FEMA – 13/2015-16 – Dated:- 1-7-2015 – RBI/2015-16/82 Master Circular No. 13/2015-16 July 01, 2015 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 Transaction) 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 Autho
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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 C.16. Import Payments through Online Payment Gateway Service Providers Annex-1 Annex-2 Annex -3 Appendix Consolidated List of Circulars in the Master Circular Section I – Introduction (i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, Department of Commerce, Government of India. Authorised Dealer Category – I (AD Category – I) banks should ensure that the imports into India are in conformity with the Foreign Trade Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by the Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000 and the Directions issued by Reserve Bank under Foreign Exchange Management Act, 1999 from time to time. (ii) AD Category – I banks shoul
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nd 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 banks may particularly note to adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Regulation) in all their dealings. B.2. Remittances for Import Payments AD Category I Banks may allow remittance for making payments for imports into India, the after ensuring that all the requisite details are made available by the importer and the remittance is for bona fide trade transactions as per applicable laws in force. B.3. Import Licences Except for goods included in the negative list which require licence under the Foreign Trade Policy in force, AD Category – I banks may freely open letters of credit and allow remittances
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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 to the permitted methods of payment for imports laid down in Notification No.FEMA14/2000-RB dated 3rd May 2000, payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank in India. In such cases also AD Category – I banks should ensure compliance with the instructions contained in sub-paragraphs (i) and (ii) above. B.5. Time Limit for Settlement of Import Payments B.5.1. Time limit for Normal Imports (i) In terms of the extant regulations, remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc. (ii) AD Category – I banks may permit settlement
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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 Section 6 of the Foreign Exchange Management Act, 1999, and the Foreign Exchange Management (Export and Import of Currency) Regulations 2000, issued by Reserve Bank vide Notification No.FEMA 6/2000-RB dated May 3, 2000, as amended from time to time. (ii) Reserve Bank may allow a person to bring into India currency notes of Government of India and / or of Reserve Bank subject to such terms and conditions as the Reserve Bank may stipulate. B.6.1. Import of Foreign Exchange into India A person may- (i) Send into India, without limit, foreign exchange in any form other than currency notes, bank notes and travellers cheques; (ii) Bring into India from any place outside India, without limit, foreign exchange (other than unissued notes), subject to the condition that such person makes, on arrival in India, a d
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ly). (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 ₹ 100/-. B.7. Third Party Payment for Import Transactions AD category I banks are allowed to make payments to a third party for import of goods, subject to conditions as under: Firm irrevocable purchase order / tripartite agreement should be in place. However this requirement may not be insisted upon in case where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order / invoice has been produced. AD bank should be satisfied with the bonafides of the transactions and should consider the Financial Action Task Force (FATF) Statement before handling the transactions; The Invoice should contain a narration that the related payment has to be made to the (named) third party; Bill of Entry should mention the name of the shipper as also the narra
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nt/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 the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances up to USD 5,000,000 (US Dollar five million). AD Category – I banks may frame their own internal guidelines to deal with such cases as per a suitable policy framed by the bank's Board of Directors. (c) A Public Sector Company or a Department/Undertaking of the Government of India / State Government/s which is not in a position to obtain a guarantee from an international bank of repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance, Government of India before making advance remittance exceeding USD 100,000. (ii) All payments towards advance remittance for imports shall be subject to the specified conditions. C.1.2. Advance Remittance for Imp
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
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 – I banks should follow-up submission of the Bill of Entry / documents evidencing import of rough diamonds into the country by the importer, in terms of the Act / Rules / Regulations / Directions issued in this regard. b) In case of an importer entity in the Public Sector or a Department / Undertaking of the Government of India / State Government/s, AD Category – I banks may permit the advance remittance subject to the above conditions and a specific waiver of bank guarantee from the Ministry of Finance, Government of India, where the advance payments is equivalent to or exceeds USD 100,000/- (USD one hundred thousand only). C.1.3. Advance Remittance for Import of Aircrafts/Helicopters and other Aviation Related Purchases 1. As a sector specific measure, airline companies which have been
