Eximkey India DGFT, Customs, Excise, Export Import policy, Foreign Trade Policy and export import data.

RBI Notification Circulars Master Circulars RBI/2004-05/8 Master Circular No. / 8 /2004-05, DT. 01/07/2004

RBI/2004-05/8 Master Circular No. / 8 /2004-05, DT. 01/07/2004

Master Circular- Export of Goods and Services

Export of Goods and Services from India is allowed in terms of clause (a) of subsection (1) and sub-section (3) of Section 7 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. GSR 381(E) dated May 3, 2000 and FEMA Notification 23/RB-2000 dated May 3, 2000 as amended from time to time.

2. This Master Circular consolidates the existing instructions on the subject of “Export of Goods and Services” at one place. The list of underlying circulars is set out at Annex -1.

3. As recommended by the Committee on Procedures and Performance Audit on Public Services (CPPAPS) (Chairman : Shri S. S. Tarapore) set up by the Reserve Bank, this Master Circular is being issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2005 and be replaced by an updated Master Circular on the subject.

Yours faithfully,

Grace Koshie
Chief General Manager

Annex-1

List of circulars which have been consolidated in this Master Circular Export of Goods and Services

Circular No Date

Part I

Introduction

Export trade is regulated by the Directorate General of Foreign Trade (DGFT) and its regional offices, functioning under the Ministry of Commerce and Industries, Department of Commerce, Government of India. Policies and procedures required to be followed for exports from India are announced by the DGFT. Authorised dealers may conduct export transactions in conformity with the Export-Import Policy in vogue and the Rules framed by the Government of India and the Directions issued by Reserve Bank from time to time under the Act.

2. Attention of authorised dealers is invited to the Government of India Notification No.G.S.R.381(E) dated May 3, 2000, notifying the Foreign Exchange Management (Current Account Transactions) Rules, 2000, in terms of which drawal of exchange for certain current account transactions has been prohibited and restrictions have been placed on certain other transactions. In terms of Rule 4 ibid, the transactions specified in Schedule II to the said Notification require prior approval of the Government of India and in terms of the Rule 5, the transactions specified in Schedule III to the Notification require prior approval of the Reserve Bank. Authorised dealers may follow directions contained in Part III while dealing with applications relating to export of goods and services from India. It is further clarified that the directions contained in this Circular should be read with the Rules notified by the Government of India, Ministry of Finance, vide Notification dated May 3, 2000, and annexed as Part II of this circular as also Regulations notified by Reserve Bank vide its Notification No.FEMA 23/2000-RB dated 3rd May 2000 as amended from time to time (copy enclosed).

3. The Reserve Bank has made the Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 vide its Notification No.FEMA 6/RB-2000 dated 3rd May 2000 and subsequently modified vide Notification No.FEMA 38 / 2001-RB dated 27th February, 2001. Any export of Indian currency of value exceeding Rs.5000/- except to the extent permitted under any general permission granted under the Regulations, will require prior permission of Reserve Bank.

4. In terms of Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000, notified vide Reserve Bank Notification No.FEMA 8 / RB dated 3rd May 2000, authorised dealers have been permitted to issue guarantees on behalf of exporter clients on account of exports out of India.

5. Export of goods and services against repayment of state credits granted by erstwhile Soviet Union will continue to be governed by the extant directions issued by Reserve Bank, as amended from time to time. Further, Reserve Bank will continue to consider as hitherto, counter trade proposals from Indian exporters with Romania involving adjustment of value of exports from India against value of imports made into India in terms of a voluntarily entered arrangement between the concerned parties, subject to the condition, among others that the Indian exporter should utilise the funds for import of goods from Romania into India within six months from the date of credit to Escrow Accounts allowed to be opened.

PART II

Export of Goods and services

Section `A’ : General

A.1 Trade and Exchange Control

(i) In exercise of the powers conferred by clause (a) of sub-section (1), sub-section (3) of section 7 and sub-section (2) of section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank has made the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000 relating to export of goods and services from India, hereinafter referred to as the ‘Export Regulations’. These Regulations have been notified vide Notification No. FEMA 23/2000-RB, dated 3rd May, 2000, as amended from time to time.

