Master Circular on Import of Goods and Services(Updated as on September 24, 2015)
13/2015-16 Dated:- 1-7-2015 Master Circular
FEMA
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 b
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mport 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
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
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artment, 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 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 goo
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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 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
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ctions 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 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 trave
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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 ₹ 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:
a. 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.
b. AD bank should be satisfied with the bonafides of the transactions and should consider the Financial Action Task Force (FATF) S
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d 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 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 guarant
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r 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 – 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
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ions:
i The AD Category – I banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafides 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 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
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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 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 re
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ailing 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 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 r
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te 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.6.1.1 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 Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units / Units in Special Economic Zones, Public Sector Undertakings and L
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ject to the prevailing Foreign Trade Policy.
(ii) The transactions are based on their commercial judgment and they 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.6.1.3. 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 supp
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post, as evidence that the goods for which the payment was made have actually been imported into India.
(ii) In respect of imports on Delivery against acceptance 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 :-
(
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ountant that the software / data / drawing/ design has been received by the importer, may be obtained.
(ii) AD Category – I bank should advise importers to keep Customs 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
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ble Business Reporting Language (XBRL) system on a Bank-wide basis instead of the present system of branch-wise submission, to the respective Regional Offices of the RBI. The Statement should be 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 Import of Gold
C.12.1 Import of Gold.
1. The 20:80 scheme of import of gold was withdrawn on November 28, 201
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/ SEZs in Gem & Jewellery Sector, mode of payment-wise.(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 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 Met
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while undertaking import of the precious 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 allow 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
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re 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 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
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(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 1, within 15 days 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 Me
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ceeding USD 2,000 by entering into standing arrangements with the OPGSPs subject to the following:-
(a) The balances held in the Import Collection account shall be remitted to the respective overseas exporter's account immediately on receipt of funds from the importer and, in no case, later than two days from the date of credit to the collection account.
(b) The AD Category -I bank will obtain a copy of invoice 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:
a. collection from Indian importers for online purchases from overseas exporters electronically through credit card, debit card and net banking and
b. charge back from the overseas exporters.
(d) The permitted debits in the OPGSP Import Collection account will be:
1. payment to overseas exporters in permitte
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Import of Goods into India – Evidence of Import
February 20, 2004
8
AP(DIR Series) Circular No. 2
Import of Gold by (i) Export Oriented Units (EOUs), (ii) Units in SEZ/EPZ, and (iii) Nominated Agencies
July 9, 2004
9
AP(DIR Series) Circular No. 34
Import of Gold on Loan Basis – Tenor of Loan and Opening of Stand-By Letter of Credit
February 18, 2005
10
AP(DIR Series) Circular No. 1
Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import
July 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
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ances for Import of Services
September 8, 2008
23
AP(DIR Series) Circular No.21
Advance Remittance for Import of Rough Diamonds
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
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 Bank
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s
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
February 14, 2014
43
AP(DIR Series) Circular No.115
Merchanting Trade Transactions – Revised guidelines
March 28, 2014
44
A P (DIR Series) Circular No.116
Advance Remittance for Import of Rough Diamonds
April 01, 2014
45
AP(DIR Series) Circular No.122
Trade Credits for Imports into India – Review of all-in-cost ceiling
April 10, 2014
46
AP(DIR Series) Circular No.133
Import 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/Agenc
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