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
entity and the overseas manufacturer company as well. ii. Advance payments should be made strictly as per the terms of the sale contract and directly to the account of the manufacturer (supplier) concerned. iii. AD Category – I banks 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 Department / Undertaking of Central /State Governments, the AD Category – I bank shall ensure that the requirement of bank guarantee has been specifically waived by the Ministry of Finance, Government of India for advance remittances exceeding USD 100,000. v. Physical import of goods into India is made within six months (three years in case of capital goods) from the date of remittance and the importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period. It is clarified that where advance is paid as milestone payments, the date of
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
itions: (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 of Finance, Government of India for advance remittance for import of services without bank guarantee for an amount exceeding USD 100,000 (USD One hundred thousand) or its equivalent would be required. (c) AD Category – I banks should also follow-up to ensure that the beneficiary of the advance remittance fulfils his obligation under the contract or agreement with the remitter in India, failing which, the amount should be repatriated to India. C.2. Interest on Import Bills (i)
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
riginal 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 import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India, AD Category-I banks may issue guarantees at the request of importer client for dispatch/return of the defective goods, according to their commercial judgment. C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for their Overseas Sites AD Category – I bank may allow BPO companies in India to make remittances towards the cos
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
m 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 Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units / Units in Special Economic Zones, Public Sector Undertakings and Limited Companies. (iv) Import bills received by all limited companies viz. public limited, deemed public limited and private limited companies. C.6.1.2. Receipt of import documents by the importer directly from overseas suppliers in case of specified sectors As a sector specific measure, AD Category – I banks are pe
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
cord 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.6.1.3. 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 need not be obtained in cases where the invoice value does not exceed USD 300,000 provided the AD Category – I bank is satisfied about the bonafides of the transaction and track record of the importer constitue
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
entary 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 and (b) The importer is a company listed on a stock exchange in India and whose net worth is not less than ₹ 100 crore as on the date of its last audited balance sheet, or, the importer is a public sector company or an undertaking of the Governmen
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ange 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 their verification. However, in respect of cases which are under investigation by investigating agencies, the documents may be destroyed only after obtaining clearance from the investigating agency concerned. C.10. Follow-up for Import Evidence (i) In case an importer does not furnish any documentary evidence of import, as requ
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e 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 Import of Gold C.12.1 Import of Gold. The 20:80 scheme of import of gold was withdrawn on November 28, 2014. However, the obligation to export under the 20:80 scheme would apply to the unutilised gold imported before November 28, 2014. Nominated banks and nominated agencies, as notified by DGFT, are permitted to import gold on consignment basis. All sale of gold domestically will, however, be against upfront payment. Nominated banks are free to grant gold metal
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
nancial YearBoth 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 form, including jewellery made of gold/precious metals or/and studded with diamonds/semi- precious/precious stones, should not exceed 90 days from the date of shipment. C.13. Import of Other Precious Metals C.13.1. Import of Platinum /Palladium/Rhodium/ Silver/Rough, Cut & Polished Diamonds / Precious and Semi-precious Stones. (a) Suppliers and Buyers Credit, including the usance period of Letters of Credit opened for import of Platinum, Palladium, Rhodium and Silver and rough, cut and polished Diamonds, Precious and semi-precious stones; should not exceed 90 day
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
