Master Direction – Export of Goods and Services (Updated as on January 12, 2018)

FEMA – 16/2015-16 – Dated:- 1-1-2016 – RBI/FED/2015-16/11 FED Master Direction No. 16/2015-16 January 1, 2016 (Updated as on January 12, 2018) (Updated as on November 16, 2017) (Updated as on September 15, 2017) (Updated as on May 26, 2016) (Updated as on May 12, 2016) To, All Authorised Dealer Category – I banks and Authorised Banks Madam / Sir, Master Direction – Export of Goods and Services Export of Goods and Services from India is governed by clause (a) of sub-section (1) and sub-section (3) of Section 7 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 Transactions) Rules, 2000, further read with 1 FEMA Notification No.23(R)/2015-RB dated January 12, 2016. These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications. 2. Within the contours of the Regulations, Reserve Bank of In

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

e Master Direction issued herewith shall be amended suitably simultaneously. Yours faithfully, (J K Pandey) Chief General Manager INDEX PART – A General A.1 Introduction A.2 Realization and repatriation of proceeds of export of goods / software / services A.3 Manner of receipt and payment A.4 Foreign Currency Account A.5 Diamond Dollar Account (DDA) A.6 Exchange Earners Foreign Currency Account (EEFC Account) A.7 Counter-Trade Arrangement A.8 Exports to neighboring countries by road, rail or river A.9 Border trade with Myanmar A.10 Counter -Trade arrangements with Romania A.11 Repayment of State credits A.12 Forfaiting A.13 Export factoring on non-recourse basis A.14 Project Exports and Service Exports A.15 Export of goods on lease, hire, etc. A.16 Export on elongated credit terms A.17 Export of currency PART – B EDF / SOFTEX Procedure B.1 Export of goods through Customs ports B.2 Export of goods/ software done through EDI ports B.3 Export of goods through post B.4 Mid-sea trans-shipme

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

C.14 Export Bills Register C.15 Follow-up of overdue bills C.16 Reduction in invoice value on account of prepayment of usance bills C.17 Reduction in invoice value in other cases C.18 Change of buyer/consignee C.19 Export of goods by Special Economic Zones (SEZs) C.20 Extension of time C.21 Shipments lost in transit C.22 Export claims C.23 Write-off of unrealized export bills C.24 Write off in cases of payment of claims by ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) C.25 Write-off relaxation C.26 Set-off of export receivables against import payables C.27 Netting-off of export receivables against import payments – Units in (SEZs) C.28 Exporters' Caution List C.29 Issue of Guarantees by an Authorised Dealer C.30 Issuance of Electronic Bank Realisation Certificate (eBRC) Part-D Remittances connected with Export D.1 Agency commission on exports D.2 Refund of export proceeds Appendix PART-A General A.1 Introduction (i) Export

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

on No. FEMA 23(R)/2015-RB dated January 12, 2016. (iii) The Directions contained in this Document should be read with the Rules notified by the Government of India, Ministry of Finance, vide Notification No.G.S.R.381 (E) dated May 3, 2000, as also Regulations notified by Reserve Bank vide its 3Notification No. FEMA 23(R)/2015-RB dated January 12, 2016. (iv) In terms of Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000, notified vide 3Notification No. FEMA 8/2000-RB dated May 3, 2000 as amended from time to time, AD Category – I banks have been permitted to issue guarantees on behalf of exporter clients on account of exports out of India subject to specified conditions. (v) There is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act 1999. Further, in terms of Para 2.52 of the Foreign Trade Policy (2015-2020), All export contracts an

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

sactions pertaining to trade related issues. A.2 Realization and repatriation of proceeds of export of goods / software / services It is obligatory on the part of the exporter to realize and repatriate the full value of goods / software / services to India within a stipulated period from the date of export, as under: (i) It has been decided in consultation with the Government of India that the period of realization and repatriation of export proceeds shall be nine months from the date of export for all exporters including Units in Special Economic Zones (SEZs), Status Holder Exporters, Export Oriented Units (EOUs), Units in Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) & Bio-Technology Parks (BTPs) until further notice. (ii) For goods exported to a warehouse established outside India, the proceeds shall be realized within fifteen months from the date of shipment of goods. A.3 Manner of receipt and payment (i) The amount representing the full export