(ii) Any reference to Reserve Bank should be made to the office of Foreign Exchange Department within whose jurisdiction the applicant person, firm or company resides or functions unless otherwise indicated. If for any particular reason, a firm or company desires to deal with a different office of the Foreign Exchange Department, it may approach the office within whose jurisdiction it functions for necessary approval.

A.2 Exemptions from Declarations

(i) The requirement of declaration of export of goods and software in the prescribed form will not apply to the cases indicated in Regulation No. 4, ibid. The requirement of declaration also shall not apply to goods sent for testing abroad, subject to re-import. Exporters have been exempted from submission of declaration in prescribed format for exports of value not exceeding US $ 25,000 or its equivalent. The exporters shall however, be liable to realize and repatriate export proceeds as per FEMA regulations.

(ii) Gift of goods exceeding rupees five lakhs in value require approval of the Reserve Bank.

(iii) Authorised Dealers may consider requests for grant of GR waiver from exporters for export of goods free of cost, for export promotion upto 2 percent of average annual exports of the applicant during the preceding three years subject to a ceiling of Rs.5 lakhs.

(iv) Export of goods not involving any foreign exchange transaction directly or indirectly, requires the waiver of GR/PP procedure from Reserve Bank.

A.3 Numbering of forms

GR, PP and SOFTEX forms will bear specific identification numbers. In all applications/ correspondence with the Reserve Bank, this identification number should invariably be cited. In the case of declarations made on SDF form, the port code number and shipping bill number should be cited.

A. 4 Manner of Payment

(i) The amount representing the full export value of the goods exported shall be received through an authorised dealer in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA 14/2000-RB, dated 3rd May, 2000.

(ii) Payment for export may also be received by the exporter in the following manner :

a. In the form of bank draft, pay order, banker’s or personal cheques.

b. Foreign currency notes/foreign currency travellers’ cheques from the buyer during his visit to India.

c. Payment out of funds held in the FCNR/NRE account maintained by the Buyer

d. Through International Credit Cards. When payment, in respect of goods sold to overseas buyers during their visits is received in this manner the GR/SDF (duplicate) should be released by the authorised dealers only on receipt of funds in their Nostro account or on production of a certificate by the exporter from the Credit Card servicing bank in India to the effect that it has received the equivalent amount in foreign exchange, if the authorised dealer concerned is not the Credit Card servicing bank. ADs may also receive payment for exports made out of India by debit to the credit card of an importer where the reimbursement from the card issuing bank/organisation will be received in foreign exchange.

e. All transactions between a person resident in India and a person resident in Nepal may be settled in Rupees. However, in case of export of goods to Nepal, where an importer resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism.

f. Payment of export may also be received by the Gem & Jewellery units in SEZs and EOUs in the form of precious metals i.e. Gold / Silver / Platinum equivalent to value of jewellery exported on the condition that the sale contract provides for the same and the approximate value of the precious metals is indicated in the relevant GR / SDF / PP Forms.

A. 5 Guarantees against Exports

Prior approval of Reserve Bank should be obtained by authorised dealers for issue of guarantees in respect of caution-listed exporters.

A.6 (i) Foreign Currency Accounts –

Reserve Bank may consider applications in Form EFC from exporters having good track record for opening foreign currency accounts with banks subject to certain terms and conditions. Applications for opening such an account with a branch of an authorised dealer in India may be submitted through the branch at which the foreign currency account is to be maintained. If the foreign currency 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. An Indian entity has also been permitted to open, hold and maintain in the name of its office/branch set up outside India, a foreign currency account with a bank outside by making remittance for the purpose of normal business operations of the said office/branch or representative subject to certain conditions.

Indian corporates who have set up overseas offices abroad have been permitted to acquire immovable property outside India for their business as also staff residential purposes with prior permission of RBI, until further notice.

A unit located in a Special Economic Zone (SEZ) may be allowed to open , hold and maintain a Foreign Currency Account with an authorised dealer in India subject to certain specified conditions.

A person resident in India being a project /service exporter may open , hold and maintain Foreign Currency Account with a bank outside or in India , subject to certain terms and conditions.

