FEMA – 13/2014-15 – Dated:- 1-7-2014 – RBI/2014-15/4 Master Circular No.13/2014-15 July 01, 2014 To, All Category – I Authorised Dealer Banks Madam / Sir, Master Circular on Import of Goods and Services Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account) Rules, 2000 as amended from time to time. 2. This Master Circular consolidates the existing instructions on the subject of "Import of Goods and Services" at one place. The list of underlying circulars consolidated in this Master Circular is furnished in Appendix. 3. This Master Circular is being updated from time to time as and when the fresh instructions are issued. The date up to which the Master Circular has been updated is suitably indicated. 4. This Master Circular may be referred to for general guidance. The Authorised Persons
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ent Imports C.4. Guarantee for Replacement Import C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for their overseas sites C.6. Receipt of Import Bills/Documents by the Importer Directly from Overseas Suppliers C.7. Evidence of Import C.8. Issue of acknowledgement C.9. Verification and Preservation C.10. Follow up for Import Evidence C.11. Issue of Bank Guarantee C.12. Import of Gold C.13. Import of Other Precious Metals C.14. Import Factoring C.15. Merchanting Trade Annex – 1 Annex – 2 Annex – 3 Appendix Consolidated List of Circulars in the Maste
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t of drawings and designs. (iv) AD Category – I banks may also advise importers to ensure compliance with the provisions of Income Tax Act, wherever applicable. (v) Any reference to the Reserve Bank should first be made to the Regional Office of the Foreign Exchange Department situated in the jurisdiction where the applicant person resides, or the firm / company functions, unless otherwise indicated. If, for any particular reason, they desire to deal with a different office of the Foreign Exchange Department, they may approach the Regional Office of its jurisdiction for necessary approval. Section II – General Guidelines for Imports B.1. General Guidelines Rules and regulations to be followed by the AD Category – I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not exist, AD Category – I banks may be governed by normal trade practices. AD Category – I b
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y – I banks may preserve the copies of utilised licence /s till they are verified by the internal auditors or inspectors. B.4. Obligation of Purchaser of Foreign Exchange (i) In terms of Section 10(6) of the Foreign Exchange Management Act, 1999 (FEMA), any person acquiring foreign exchange is permitted to use it either for the purpose mentioned in the declaration made by him to an Authorised Dealer Category – I bank under Section 10(5) of the Act or to use it for any other purpose for which acquisition of foreign exchange is permissible under the said Act or Rules or Regulations framed there under. (ii) Where foreign exchange acquired has been utilised for import of goods into India, the AD Category – I bank should ensure that the importer furnishes evidence of import viz., Exchange Control Copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to the value of remittance have been imported. (iii) In addition
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C.2 of Section III below. B.5.2. Time Limit for Deferred Payment Arrangements Deferred payment arrangements, including suppliers and buyers credit, providing for payments beyond a period of six months from date of shipment up to a period of less than three years, are treated as trade credits for which the procedural guidelines laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed. B.5.3. Time Limit for Import of Books Remittances against import of books may be allowed without restriction as to the time limit, provided, interest payment, if any, is as per the instructions in para C.2 of Section III of this Circular. B.6. Import of Foreign Exchange / Indian Rupees (i) Except as otherwise provided in the Regulations, no person shall, without the general or special permission of the Reserve Bank, import or bring into India, any foreign currency. Import of foreign currency, including cheques, is governed by clause (g) of sub-section (3) of Se
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ke such declaration where the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in by such person at any one time does not exceed USD 10,000 (US Dollars ten thousand) or its equivalent and/or the aggregate value of foreign currency notes (cash portion) alone brought in by such person at any one time does not exceed USD 5,000 (US Dollars five thousand) or its equivalent. B.6.2. Import of Indian Currency and Currency Notes (i) Any person resident in India who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding ₹ 25,000 (Rupees twenty five thousand only). (ii) A person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India for any amount in denominations up to ₹ 10