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Gateway Service Providers (OPGSPs) Authorised Dealer Category – I (AD Category – I) banks have been allowed to offer the facility of repatriation of export related remittances by entering into standing arrangements with Online Payment Gateway Service Providers (OPGSPs) subject to the following conditions – a) The AD Category-I banks offering this facility shall carry out the due diligence of the OPGSP. b) This facility shall only be available for export of goods and services of value not exceeding USD 10,000 (US Dollar ten thousand). c) AD Category-I banks providing such facilities shall open a NOSTRO collection account for receipt of the export related payments facilitated through such arrangements. Where the exporters availing of this facility are required to open notional accounts with the OPGSP, it shall be ensured that no funds are allowed to be retained in such accounts and all receipts should be automatically swept and pooled into the NOSTRO collection account opened by the AD C

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

he purpose codes reported to the Reserve Bank in the online payment gateways are appropriate. h) AD Category -I banks shall submit all the relevant information relating to any transaction under this arrangement to the Reserve Bank, as and when advised to do so. i) Each NOSTRO collection account should be subject to reconciliation and audit on a quarterly basis. j) Resolution of all payment related complaints of exporters in India shall remain the responsibility of the OPGSP concerned. k) AD Category-I banks desirous of entering into such an arrangement/s should report the details of each such arrangement as and when entered into to the Foreign Exchange Department, Central Office, Reserve Bank of India, Mumbai. l) 4A start-up can realise the receivables of its overseas subsidiary and repatriate them through Online Payment Gateway Service Providers (OPGSPs). (iv) Settlement System under ACU Mechanism a) In order to facilitate transactions / settlements, effective January 01, 2009, partic

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

permitted currency outside the ACU mechanism, until further notice. e) In view of the understanding reached among the members of the ACU during the 44th Meeting of the ACU Board in June, 2015, it has been decided to permit the use of the Nostro accounts of the commercial banks of the ACU member countries, i.e., the ACU Dollar and ACU Euro accounts, for settling the payments of both exports and imports of goods and services among the ACU countries. (v) Third party payments for export / import transactions Taking into account the evolving international trade practices, it has been decided to permit third party payments for export / import transactions can be made subject to conditions as under: a) Firm irrevocable order backed by a tripartite agreement should be in place. However, it may not be insisted upon in cases 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 s

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

.g. Sudan, Somalia, etc.), payments for the same may be received from an Open Cover Country; and g) In case of imports, the Invoice should contain a narration that the related payment has to be made to the (named) third party, the Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party and the importer should comply with the related extant instructions relating to imports including those on advance payment being made for import of goods. (vi) 5Settlement of Export transactions in currencies not having a direct exchange rate To further liberalize the procedure and facilitate settlement of export transactions where the invoicing is in a freely convertible currency and the settlement takes place in the currency of the beneficiary, which though convertible, does not have a direct exchange rate, it has been decided that AD Category-I banks may permit settlement of such export transactions (excluding those

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

y account abroad. Exporters may deposit the foreign exchange obtained by sale of goods at the international exhibition/ trade fair and operate the account during their stay outside India provided that the balance in the account is repatriated to India through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the AD Category – I banks concerned. (ii) Reserve Bank may consider applications in Form EFC from exporters having good track record for opening a foreign currency account with AD banks in India and outside India subject to certain terms and conditions. Applications for opening the account with a branch of an AD Category – I bank in India may be submitted through the branch at which the account is to be maintained. If the account is to be maintained abroad the application should be made by the exporter giving details of the bank with which the account will be maintained. (iii) An Indian entit

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

(i) Under the scheme of Government of India, firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / or studded with / without diamond and / or other stones, with a track record of at least 2 years in import / export of diamonds / colored gemstones / diamond and colored gemstones studded jewellery / plain gold jewellery and having an average annual turnover of ₹ 3 crores or above during the preceding three licensing years (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Accounts. (ii) They may be allowed to open not more than five Diamond Dollar Accounts with their banks. (iii) Eligible firms and companies may apply for permission to their AD Category – I banks in the format prescribed. 9Omitted (iv) Conditions mentioned at Para A.6 (iv) a) & b) shall also apply. A.6 Exchange Earners Foreign Currency Account (EEFC Account) (i) A person resident

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. b) The facility of EEFC scheme is intended to enable exchange earners to save on conversion/transaction costs while undertaking forex transactions. This facility is not intended to enable exchange earners to maintain assets in foreign currency, as India is still not fully convertible on Capital Account. (v) The eligible credits represent – a) inward remittance received through normal banking channel, other than the remittance received pursuant to any undertaking given to the Reserve Bank or which represents foreign currency loan raised or investment received from outside India or those received for meeting specific obligations by the account holder. b) payments received in foreign exchange by a 100 per cent Export Oriented Unit or a unit in Export Processing Zone, Software Technology Park or Electronic H

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

realization credited to the EEFC account maintained by the exporter with…… A.7 Counter-Trade Arrangement 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 US Dollar will be considered by the Reserve Bank subject to following conditions: (i) All imports and exports under the arrangement should be at international prices in conformity with the Foreign Trade Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made there under. (ii) 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. (iii)