import of platinum and silver, on outright purchase basis subject to the condition that although ownership of the same shall be passed on to the importers at the time of import itself, the price shall be fixed later as and when the importer sells to the user. C.14. Import Factoring (i) AD Category – I bank may enter into arrangements with international factoring companies of repute, preferably members of Factors Chain International, without the approval of Reserve Bank. (ii) They will have to ensure compliance with the extant foreign exchange directions relating to imports, Foreign Trade Policy in force and any other guidelines/directives issued by Reserve Bank in this regard. C.15. Merchanting Trade C.15.1. For a trade to be classified as Merchanting Trade following conditions should be satisfied: a. Goods acquired should not enter the Domestic Tariff Area and b. The state of the goods should not undergo any transformation. C.15.2. AD Category – I bank may handle bonafide Merchanting
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
he 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 leg, including the discounting of export leg LC by an AD bank, as in the case of import transactions ; (f) In case advance against the export leg is received by the Merchanting Trader, AD bank should ensure that the same is earmarked for making payment for the respective import leg. However, AD bank may allow short-term deployment of such funds for the intervening period in an interest bearing account; (g) Merchanting Traders may be allowed to make advance payment for the import leg on demand made by the overseas seller. In case where inward remittance from the overseas buyer is not received b
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
from the close of each half year, i.e. June and December. (k) Defaulting Merchanting Traders, whose outstandings reach 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. Merchanting Traders have to be genuine traders of goods and not mere financial intermediaries. Confirmed orders have to be received by them from the overseas buyers. AD banks should satisfy themselves about the capabilities of the Merchanting Trader to perform the obligations under the order. The overall Merchanting Trade should result in reasonable profits to the Merchanting Trader. C.15.3. Merchanting trade to Nepal and Bhutan As Nepal and Bhutan are landlocked countries, there is a facility of transit trade whereby goods are imported from third countries by Nepal and Bhutan through India under the cover of Customs Transit Declarations in terms of the Government of India Treaty of Transit with these two countr
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
e and airway bill from the OPGSP containing the name and address of the beneficiary as evidence of import and report the transaction in R-Return under the foreign currency payment head. (c) The permitted credits in the OPGSP Import Collection account will be: collection from Indian importers for online purchases from overseas exporters electronically through credit card, debit card and net banking and charge back from the overseas exporters. (d) The permitted debits in the OPGSP Import Collection account will be: payment to overseas exporters in permitted foreign currency; payment to Indian importers for returns and refunds; payment of commission at rates/frequencies as defined under the contract to the current account of the OPGSP; and bank charges Appendix Consolidated 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 Mer
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
12, 2005 11 AP(DIR Series) Circular No. 33 Liberalisation of Export and Import procedures February 28, 2007 12 AP(DIR Series) Circular No. 34 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 18 AP(DIR Series) Circular No. 08 Advance Remittance for Import of Rough Diamonds August 21, 2008 19 AP(DIR Series) Circular No
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
ing 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 30 AP(DIR Series) Circular No.103 Import of Gold by Nominated Banks/Agencies May 13, 2013 31 AP(DIR Series) Circular No.107 Import of Gold by Nominated Banks/Agencies June 4, 2013 32 AP(DIR Series) Circular No. 122 Import of Gold by Nominated Banks/Agencies June 27, 2013 33 AP(DIR Series) Circular No.15 Import of Gold by Nominated Banks /Agencies/Entities July 22, 2013 34 AP(DIR Series) Circular No.39 Export import of Currency September 6, 2013 35 AP(DIR Series) Circular No.70 Third party payments for export / import transactions November 8 , 2013 36 AP(DIR Series) Circular No.71 Advance Remittance for Import of Rough Diamonds November 8, 2013 37 AP(DIR Series) Circular No.73 Import of Gold by Nominated Banks /Agencies/Entitie
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =
rt of Gold by Nominated Banks / Agencies / Entities May 21, 2014 47 AP(DIR Series) Circular No.146 Export & Import of Currency- Enhanced Facilities June 19, 2014 48 AP(DIR Series) Circular No. 2 Import of Rough, Cut and Polished Diamonds – credit relaxation July 07, 2014 49 A. P. (DIR Series) Circular No.42 Import of Gold by Nominated Banks/Agencies November 28, 2014 50 AP(DIR Series) Circular No 76 Form A1- Payments for Imports – Discontinuance thereof February 12, 2015 51 AP(DIR Series) Circular No 79 Guidelines on Import of Gold by Nominated Banks / Agencies February 18, 2015 52 AP(DIR Series) Circular No 96 Merchanting Trade to Nepal and Bhutan April 30, 2015 53 AP(DIR Series) Circular No .16 Processing and settlement of import and export related payments facilitated by Online Payment Gateway Service Providers September 24, 2015 54 AP(DIR Series) Circular No .29 Import of Goods into India – Evidence of Import November 26, 2015 55 AP(DIR Series) Circular No .30 Advance Remittanc
= = = = = = = =
Plain text (Extract) only
For full text:-Visit the Source
= = = = = = = =