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payment being made for import of goods. Section III – Operational Guidelines for Imports C.1. Advance Remittance C.1.1. Advance Remittance for Import of Goods (i) AD Category – I bank may allow advance remittance for import of goods without any ceiling subject to the following conditions: (a) If the amount of advance remittance exceeds USD 200,000 or its equivalent, an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of an international bank of repute situated outside India, is obtained. (b) In cases where the importer (other than a Public Sector Company or a Department/Undertaking of the Government of India/State Government/s) is unable to obtain bank guarantee from overseas suppliers and the AD Category – I bank is satisfied about the track record and bonafides of the importer, the requirement of
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t of India / State Government) can make advance payments, without any limit / bank guarantee/ stand-by letter of Credit. Banks must ensure the following: i. The overseas mining company should have the recommendation of GJEPC. ii. The importer should be a recognised processor of rough diamonds and should have a good track record. iii. AD Category – I banks should, undertake the transaction based on their commercial judgment and after being satisfied about the bonafides of the transaction. iv. Advance payments should be made strictly as per the terms of the sale contract and should be made directly to the account of the company concerned, that is, to the ultimate beneficiary and not through numbered accounts or otherwise. v. Further, due caution may be exercised to ensure that remittance is not permitted for import of conflict diamonds (Kimberly Certification). vi. KYC and due diligence exercise should be done by the AD Category – I banks as per the existing guidelines. vii. AD Category
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– I banks may allow advance remittance, without obtaining a bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50 million, for direct import of each aircraft, helicopter and other aviation related purchases. The remittances for the above transactions shall be subject to the following conditions: i The AD Category – I banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafide of the transactions. KYC and due diligence exercise should be done by the AD Category-I banks for the Indian importer entity and the overseas manufacturer company as well. ii. Advance payments should be made strictly as per the terms of the sale contract and are made directly to the account of the manufacturer (supplier) concerned. iii. AD Category – I bank may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. iv. In the case of a Public Sector Company or a Departm
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-import of aircraft and aviation sector related products, AD Category – I bank should ensure that the amount of advance remittance is immediately repatriated to India. Prior approval of the concerned Regional Office of the Reserve Bank will be required in case of any deviation from the above stipulations. C.1.4. Advance Remittance for the Import of Services AD Category – I bank may allow advance remittance for import of services without any ceiling subject to the following conditions: (a) Where the amount of advance exceeds USD 500,000 or its equivalent, a guarantee from a bank of international repute situated outside India, or a guarantee from an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India, should be obtained from the overseas beneficiary. (b) In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval from the Ministry
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est is not separately claimed or expressly indicated, remittances may be allowed after deducting the proportionate interest for the unexpired portion of usance at the prevailing LIBOR of the currency of invoice. C.3. Remittances against Replacement Imports Where goods are short-supplied, damaged, short-landed or lost in transit and the Exchange Control Copy of the import licence has already been utilised to cover the opening of a letter of credit against the original goods which have been lost, the original endorsement to the extent of the value of the lost goods may be cancelled by the AD Category – I bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided, the insurance claim relating to the lost goods has been settled in favour of the importer. It may be ensured that the consignment being replaced is shipped within the validity period of the license. C.4. Guarantee for Replacement Import In case replacement goods for defective i
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f the contract. (iii) The remittance is made directly to the account of the overseas supplier. (iv) The AD Category – I banks should also obtain a certificate as evidence of import from the Chief Executive Officer (CEO) or auditor of the importer company that the goods for which remittance was made have actually been imported and installed at overseas sites. C.6. Receipt of Import Bills/Documents C.6.1. Receipt of import documents by the importer directly from overseas suppliers Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD Category – I bank should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: (i) Where the value of import bill does not exceed USD 300,000. (ii) Import bills received by wholly-owned Indian subsidiaries of foreign companies from their principals. (iii) Import bills received by Status Holde