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

y rail, Customs staff has been posted at certain designated railway stations for attending to Customs formalities. They will collect the EDF for 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 can be obtained from the Railways. For goods loaded at stations other than the designated stations, exporters must arrange to present EDF to the Customs Officer at the Border Land Customs Station where Customs formalities are completed. A.9 Border trade with Myanmar In supersession of instructions contained in A.P. (DIR Series) Circular No. 17 dated October 16, 2000, barter system of trade at the Indo-Myanmar border has been discontinued and replaced with normal trade with effect from December 1, 2015. Accordingly, all trade transactions with Myanmar, including those at the Indo-Myanmar border with effect from December 1, 2015 shall be settled in any permitted currency i

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

e by the exporter as approved by the EXIM Bank / AD Category – I banks concerned may be done through an AD bank. Such remittances may be made in advance in one lump sum or at monthly intervals as approved by the authority concerned. A.13 Export factoring on non-recourse basis AD banks have been permitted to factor the export receivables on a non-recourse basis, so as to enable the exporters to improve their cash flow and meet their working capital requirements subject to conditions as under: (i) AD banks may take their own business decision to enter into export factoring arrangement on non-recourse basis. They should ensure that their client is not over financed. Accordingly, they may determine the working capital requirement of their clients taking into account the value of the invoices purchased for factoring. The invoices purchased should represent genuine trade invoices. (ii) In case the export financing has not been done by the Export Factor, the Export Factor may pass on the net

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

the approval of the AD Category – I banks/ Exim Bank at post-award stage before undertaking execution of such contracts. Regulations relating to Project Exports and Service Exports are laid down in the revised Memorandum of Instructions on Project and Service Exports (PEM-July 2014). (ii) Accordingly, AD banks / Exim Bank may consider awarding post-award approvals without any monetary limit and permit subsequent changes in the terms of post award approval within the relevant FEMA guidelines / regulations. Project and service exporters may approach AD banks / Exim Bank based on their commercial judgment. The respective AD bank / Exim Bank should monitor the projects for which post-award approval has been granted by them. (iii) In order to provide greater flexibility to project & service exporters in conducting their overseas transactions, facilities have been provided as under: a) Inter-Project transfer of machinery – The stipulation regarding recovery of market value (not less tha

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

erm paper abroad including treasury bills and other monetary instruments with a maturity or remaining maturity of one year or less and the rating of which should be at least A-1/AAA by Standard & Poor or P-1/-AAA by Moody s or F1/AAA by Fitch IBCA etc., and as deposits with branches / subsidiaries outside India of AD Category – I banks in India. d) Repatriation of funds in case of On-site Software Contracts – The requirement of repatriation of 30 per cent of contract value in respect of on-site contracts by software exporter company / firm has been dispensed with. They should, however, repatriate the profits of on-site contracts after completion of the contracts. A.15 Export of goods on lease, hire, etc. Prior approval of the Reserve Bank is required for export of machinery, equipment, etc., on lease, hire basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import. Exporters should apply for necessary permission, through a

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

and (ii) Any person resident outside India, not being a citizen of Pakistan and Bangladesh and also not a traveler coming from and going to Pakistan or Bangladesh, and visiting India may take outside India 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) while exiting only through an airport. PART-B EDF / SOFTEX Procedure B.1 Export of goods through Customs ports (i) Customs shall certify the value declared and give running serial number on the two copies of Export Declaration Form (EDF), submitted by exporter at Non- Electronic Data Interchange (EDI) port. (ii) Customs shall retain the original EDF for transmission to the Reserve Bank and return the duplicate copy to the exporter. (iii) At the time of shipment of goods, exporters shall submit the duplicate copy of the EDF to Customs. After examining the goods, Customs shall certify the quantity in the form and return it to the exporte

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ted in duplicate to the authority concerned (Commissioner of Customs or the SEZ, if the export is made through it). (ii) After verifying and authenticating, the authority concerned shall hand over to the exporter, one copy of the shipping bill marked Exchange Control (EC) Copy for being submitted to the AD bank within 21 days from the date of export for collection/negotiation of shipping documents. However, in cases where EC copy of shipping bill is not printed in terms of CBEC s Circular No. 55/2016-Customs dated November 23, 2016 and data of shipping bill is integrated with EDPMS, requirement of submission of EC copy of shipping bill with the AD bank would not be there. (iii) The manner of disposal of EC copy of Shipping Bill shall be the same as that for EDF. The duplicate copy of the form together with a copy of invoice etc. shall be retained by ADs and may not be submitted to the Reserve Bank. The question of disposal of EC copy of shipping bill will, however, not arise where EC c