(ii) Diamond Dollar Account –

Under the scheme of Government of India, firms and companies dealing in purchase/sale of rough or cut and polished diamonds / diamond studded jewellery, with track record of at least three years in import or export of diamonds and having an average annual turnover of Rs.5 crores or above during preceding three licensing years (licensing year is from April to March) are permitted to transact their business through Diamond Dollar Accounts and may be allowed to open not more than five Diamond Dollar Accounts with their banks. Accordingly, eligible firms and companies may apply for permission to the Chief General Manager, Foreign Exchange Department, Trade Division, Reserve Bank of India, Central Office, Mumbai 400 001, through their authorised dealer.

(iii) Exchange Earners’ Foreign Currency (EEFC) Account

A person resident in India may open, hold and maintain with an authorised dealer in India, a foreign currency account to be known as Exchange Earners’ Foreign Currency (EEFC) Account. This account will be maintained only in the form of non-interest bearing current account and no credit facilities either fund-based or non-fund based, should be permitted against the security of balances held in EEFC accounts, by the authorised dealers. The limits of eligible credits to the EEFC accounts are 100% for Status Holder Exporter (as defined in Exim Policy in force), a resident in India for professional services rendered in his personal capacity and 100% Export Oriented Unit/s, Unit/s in Export Processing Zones (EPZs), Software Technology Park (STP) and Electronic Hardware Technology Park (EHTPs) and 50% for other persons resident in India in respect of 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.

Payments received in foreign exchange by a unit in Domestic Tariff Area (DTA) for supply of goods to a unit in Special Economic Zones out of its foreign currency a/c. are to be treated as eligible foreign exchange earnings for the purpose of credit to the EEFC A/c. Authorised Dealers may credit such payments received in foreign exchange by a unit in DTA to its EEFC A/c.

Authorised Dealers may till further notice, permit their exporter constituents to extend trade related loans / advances to overseas importers out of their EEFC balances without any ceiling subject to compliance of provisions of Notification No.FEMA 3/2000-RB dated 3rd May 2000 as amended from time to time.

Authorised Dealers may permit exporters to repay packing credit advances whether availed in Rupee or in foreign currency from balances in their EEFC A/c. and / or rupee resources to the extent exports have actually taken place.

(iv) Supply of goods from units in Special Economic Zones (SEZs) to units in Domestic Tariff Area (DTA)

Authorised Dealers may permit units in DTAs to purchase foreign exchange for making payment for goods supplied to them by units in SEZs.

A.7 Counter-trade Arrangement

(i) Counter trade proposals involving adjustment of value of goods imported into India against value of goods exported from India in terms of an arrangement voluntarily entered into between the Indian party and the overseas party through an Escrow Account opened in India in U.S. dollar will be considered by the Reserve Bank. All imports and exports under the arrangement should be at international prices in conformity with the Exim Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder. No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year (i.e., in a block of 12 months) and the banks may pay interest at the applicable rate. No fund based/or non-fund based facilities would be permitted against the balances in the Escrow Account.

(ii) Application for permission for opening an Escrow Account may be made by the overseas exporter/organisation through the authorised dealer with whom the account is proposed to be opened, to the office of Reserve Bank under whose jurisdiction the authorised dealer is functioning.

A.8 Export of goods on lease, hire, etc.

Export of machinery, equipment, etc., on lease, hire, etc., basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import require prior approval of the Reserve Bank. Exporters should apply for necessary permission, through an authorised dealer, to the concerned Regional Office of the Reserve Bank, giving full particulars of the goods to be exported.

A.9 Participation in Trade Fairs abroad

(i) Participants in international exhibition/trade fair have been granted general permission vide Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB, dated 3rd May, 2000 for opening temporary foreign currency 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 within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the concerned authorised dealer.

(ii) Firms/Companies and other organisations participating in Trade Fair/Exhibition abroad are now permitted to take/export goods for exhibition and sale outside India without the prior approval of the Reserve Bank of India. Unsold exhibit items may be sold outside the exhibition/trade fair in the same country or in another third country. Such sales at discounted value are also permissible. It would also be permissible to `gift' unsold goods upto the value of US $ 5000 per exporter, per exhibition/trade fair. Authorised Dealers may approve GR Form of export items for display or display-cum-sale in trade fairs/exhibitions outside India subject to the following;

i. The exporter shall produce relative Bill of Entry within one month of re-import into India of the unsold items.

ii. The sale proceeds of the items sold are repatriated to India in accordance with Foreign Exchange Management (Realisation, Repatriation, and Surrender of Foreign Exchange) Regulations, 2000.

iii. The exporter shall report to the Authorised Dealer the method of disposal of all items exported, as well as the repatriation of proceeds to India.