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hey are satisfied about the bonafides of the transactions. (iii) AD Category – I banks should do the KYC and due diligence exercise and should be fully satisfied about the financial standing / status and track record of the importer customer. Before extending the facility, they should also obtain a report on each individual overseas supplier from the overseas banker or reputed overseas credit rating agency. C.6.3. Receipt of import documents by the AD Category – I bank directly from overseas suppliers (i) At the request of importer clients, AD Category – I bank may receive bills directly from the overseas supplier as above, provided the AD Category – I bank is fully satisfied about the financial standing/status and track record of the importer customer. (ii) Before extending the facility, the AD Category – I bank should obtain a report on each individual overseas supplier from the overseas banker or a reputed overseas credit agency. However, such credit report on the overseas supplier
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ports on D/A basis, AD Category – I bank should insist on production of evidence of import at the time of effecting remittance of import bill. However, if importers fail to produce documentary evidence due to genuine reasons such as non- arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD bank may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import. C.7.2. Evidence of Import in Lieu of Bill of Entry (i) AD Category – I bank may accept, in lieu of Exchange Control Copy of Bill of Entry for home consumption, a certificate from the Chief Executive Officer (CEO) or auditor of the company that the goods for which remittance was made have actually been imported into India provided :- (a) The amount of foreign exchange remitted is less than USD 1,000,000 or its equivalent. (b) The importer is a company listed on a stock exchange in India
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stoms Authorities informed of the imports made by them under this clause. C.8. Issue of Acknowledgement AD Category – I bank should acknowledge receipt of evidence of import e.g. Exchange Control Copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions. C.9. Verification and Preservation (i) Internal inspectors or auditors (including external auditors appointed by AD Category – I bank) should carry out verification of the documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms or Customs Assessment Certificates, etc. (ii) Documents evidencing import into India should be preserved by AD Category – I bank for a period of one year from the date of its verification. However, in respect of cases which are under investigation by investigating agencies, the documents may be destroyed only after ob
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submitted within 15 days from the close of the half-year to which the statement relates. (iii) AD Category – I bank need not follow up submission of evidence of import involving amount of USD 100,000 or less provided they are satisfied about the genuineness of the transaction and the bonafides of the remitter. A suitable policy may be framed by the bank's Board of Directors and AD Category – I bank may set their own internal guidelines to deal with such cases. C.11. Issue of Bank Guarantee AD Category – I banks are permitted to issue guarantee on behalf of their importer customers in terms of Notification No. FEMA 8/2000-RB dated May 3, 2000, as amended from time to time. C.12.1 Import of Gold It was made incumbent on all nominated banks / agencies / entities from July 22, 2013 onwards to ensure that at least one fifth of every lot of import of gold (in any form or purity) is exclusively made available for the purpose of export. This 20:80 principle of import of gold was withdraw
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by email. (a) Statement on half yearly basis (end March / end September), showing the quantity and value of gold imported by the nominated banks/ agencies/ EOUs/ SEZs in Gem & Jewellery Sector, mode of payment-wise, as per Annex-1. (b) Statement on monthly basis showing the quantity and value of gold imports by the nominated agencies (other than the nominated banks)/ EOUs/ SEZs in Gem & Jewellery sector during the month under report as well as the cumulative position as at the end of the said month beginning from the 1st month of the Financial Year, as per Annex – 2. Both the statements shall be submitted, even if there is 'Nil' position, by the 10th of the following month / half year, to which it relates. C.12.2. Import of Gold Jewellery Including Jewellery Made of Precious Metals or/and Studded With Diamonds / Precious Stones /Semi-precious. Suppliers and Buyers credit (trade credit) including the usance period of Letters of Credit opened for import of gold in any for
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uld ensure that due diligence is undertaken and Know Your Customer (KYC) norms and Anti-Money Laundering (AML) guidelines, issued by the Reserve Bank are adhered to while undertaking import of the metals and rough, cut and polished diamonds. Further, any large or abnormal increase in the volume of business should be closely examined to ensure that the transactions are bonafide and are not intended for interest / currency arbitrage. C.13.2. Import of / Platinum / Silver on Unfixed Price Basis The nominated agency/bank may import platinum and silver, on outright purchase basis subject to the condition that although ownership of the same shall be passed on to the importer at the time of import itself, the price of shall be fixed later, as and when the importer sells to the users but within the permissible time period for settling the transaction. C.14. Import Factoring (i) AD Category – I bank may enter into arrangements with international factoring companies of repute, preferably members