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

sending goods by post should be first presented by the exporter to an AD for countersignature. The procedure is as under: (i) AD shall countersign EDF after ensuring that the parcel has been addressed to their branch or correspondent bank in the country of import and return the original copy to the exporter, who shall then submit the EDF to the post office with the parcel. (ii) The duplicate copy of EDF shall be retained by the AD to whom the exporter shall submit relevant documents together with an extra copy of invoice for negotiation/collection, within the prescribed period of 21 days. (iii) The concerned overseas branch or correspondent shall be instructed to deliver the parcel to consignee against payment or acceptance of relative bill. (iv) AD may, however, countersign EDF covering parcels addressed direct to the consignees, provided: (a) An irrevocable letter of credit for the full value of export has been opened in favor of the exporter and has been advised through the AD conce

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

Indian owned vessels, as per the norms prescribed by the Ministry of agriculture, Government of India, the EDF declaration procedure in this regard has been rationalized in consultation with the Government of India as outlined below should be followed by the exporter in conformity with Regulation 3 of Notification No.FEMA.23 (R)/2015-RB dated January 12, 2016. a) The exporters may submit the EDF, duly signed by the Master of the vessel in lieu of Custom certification, indicating the composition of the catch, quantity, export value, date of shipment (date of transfer of catch), etc duly supported by a certificate from an international cargo surveyor. b) Bill of Lading / receipt of trans-shipment issued by the carrier vessel should include the EDF Number. c) The prescribed period of realization and repatriation should be reckoned with reference to the date of transfer of catch as certified by the Master of the vessel or the date of the invoice, whichever is earlier. d) The EDF, both orig

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

statement in excel format to the competent authority for certification. Since the SOFTEX data from STPI/SEZ are being transmitted in electronic format to RBI, the exporters now have to submit the SOFTEX form in duplicate as per the revised procedure. STPI/SEZ will retain one copy and handover duplicate copy to exporters after due certification. As hitherto, the exporters have to provide information about all the invoices including the ones lesser than US$25000, in the bulk statement in excel format. (ii) A common SOFTEX Form has been devised to declare single as well as bulk software exports. (iii) Reserve Bank of India has extended the facility for online generation of the EDF Form Number and the SOFTEX Form Number (Single as well as Bulk for use in off-site software exports). The facility of manual allotment of single as well bulk SOFTEX form number by Regional Offices of RBI has been dispensed with accordingly. (iv) Invoicing of software exports a) For long duration contracts involv

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

a month, as indicated above. The designated officials may also certify the SOFTEX Forms of EOUs, which are registered with them. d) The invoices raised on overseas clients as at (a) to (c) above will be subject to valuation of export declared on SOFTEX form by the designated official concerned of the Government of India and consequent amendment made in the invoice value, if necessary. B.6 Citing of specific identification numbers In all applications / correspondence with the Reserve Bank, the specific identification number as available on the EDF and SOFTEX forms should invariably be cited. B.7 Export of Services it is clarified that, in respect of export of services to which none of the Forms specified in these Regulations apply, the exporter may export such services without furnishing any declaration, but shall be liable to realise the amount of foreign exchange which becomes due or accrues on account of such export, and to repatriate the same to India in accordance with the provisio

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

nks 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. (ii) Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship, the exporter will give notice in duplicate to the Customs in the form and manner prescribed, attaching thereto the unused duplicate copy of EDF and the shipping bill. The Customs will verify that the shipment was actually shut out, certify the copy of the notice as correct and forward it to the Reserve Bank together with unused duplicate copy of the EDF. In this case, the original EDF received earlier from Customs will be cancelled. If the shipment is made subsequently, a fresh set of EDF should be completed. B.11 Consolidation of air cargo/sea cargo (i) Consolidation of air cargo a) Where air cargo is shipped under consolidation, the airline company s Master Airway Bill will be issued to the Consolidating Cargo Agent. The Cargo agent in turn will issue

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

documents even in cases, where export transactions are not backed by letters of credit, provided their 'relative sale contract' with overseas buyer provides for acceptance of FCR as a shipping document in lieu of bill of lading. However, the acceptance of such FCR for purchase/discount would purely be the credit decision of the bank concerned who, among others, should satisfy itself about the bona fides of the transaction and the track record of the overseas buyer and the Indian supplier since FCRs are not negotiable documents. It would be advisable for the exporters to ensure due diligence on the overseas buyer, in such cases. B.12 Exemption from Declaration The requirement of declaration of export of goods and software in the prescribed form will not apply to the cases indicated in Regulation 4 of 11Foreign Exchange Management (Export of Goods and Services) Regulations dated January 12, 2016. The exporters shall, however, be liable to realize and repatriate export proceeds a

