTEX form for all the invoices raised on a particular overseas client, including advance remittances received in a month.
(ii) In respect of contracts involving only 'one shot operation', the invoice/bill should be raised within 15 days from the date of transmission.
(iii) The exporter should submit SOFTEX form to the concerned official of Government of India at STPI/EPZ for valuation/certification not later than 30 days from the date of invoice/the date of last invoice raised in a month, as indicated above.
(iv) The invoices raised on overseas clients as at (i) to (iii) above will be subject to valuation
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dealer to the effect that he has filed the short-shipment notice with the Customs and that he will furnish it as soon as it is obtained. Authorised dealer should send the short shipment notice along with the GR duplicate to Reserve Bank.
(ii) Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship, exporter will give notice in duplicate to Customs in the manner and in form prescribed for the purpose, attaching thereto the unused duplicate copy of GR form and the shipping bill. Customs will verify that the shipment was actually shut out, certify copy of the notice as correct and forward it to Reserve Bank together with unused duplicate copy of the GR form. In this case, the original GR form received earlier from Customs will be cancelled. If the shipment is made subsequently, a fresh set of GR form should be completed.
B.5 Consolidation of Air Cargo
Where air cargo is shipped under consolidation, the airline company's Master Airway B
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gards exports by rail, Customs staff have been posted at certain designated railway stations for attending to Customs formalities. They will collect the GR/SDF forms in respect of goods loaded at these stations so that the goods may move straight on to the foreign country without further formalities at the border. The list of designated railway stations is obtainable from the Railways. In respect of goods loaded at stations other than the designated stations, exporters must arrange to present GR/SDF forms to the Customs Officer at the Border Land Customs Station where Customs formalities are completed.
c. In terms of an agreement on Border Trade between India and Myanmar, exchange of certain specified locally produced commodities, by people living along the India-Myanmar border on both sides under barter trade arrangement as also trade in freely convertible currency, has been permitted as per guidelines issued by Reserve Bank to authorised dealers from time to time. Authorised deale
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aid' basis may be accepted where the sale contract is on f.o.b., f.a.s. etc. basis provided the amount of freight has been included in the invoice and the bill. Conversely, in the case of c.i.f., c.&f. etc. contracts whose freight is sought to be paid at destination, it should be ensured that the deduction made is only to the extent of freight declared on GR/SDF form or the actual amount of freight indicated on the Bill of Lading/Airway Bill, whichever is less. Likewise, where the marine insurance is taken by the exporters on buyer's account, authorised dealer should verify that the actual amount paid is received from the buyer through invoice and the bill.
iii. The documents submitted do not reveal any material inter se discrepancies in regard to description of goods exported, export value or country of destination.
NOTE: A. The export realisable value may be more than what was originally declared to/accepted by Customs on the GR/SDF form in certain circumstances such as
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le exporters declare to Customs the full export value based on the contract price, invoices submitted along with shipping documents for negotiation / collection may reflect a different value arrived at after taking into account the results of analysis of samples or late shipment penalty, as the case may be.
As such variations stem from the terms of contract, authorised dealers may accept them on production of documentary evidence after verifying the arithmetical accuracy of the calculations and on conforming the terms of underlying contracts.
C.3 Trade Discount
Bills in respect of exports by sea or air which fall short of the value declared on GR/SDF forms on account of trade discount may be accepted for negotiation or collection only if the discount has been declared by exporter on relative GR/SDF form at the time of shipment and accepted by Customs.
C.4 Advance Payments against Exports
Exporters may receive advance payments (with or without interest) from their oversea
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ar line of export trade, subject to a maximum of 10 per cent of the full export value;
and
(b) an undertaking is obtained from exporter on the duplicate of GR/SDF/PP that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realisation.
NOTE : In cases where exporter has not been able to arrange for repatriation of the undrawn balance in spite of best efforts authorised dealers, on being satisfied with the bona fides of the case, may submit duplicate copies of GR/PP/SDF forms to Reserve Bank duly certified for the amount actually realised. Authorised dealers should however, ensure that the exporter has realised at least the value for which the bill was initially drawn (excluding undrawn balances) or 90% of the value declared on GR/PP/SDF form, whichever is more and a period of one year has elapsed from the date of shipment.
C.6 Consignment Exports
i. When goods have been exported on consignment basis, authorised dealer, whil
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ge/cable charges, stamp duty etc.
NOTES: A. In case of goods exported on consignment basis, freight and marine insurance must be arranged in India.
B. Reserve Bank, on an application made to it may, permit individual exporters to hire warehouses abroad subject to such terms and conditions as it may stipulate.
C. Reserve Bank will permit, on application, exporters with satisfactory track record a longer period up to twelve months for realisation of export proceeds for exports on consignment basis made to CIS countries and East European countries financed in any permitted currency.
C.7 Despatch of Shipping Documents
i. While Authorised dealers should normally despatch shipping documents to their overseas branches/ correspondents expeditiously, they may despatch shipping documents direct to the consignees or their agents resident in the country of final destination of goods in cases where advance payment or an irrevocable letter of credit has been received for the full valu
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ce, in terms of paragraph C.4 may be directly sent by the exporter to the consignee.