Such transactions approved by the Authorised Dealers will be subject to 100% audit by the internal inspectors/auditors of the Authorised Dealer concerned.

A. 10 Project Exports and Service Exports

Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as ‘Project Exports’. Indian exporters offering deferred payment terms to overseas buyers and those participating in global tenders for undertaking turnkey/civil construction contracts abroad are required to obtain approval of Authorised Dealer/Exim Bank/Working Group 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 on Project Exports (PEM).

A. 11 Export on Elongated Credit Terms

Exporters intending to export goods on elongated credit terms may submit their proposals giving full particulars through their banks to the concerned Regional Office of Reserve Bank for consideration.

In the case of export of books on consignment basis, ADs may approve such proposals allowing for realisation of export proceeds upto 360 days from the date of shipment. The exporters may be allowed to abandon the books which remain unsold at the expiry of the period of the sale contract. Accordingly, the value of the unsold books may be shown by the exporters as deduction from the export proceeds in the Account Sales.

A. 12 Export of goods by Special Economic Zone - Job work abroad

Units in SEZs are permitted to undertake job work abroad and export goods from that country itself subject to the conditions that -

i. Processing / manufacturing charges are suitably loaded in the export price and are borne by the ultimate buyer.

ii. The exporter has made satisfactory arrangements for realisation of full export proceeds subject to the usual GR procedure.

A. 13 Forfaiting

Export-Import Bank of India (Exim Bank) and authorised dealers have been permitted to undertake forfaiting, for financing of export receivables. It would be in order for authorised dealers to allow remittance of commitment fee/service charges, etc., payable by the exporter as approved by the Exim Bank/the concerned authorised dealer. Such remittance may be permitted in advance in one lump sum or at monthly intervals as approved by the concerned agency.

Section B-GR / PP / SOFTEX PROCEDURE

B 1 Disposal of Copies of Export Declaration Forms

(i) Copies of export declaration forms should be disposed of as under :

(a) GR forms should be completed by the exporter in duplicate and both the copies submitted to the Customs at the port of shipment along with the shipping bill. Customs will give their running serial number on both the copies after admitting the corresponding shipping bill. The Customs serial number will have ten numerals denoting the code number of the port of shipment, the calendar year and a six digit running serial number. Customs will certify the value declared by the exporter on both the copies of the GR form at the space earmarked and will also record the assessed value. They will then return the duplicate copy of the form to the exporter and retain the original for transmission to Reserve Bank. Exporters should submit the duplicate copy of the GR form again to Customs along with the cargo to be shipped. After examination of the goods and certifying the quantity passed for shipment on the duplicate copy, Customs will return it to the exporter for submission to the authorised dealer for negotiation or collection of export bills.

(b) Within twenty-one days from the date of export, exporter should lodge the duplicate copy together with relative shipping documents and an extra copy of the invoice with the authorised dealer named in the GR form. After the documents have been negotiated/sent for collection, the authorised dealer should report the transaction to Reserve Bank in statement ENC under cover of appropriate R-Supplementary Return. However, the duplicate copy of the form together with a copy of invoice etc. will henceforth be retained by the authorised dealer and may not be submitted to Reserve Bank.

Note: (i) In the case of exports made under deferred credit arrangement or to joint ventures abroad against equity participation or under rupee credit agreement, the number and date of Reserve Bank approval and/or number and date of the relative RBI circular should be recorded at the appropriate place on the GR form.

(ii) Where Duplicate copy of GR form is misplaced or lost, authorised dealer may accept another copy of duplicate GR form duly certified by Customs.