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

hall not be entitled to Duty Drawback or any other export incentive under any export promotion scheme. Exports of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of EDF procedure from the Reserve Bank. C.2 Receipt of advance against exports (1) In terms of Regulation 15 of Notification No. FEMA 23 (R)/2015-RB dated January 12, 2016, where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall be under an obligation to ensure that the shipment of goods is made within one year from the date of receipt of advance payment; the rate of interest, if any, payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points; and the documents covering the shipment are routed through the AD Category – I bank through whom the advance payment is received. Provided that in the event of the exporter s inability to make the shipment, partly or fully, within one

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

of long term supply contracts for export of goods subject to the conditions as under: (i) Firm irrevocable supply orders and contracts should be in place. The contract with the overseas party/ buyer should be vetted and the same shall clearly specify the nature, amount and delivery timelines of the products over the years and penalty in case of non-performance or contract cancellation. Product pricing should be in consonance with prevailing international prices. (ii) Company should have capacity, systems and processes in place to ensure that the orders over the duration of the said tenure can actually be executed. (iii) The facility is to be provided only to those entities, which have not come under the adverse notice of Enforcement Directorate or any such regulatory agency or have not been caution listed. (iv) Such advances should be adjusted through future exports. (v) The rate of interest payable, if any, should not exceed LlBOR plus 200 basis points. (vi) The documents should be r

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

rt performance as per the contract. b) BG / SBLC should cover only the advance on reducing balance basis. c) BG / SBLC issued from India in favor of overseas buyer should not be discounted by the overseas branch / subsidiary of bank in India. Note: AD Category – I banks may also be guided by the Master Circular on Guarantees and Co-acceptances issued by Department of Banking Regulation. (xii) AD Category – I banks may allow the purchase of foreign exchange from the market for refunding advance payment credited to EEFC account only after utilizing the entire balances held in the exporter s EEFC accounts maintained at different branches/banks. (3) AD Category- I banks may allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship and where the export agreement provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment subject to the following conditions:- (i) The KYC an

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

payment or towards payment of interest should be made without the prior approval of the Reserve Bank. (4) (i) As it has been observed that there is substantial increase in the number and amount of advances received for exports remaining outstanding beyond the stipulated period on account of non-performance of such exports (shipments in case of export of goods), AD Category -I banks are advised to efficiently follow up with the concerned exporters in order to ensure that export performance (shipments in case of export of goods) are completed within the stipulated time period. (ii) It is further reiterated that AD category -I banks should exercise proper due diligence and ensure compliance with KYC and AML guidelines so that only bonafide export advances flow into India. Doubtful cases as also instances of chronic defaulters may be referred to Directorate of Enforcement (DoE) for further investigation. A quarterly statement indicating details of such cases may be forwarded to the concern

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

triation of proceeds to India. (iii) Such transactions approved by the AD Category – I banks will be subject to 100 per cent audit by their internal inspectors/auditors. C.4 EDF approval for export of goods for re-imports (i) AD Category – I banks may consider request from exporters for granting EDF approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration, etc., subject to the condition that the exporter shall produce relative Bill of Entry within one month of re-import of the exported item from India. (ii) Where the goods being exported for testing are destroyed during testing, AD Category – I banks may obtain a certificate issued by the testing agency that the goods have been destroyed during testing, in lieu of Bill of Entry for import. C.5 Re-export of unsold rough diamonds from Special Notified Zone of Customs without Export Declaration Form (EDF) formality (i) In order to facilitate re-export of unsold rough diamonds impor

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

allow remittances towards initial expenses up to fifteen per cent of the average annual sales/income or turnover during the last two financial years or up to twenty-five per cent of the net worth, whichever is higher. (ii) For recurring expenses, remittances up to ten per cent of the average annual sales/income or turnover during the last two financial years may be sent for the purpose of normal business operations of the office (trading/non-trading)/branch or representative office outside India subject to the following terms and conditions: a) The overseas branch/office has been set up or representative is posted overseas for conducting normal business activities of the Indian entity; b) The overseas branch/office/representative shall not enter into any contract or agreement in contravention of the Act, Rules or Regulations made there under; c) The overseas office (trading / non-trading) / branch / representative should not create any financial liabilities, contingent or otherwise, f