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he legs of a Merchanting Trade Transaction are routed through the same AD bank. The bank should verify the documents like invoice, packing list, transport documents and insurance documents (if originals are not available, Non-negotiable copies duly authenticated by the bank handling documents may be taken) and satisfy itself about the genuineness of the trade. (c) The entire Merchanting Trade Transactions should be completed within an overall period of nine months and there should not be any outlay of foreign exchange beyond four months. (d) The commencement of Merchanting Trade would be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last; (e) Short-term credit either by way of suppliers' credit or buyers' credit will be available for Merchanting Trade Transactions, to the extent not backed by advance remittance for the export lag,
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port leg has been received in advance; (h) Letter of Credit to the supplier is permitted against confirmed export order keeping in view the outlay and completion of the transaction within nine months; (i) Payment for import leg may also be allowed to be made out of the balances in Exchange Earners Foreign Currency Account (EEFC) of the Merchant Trader. (j) AD bank should ensure one-to-one matching in case of each Merchanting Trade transaction and report defaults in any leg by the traders to the concerned Regional Office of RBI, on half yearly basis in the format as given in Annex 3, within 15 days from the close of each half year, i.e. June and December. (k) The names of defaulting Merchanting Traders, where outstanding reaches 5% of their annual export earnings, would be Caution-listed. (l) The KYC and AML guidelines should be observed by the AD bank while handling such transactions. The Merchanting Traders have to be genuine traders of goods and not mere financial intermediaries. Con
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lidated List of Circulars on Import of Goods and Services Sr. No Circular No Subject Date of Circular 1 AP(DIR Series) Circular No. 106 Import of goods and services into India. June 19, 2003 2 AP(DIR Series) Circular No. 4 Merchanting Trade Transactions – Clarifications – Short term credit July 19, 2003 3 AP(DIR Series) Circular No. 9 Evidence of Import – Liberalisation August 18, 2003 4 AP(DIR Series) Circular No. 15 Advance Remittance for Imports September 17, 2003 5 AP(DIR Series) Circular No. 49 Advance Remittance for Imports December 15, 2003 6 AP(DIR Series) Circular No. 66 Imports into India – Direct Receipt of Import Bills/Documents Februa
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Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import March 2, 2007 13 AP(DIR Series) Circular No. 63 Import of Equipments by BPO Companies in India for International Call Centre May 25, 2007 14 AP(DIR Series) Circular No. 77 Advance Remittance for Import of aircrafts / helicopters / other aviation related purchases June 29, 2007 15 AP(DIR Series) Circular No. 18 Direct Receipt of Import Bills / Documents – Liberalisation November 7, 2007 16 AP(DIR Series) Circular No. 37 Direct Receipt of Import Bills / Documents for Import of Rough Precious & Semi-Precious Stones April 16, 2008 17 AP(DIR Series) Circular No. 03 Advance Remittance for Import of Rough Diamonds August 4, 2008
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December 29, 2009 24 AP(DIR Series) Circular No.56 Advance Remittance for Import of Goods – Liberalisation April 29, 2011 25 AP(DIR Series) Circular No. 59 Import of rough, cut and polished diamonds May 06, 2011 26 AP(DIR Series) Circular No. 82 Release of Foreign Exchange for Imports – Further Liberalisation February 21, 2012 27 AP(DIR Series) Circular No. 83 Import of Gold on Loan Basis – Tenor of Loan and Opening of Stand – By Letter of Credit February 27, 2012 28 AP(DIR Series) Circular No. 103 Data on import of Gold – Statements – Modification April 03, 2012 29 AP(DIR Series) Circular No.83 Import of precious and semi precious stones- Clarification February 20, 2013
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37 AP(DIR Series) Circular No.73 Import of Gold by Nominated Banks /Agencies/Entities November 11, 2013 38 AP(DIR Series) Circular No. 75 Trade Credit for imports into India- Online submission of data on issuance of Guarantee/Letter of Undertaking (LoU)/Letter of Comfort (LoC) by ADs November 19, 2013 39 AP(DIR Series) Circular No.82 Import of Gold by Nominated Banks/Agencies/Entities December 31, 2013 40 AP(DIR Series) Circular No.95 Merchanting Trade Transactions January 17, 2014 41 AP(DIR Series) Circular No.100 Third party payments for export / import transactions February 04, 2014 42 AP(DIR Series) Circular No.103 Import of Gold / Gold Dore by Nominated Banks /Agencies /Entities – Clarifications Feb
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