(c) On account of introduction of Electronic Data Interchange (EDI) System at certain Customs offices where shipping bills are processed electronically, the existing declaration in GR form is replaced by a declaration in form SDF (Statutory Declaration Form) . The SDF form should be submitted in duplicate (to be annexed to the relative shipping bill) to the concerned Commissioner of Customs. After verifying and authenticating the declaration in form SDF, the Commissioner of Customs will hand over to the exporter, one copy of the shipping bill marked ‘Exchange Control Copy’ in which form SDF has been appended for being submitted to the authorised dealer within 21 days from the date of export. The authorised dealer should accept the Exchange Control (EC) copy of the shipping bill and form SDF appended thereto, submitted by the exporter for collection/negotiation of shipping documents. The manner of disposal of EC copy of shipping Bill (and form SDF appended thereto) is same as that for GR forms.

(d) In cases where ECGC initially settles the claims of exporters in respect of exports insured with them and subsequently receives the export proceeds from the buyer/buyer’s country through the efforts made by them, the share of exporters in the amount so received is disbursed through the bank which had handled the shipping documents. In such cases, ECGC will issue a certificate to the bank which had handled the relevant shipping documents after full proceeds have been received. The certificate will indicate the number of declaration form, name of the exporter, name of the authorised dealer, date of negotiation, bill number, invoice value and the amount actually received by ECGC.

(e) The authorised dealer should ensure by random check of the relevant duplicate forms by their internal / concurrent auditors to confirm that non-realisation or short realization allowed, if any, is within the powers delegated to them or has been duly approved by Reserve Bank, wherever necessary.

(f) Where a part of export proceeds are credited to EEFC account, the export declaration (duplicate) form may be certified as under :

"Proceeds amounting to....... representing......% of the export realisation credited to EEFC account maintained by the exporter with......"

(ii) The manner of disposal of PP forms is same as that for GR forms. Postal authorities will allow export of goods by post only if the original copy of the form has been countersigned by an authorised dealer. Therefore, PP forms should be first presented by the exporter to an authorised dealer for countersignature. Authorised dealer will countersign the forms in accordance with directions in paragraph B.2 and return the original copy to the exporter, who should submit the form to the post office with the parcel. The duplicate copy of the PP form will be retained by the authorised dealer to whom the exporter should submit relevant documents together with an extra copy of invoice for negotiation/collection, within the prescribed period of twenty-one days.

B. 2 Counter signature on PP Forms

PP forms will be presented by the exporter to an authorised dealer for counter signature. Authorised dealers should countersign the PP forms after ensuring that the parcel is being addressed to their branch or correspondent bank in the country of import. The concerned overseas branch or correspondent should be instructed to deliver the parcel to consignee against payment or acceptance of relative bill. Authorised dealers may, however, countersign PP forms covering parcels addressed direct to the consignees, provided :—

a. an irrevocable letter of credit for the full value of the export has been opened in favour of exporter and has been advised through authorised dealer concerned;

or

the full value of the shipment has been received in advance by the exporter through an authorised dealer;

or

b. the authorised dealer is satisfied, on the basis of the standing and track record of the exporter and the arrangements made for realisation of the export proceeds, that he could do so.

In such cases, particulars of advance payment/letter of credit/authorised dealer’s certification of standing, etc., of the exporter should be furnished on the form under proper authentication. Any alteration in the name and address of consignee on the PP form should also be authenticated by the authorised dealer under his stamp and signature.

B.3.A. Terms of payment - Invoicing - (Software)

(i) In respect of long duration contracts involving series of transmissions, the exporters should bill their overseas clients periodically, i.e., at least once a month or on reaching the ‘milestone’ as provided in the contract entered into with the overseas client and the last invoice/bill should be raised not later than 15 days from the date of completion of the contract. It would be in order for the exporters to submit a combined SOFTEX form for all the invoices raised on a particular overseas client, including advance remittances received in a month.

(ii) In respect of contracts involving only ‘one shot operation’, the invoice/bill should be raised within 15 days from the date of transmission.

(iii) The exporter should submit declaration in Form SOFTEX in triplicate in respect of export of computer software and audio / video / television software to the concerned designated official of Government of India at STPI / EPZ /FTZ /SEZ for valuation / certification not later than 30 days from the date of invoice / the date of last invoice raised in a month, as indicated above. The designated officials may also certify the SOFTEX Forms in respect of EOUs which are registered with them.