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ses and repatriation thereon may be sent to the AD Category – I banks. C.7 Delay in submission of shipping documents by exporters In cases where exporters present documents pertaining to exports after the prescribed period of 21 days from date of export, AD Category – I banks may handle them without prior approval of the Reserve Bank, provided they are satisfied with the reasons for the delay. C.8 Return of documents to exporters The duplicate copies of EDF and shipping documents, once submitted to the AD Category – I banks for negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectification of errors and resubmission. C.9 Landlocked countries AD Category – I banks may deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel or trade representative for 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 C

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

so permit 'Status Holder Exporters (as defined in the Foreign Trade Policy), and units in Special Economic Zones (SEZ) to dispatch the export documents to the consignees outside India subject to the terms and conditions that: a) The export proceeds are repatriated through the AD banks named in the EDF. b) The duplicate copy of the EDF is submitted to the AD banks for monitoring purposes, by the exporters within 21 days from the date of shipment of export. (iii) AD Category – I banks may regularize cases of dispatch of shipping documents by the exporter direct to the consignee or his agent resident in the country of the final destination of goods, up to USD 1 million or its equivalent, per export shipment, subject to the following conditions: a) The export proceeds have been realized in full. b) The exporter is a regular customer of AD Category – I bank for a period of at least six months. c) The exporter s account with the AD Category – I bank is fully compliant with the Reserve Ba

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

) In cases where the exporter has not been able to arrange for repatriation of the undrawn balance in spite of best efforts, AD Category – I banks, on being satisfied with the bona fides of the case, should ensure that the exporter has realized at least the value for which the bill was initially drawn (excluding undrawn balances) or 90 per cent of the value declared on EDF form, whichever is more and a period of one year has elapsed from the date of shipment. C.12 Consignment Exports (i) When goods have been exported on consignment basis, the AD Category-I bank, while forwarding shipping documents to his overseas branch/ correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realization of proceeds of the export. This procedure should be followed even if, according to the practice in certain trades, a bill for part of the estimated value is drawn in advance against th

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

received from exporters and grant permission for opening / hiring warehouses abroad subject to the following conditions: (i) Applicant s export outstanding does not exceed 5 per cent of exports made during the previous financial year. (ii) Applicant has a minimum export turnover of USD 100,000/- during the last financial year. (iii) Period of realization should be as applicable. (iv) All transactions should be routed through the designated branch of the AD Banks. (v) The above permission may be granted to the exporters initially for a period of one year and renewal may be considered subject to the applicant satisfying the requirement above. (vi) AD Category – I banks granting such permission/approvals should maintain a proper record of the approvals granted. C.14 Export Bills Register AD Category – I banks should maintain Export Bills Register, in physical or electronic form aligned with Export Data Processing and Monitoring System (EDPMS). The bill number should be given to all type

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

g exporters does not get delayed. Any laxity in the follow up of realization of export proceeds by AD Category – I banks will be viewed seriously by the Reserve Bank, leading to the invocation of the penal provision under FEMA, 1999. (iv) 14With operationalization of EDPMS on March 01, 2014, realization of all export transaction for shipping documents after February 28, 2014 should be reported in EDPMS. C.16 Reduction in invoice value on account of prepayment of usance bills Occasionally, exporters may approach AD Category – I banks for reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bills. AD Category – I banks may allow cash discount to the extent of amount of proportionate interest on the unexpired period of usance, calculated at the rate of interest stipulated in the export contract or at the prime rate/LIBOR of the currency of invoice where rate of interest is not stipulated in the contract. C.17 Reduction in invoice value in

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

lls outstanding to the average export realizations during the preceding three financial years, outstanding of exports made to countries facing externalization problems may be ignored provided the payments have been made by the buyers in the local currency. C.18 Change of buyer/consignee Prior approval of the Reserve Bank is not required if, after goods have been shipped, they are to be transferred to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does not exceed 25 per cent of the invoice value and the realization of export proceeds is not delayed beyond the period of 9 months from the date of export. Where the reduction in value exceeds 25%, all other relevant conditions stipulated in paragraph C.17 should also be satisfied. C.19 Export of goods by Special Economic Zones (SEZs) (i) Units in SEZs are permitted to undertake job work abroad and export goods from that country itself subject to the conditions t

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

eriod of realization of export proceeds beyond stipulated period of realization from the date of export, up to a period of six months, at a time, irrespective of the invoice value of the export subject to the following conditions: a) The export transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies, b) The AD Category – I bank is satisfied that the exporter has not been able to realize export proceeds for reasons beyond his control, c) The exporter submits a declaration that the export proceeds will be realized during the extended period, d) While considering extension beyond one year from the date of export, the total outstanding of the exporter does not exceed USD one million or 10 per cent of the average export realizations during the preceding three financial years, whichever is higher. 15Omitted 16e) In cases where the exporter has filed suits abroad against the buyer, extensi