C.8 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative
Authorised dealers may deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel or trade representative, in respect of exports to certain landlocked countries if the shipment is covered by an irrevocable letter of credit and the documents conform strictly to the terms of the Letter of Credit which, inter alia, provides for such delivery.
C.9 Export Bills Register
i. Authorised dealers should maintain Export Bills Register, in physical or electronic form. Details of GR/SDF/PP form number, due date of payment, the fortnightly period of R Supplementary Return with which ENC statement covering the transaction was sent to Reserve Bank and the period of R Supplementary Return with which the duplicate copy of GR/SDF/PP form is submitted to Reserve Bank should be available.
i
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ed by Note under paragraph C.5. Authorised dealers should follow up export outstandings with exporters systematically and vigorously so that action against defaulting exporters does not get delayed. Any laxity in the follow up of realisation of export proceeds by authorised dealers will be viewed seriously by Reserve Bank leading to the invocation of the penal provision under FEMA 1999.
ii. Authorised dealers should furnish to Reserve Bank, on half-yearly basis, a consolidated statement in Form XOS giving details of all export bills outstanding beyond six months from the date of export as at the end of June and December every year. The statement should be submitted in triplicate within fifteen days from the close of the relative half-year.
C.11 Reduction in Invoice Value on account of
Prepayment of Usance Bills
Occasionally, exporters may approach authorised dealers for reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bi
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any.
In the case of exporters who have been in the export business for more than three years, reduction in invoice value may be allowed, without any percentage ceiling, subject to the above conditions as also subject to their track record being satisfactory i.e. the export outstandings do not exceed 5% of the average annual export realisation during preceding three calendar years. For the purpose of reckoning the percentage of outstanding export bills to average export realisations during the preceding three calendar years, outstandings in respect of exports made to countries facing externalisation problems may be ignored provided the payments have been made by the buyers in the local currency.
C.13 Export Claims
Authorised dealers may remit export claims on application, provided the relative export proceeds have already been realised and repatriated to India and the exporter is not on the caution list of Reserve Bank. In all such cases of remittances, the exporter should be a
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gional Office of Reserve Bank in form ETX through his authorised dealer with appropriate documentary evidence. Extension will not ordinarily be granted unless Reserve Bank is satisfied that the exporter is in no way directly or indirectly responsible for the delay in realisation of proceeds and that by grant of a short extension the exporter will be able to realise proceeds.
C.16 Shipments Lost in Transit
When shipments from India for which payment has not already been received either by negotiation of bills under letters of credit or otherwise are lost in transit, authorised dealer must ensure that insurance claim is made as soon as the loss is known. The duplicate copy of GR/SDF/PP form should be forwarded to Reserve Bank with following particulars:
a. Amount for which shipment was insured.
b. Name and address of insurance company
c. Place where claim is payable.
In cases where claim is payable abroad, authorised dealer must arrange to collect the full amount of cla
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lso continue to hold the duplicate copies of GR/SDF/PP forms in their custody and initiate follow-up measures in the normal manner.
C.18 Write off of unrealised Export Bills
(i) An exporter who has not been able to realise the outstanding export dues despite best efforts, may approach the authorised dealer, who had handled the relevant shipping documents, with appropriate supporting documentary evidence with a request for write off of the unrealised portion. Authorised dealers may accede to such requests subject to the under noted conditions:
a. The relevant amount has remained outstanding for one year or more;
b. The aggregate amount of write off allowed by the authorised dealer during a calendar year does not exceed 10% of the total export proceeds realised by the concerned exporter through the concerned authorised dealer during the previous calendar year;
c. Satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realise th
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en after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control.;
vii. Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amount has remained unrealised consequent on dishonour of the bills by the overseas buyer and there are no prospects of realisation.
e. The case is not the subject matter of any pending civil or criminal suit.
f. The exporter has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agency.
g. The exporter has surrendered proportionate export incentives, if any,
availed of in respect of the relative shipments.
(ii) Where there is no further amount to be realised against the GR/SDF/PP form covered by the write off, authorised dealer should submit the duplicate thereof to Reserve Bank along with
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ntersign PP forms completed by them unless the GR/SDF/PP forms bear approval of Reserve Bank.
PART D – Remittances connected with Export
D.1 Agency Commission on Exports
(i) Authorised dealers may allow payment of commission, either by remittance or by deduction from invoice value, on application submitted by the exporter. The remittance on agency commission may be allowed subject to the following conditions:
a. Amount of commission has been declared on GR/SDF/PP/SOFTEX form and accepted by Customs authorities or Department of Electronics, Government of India /EPZ authorities as the case may be. In cases where the commission has not been declared on GR/SDF/PP/SOFTEX form, remittance thereof may be allowed after satisfying about the reasons adduced by the exporter for not declaring commission on Export Declaration Form, provided a valid agreement/written understanding between the exporter and /or beneficiary for payment of commission subsists.
b. The relative sh
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