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

s on shipments lost in transit which are partially settled directly by shipping companies/airlines under carrier s liability abroad are also repatriated to India by exporters. C.22 Export claims (i) AD Category – I banks may remit export claims on application, provided the relative export proceeds have already been realized and repatriated to India and the exporter is not on the caution list of the Reserve Bank. (ii) In all such cases of remittances, the exporter should be advised to surrender proportionate export incentives, if any, received by him. C.23 Write-off of unrealized export bills (i) An exporter who has not been able to realize the outstanding export dues despite best efforts, may either self-write off or approach the AD Category – I banks, who had handled the relevant shipping documents, with appropriate supporting documentary evidence. The limits prescribed for write-offs of unrealized export bills are as under: Self write-off by an exporter (Other than Status Holder Expo

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

he importing country. d) The unrealized amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization; e) The unrealized amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remaining outstanding and turned out to be unrealizable despite all efforts made by the exporter; f) The cost of resorting to legal action would be disproportionate to the unrealized amount of the export bill or where the exporter even after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control; g) 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 amounts have remained unrealized consequent on dishonor of the bills by the overseas buyer and there are no prospects of realization. (iv) The exporter has surrendere

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ed by the central banking authorities of the country. b) EDF which are under investigation by agencies like, Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc. as also the outstanding bills which are subject matter of civil / criminal suit. vii) AD banks should report write off of export bills through EDPMS to the Reserve Bank. viii) AD banks are advised to put in place a system under which their internal inspectors or auditors (including external auditors appointed by authorised dealers) should carry out random sample check / percentage check of write-off outstanding export bills. ix) Cases not covered by the above instructions / beyond the above limits, may be referred to the concerned Regional Office of Reserve Bank of India. C.24 Write off in cases of payment of claims by ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) (i) AD Category – I banks shall, on an application received

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

The exporter produces a certificate from the Foreign Mission of India concerned, about the fact of non-recovery of export proceeds from the buyer; and c) This would not be applicable in self write off cases. C.26 Set-off of export receivables against import payables AD category -I banks may deal with the cases of set-off of export receivables against import payables, subject to following terms and conditions: (i) The import is as per the Foreign Trade Policy in force. (ii) Invoices/Bills of Lading/Airway Bills and Exchange Control copies of Bills of Entry for home consumption have been submitted by the importer to the Authorized Dealer bank. (iii) Payment for the import is still outstanding in the books of the importer. (iv) Both the transactions of sale and purchase may be reported separately in R-Returns and FETERS. (v) The relative EDF will be released by the AD bank only after the entire export proceeds are adjusted / received. (vi) The set-off of export receivables against import

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

s the case may be while details of import of goods / services are recorded through A1 / A2 form as the case may be. The relative EDF will be treated as complete by the designated AD Category – I banks only after the entire proceeds are adjusted / received. (iii) Both the transactions of sale and purchase in R- Returns under FETERS are reported separately. (iv) The export / import transactions with ACU countries are kept outside the arrangement. (v) All the relevant documents are submitted to the concerned AD Category – I banks who should comply with all the regulatory requirements relating to the transactions. C.28 Exporters Caution List 181) Caution Listing/ de-caution Listing of exporters is automated in EDPMS. The updated list of caution listed exporters can be accessed through EDPMS on a daily basis. Criteria laid down for cautioning/ de-cautioning of exporters in EDPMS are as under: (a) The exporters would be caution listed if any shipping bill against them remains open for more t

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

such cases based on the recommendation of AD Category – I banks. 2) AD Category – I banks should follow the procedure mentioned below while handling shipping documents in respect of caution listed exporters: (a) They will intimate the exporters about their caution listing, giving the details of outstanding shipping bills. When caution listed exporters submit shipping documents for negotiation / purchase/ discount/ collection, etc. the AD Category – I bank may accept the documents subject to following conditions:- (i) The exporters concerned should produce evidence of having received advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports; (ii) In case of usance bills, the relative letter of credit should cover full export value and also permit such drawings. Besides, the usance bills should also mature within prescribed realisation period reckoned from date of shipment. (iii) Except under the above mentioned conditions given in

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

bank of international repute resident broad; (ii) as a counter-guarantee to cover guarantee issued by his branch or correspondent outside India, on behalf of Indian exporter in cases where guarantees of only resident banks are acceptable to overseas buyers. C.30 Issuance of Electronic Bank Realisation Certificate (eBRC) 19 AD Category-I banks are required to update the EDPMS with data of export proceeds on as and when realised basis and, with effect from October 16, 2017, they are required to generate Electronic Bank Realisation Certificate (eBRC) only from the data available in EDPMS, to ensure consistency of data in EDPMS and consolidated eBRC. PART-D Remittances connected with Export D.1 Agency commission on exports (i) AD Category – I banks 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 conditions as under: a) Amount of commission has b

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

by deduction from the invoice value. (iii) Payment of commission is prohibited on exports made by Indian Partners towards equity participation in an overseas joint venture / wholly owned subsidiary as also exports under Rupee Credit Route except commission up to 10 per cent of invoice value of exports of tea & tobacco. D.2 Refund of export proceeds AD Category – I banks, through whom the export proceeds were originally realized may consider requests for refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality. While permitting such transactions, AD Category – I banks are required to: (i) Exercise due diligence regarding the track record of the exporter (ii) Verify the bona-fides of the transactions (iii) Obtain from the exporter a certificate issued by DGFT / Custom authorities that no incentives have been availed by the exporter against the relevant export or the proportionate incentives availed, if any, for the relevant e

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

ces – Exports to Warehouses Abroad May 2, 2003 6 A.P. (DIR Series) Circular No.77 Foreign Exchange Management Act, 1999 – Guidelines for Compilation of R-Returns March 13, 2004 7 A.P. (DIR Series) Circular No.71 Data on Project Export Finance June 8, 2007 8 A.P. (DIR Series) Circular No.30 Compilation of Bank-wide consolidated R-Return February 25,2008 9 A.P (DIR Series) Circular No.43 Settlement system under ACU Mechanism December 26, 2008 10 A.P. (DIR Series) Circular No.84 Compilation of R-Returns : Reporting under FETERS February 29, 2012 11 A.P. (DIR Series) Circular No.46 Supply of Goods and Services by Special Economic Zones to Units in Domestic Tariff Areas October 23, 2012 12 A.P. (DIR Series) Circular No.60 Export Outstanding Statement (XOS) Online Bank wide Submission October 01, 2013 13 A.P. (DIR Series) Circular No.62 Closing of Old Outstanding Bills : Export – Follow-up – XOS Statements October 14, 2013 14 A.P. (DIR Series) Circular No.63 Memorandum of Procedure for Chann

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

PMS) Issuance of Electronic Bank Realisation Certificate (eBRC) September 15, 2017 1 FEM (Export of Goods and Services) Regulations, 2000 was repealed and replaced by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016. 2 FEM (Export of Goods and Services) Regulations, 2000 was repealed and replaced by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016. 3 FEM (Export of Goods and Services) Regulations, 2000 was repealed and replaced by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016. A.13 Export factoring on non-recourse basis 4 Inserted by AP (DIR Series) Circular 51 dated February 11, 2016 with effect from February 11, 2016. 5 Inserted by AP (DIR Series) Circular 42 dated February 4, 2016. 6 Inserted by FEM (Foreign Currency Accounts by a person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as Regulation 7(7) of the Foreig

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

a person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as Regulation 4 of the Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations, 2000 notified vide Notification No. FEMA 10/2000-RB dated May 3, 2000 11 FEM (Export of Goods and Services) Regulations, 2000 was repealed and replaced by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016 12 Inserted vide Gazette Notification No. 23/2015-2020 dated August 23, 2017. Prior to deletion it read as: AD Category – I banks may consider requests for grant of EDF waiver from exporters for export of goods free of cost, for export promotion up to 2 per cent of the average annual exports of the applicant during the preceding three financial years subject to a ceiling of ₹ 5 lakhs. For Status Holder exporters, this limit as per the present Foreign Trade Policy is ₹ 10 lakhs or 2 per cent of the average annua

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =

xtension has been granted may be indicated in the Remarks column. 16 The existing sub-para (f) has been re-numbered as (e) on the deletion of the existing sub-para (e) by AP (DIR) Series Circular 74 dated May 26, 2016 17 Inserted by AP (DIR) Series Circular 74 dated May 26, 2016 with effect from June 15, 2016. Prior to insertion it read as: and delete them from the XOS statement. 18 Inserted by AP (DIR) Series Circular 74 dated May 26, 2016 with effect from June 15, 2016. Prior to insertion it read as: (i) The list of exporters who are cautioned shall be shared with the AD banks and they may approve EDF of exporters who have been placed on caution list if the exporters concerned produce evidence of having received an advance payment or an irrevocable letter of credit in their favor covering the full value of the proposed exports. (ii) Such approval may be given even in cases where usance bills are to be drawn for the shipment provided the relative letter of credit covers the full expor

= = = = = = = =

Plain text (Extract) only
For full text:-Visit the Source

= = = = = = = =