(iv) The invoices raised on overseas clients as at (i) to (iii) above will be subject to valuation of export declared on SOFTEX form by the concerned designated official of Government of India and consequent amendment made in the invoice value, if necessary.

B.3.B. Disposal of SOFTEX forms

As for disposal of SOFTEX forms the procedure indicated in Regulation 6 of Export Regulations is to be observed. However, the duplicate copy of the form together with a copy of invoice etc. will henceforth be retained by the authorised dealer and may not be submitted to Reserve Bank.

B.4 Shut out shipments and Short Shipments

(i) When part of a shipment covered by a GR form already filed with Customs is short-shipped, exporter must give notice of short-shipment to Customs in form and manner prescribed. In case of delay in obtaining certified short-shipment notice from Customs, exporter should give an undertaking to the authorised dealer to the effect that he has filed the short-shipment notice with the Customs and that he will furnish it as soon as it is obtained.

(ii) Where a shipment has been entirely shut out and there is delay in making arrangements to reship, exporter will give notice in duplicate to Customs in the manner and in form prescribed for the purpose, attaching thereto the unused duplicate copy of GR form and the shipping bill.

Customs will verify that the shipment was actually shut out, certify copy of the notice as correct and forward it to Reserve Bank together with unused duplicate copy of the GR form. In this case, the original GR form received earlier from Customs will be cancelled. If the shipment is made subsequently, a fresh set of GR form should be completed.

B. 5 Consolidation of Air Cargo

Where air cargo is shipped under consolidation, the airline company’s Master Airway Bill will be issued to the Consolidating Cargo Agent who will in turn issue his own House Airway Bills (HAWBs) to individual shippers. Authorised dealers may negotiate HAWBs only if the relative letter of credit specifically provides for negotiation of these documents in lieu of Airway Bills issued by the airline company. Authorised dealers may also accept Forwarder’s Cargo Receipts (FCR) issued by steamship companies or their agents (instead of 'IATA' approved agents), in lieu of bills of lading, for negotiation / collection of shipping documents, in respect of export transactions backed by letters of credit, only if the relative letter of credit specifically provides for negotiation of this document, in lieu of bill of lading. Further, relative sale contract with the overseas buyer should also provide that FCR may be accepted in lieu of bill of lading as a shipping document.

B.6 Exports by Barges/Country Craft/Road Transport Following procedure should be adopted by exporters for filing original copies of GR/SDF forms where exports are made to neighbouring countries by road, rail or river transport :

a. In case of exports by barges/country craft/road transport, the form should be presented by exporter or his agent at the Customs station at the border through which the vessel or vehicle has to pass before crossing over to the foreign territory. For this purpose, exporter may arrange either to give the form to the person in charge of the vessel or vehicle or forward it to his agent at the border for submission to Customs.

b. As regards exports by rail, Customs staff have been posted at certain designated railway stations for attending to Customs formalities. They will collect the GR/SDF forms in respect of goods loaded at these stations so that the goods may move straight on to the foreign country without further formalities at the border. The list of designated railway stations is obtainable from the Railways. In respect of goods loaded at stations other than the designated stations, exporters must arrange to present GR/SDF forms to the Customs Officer at the Border Land Customs Station where Customs formalities are completed.

c. In terms of an agreement on Border Trade between India and Myanmar, exchange of certain specified locally produced commodities, by people living along the India-Myanmar border on both sides under barter trade arrangement as also trade in freely convertible currency, has been permitted. Authorised dealers should follow strictly the revised guidelines issued in terms of A.P.(DIR Series) Circular No.17 dated 16.10.2000.

Section C-Authorised Dealer’s Obligation

C. 1 Delay in submission of shipping documents by exporters

In cases where exporters present documents pertaining to exports after the prescribed period of twenty-one days from date of export, authorised dealers may handle them without prior approval of Reserve Bank, provided they are satisfied with the reasons for the delay.

C. 2 Check-list for Scrutiny of Forms

Authorised dealer/exporter should verify the following :

i. Authorised dealer should ensure that the number on the duplicate copy of a GR form presented to them is the same as that of the original which is usually recorded on the Bill of Lading/Shipping Bill and the duplicate has been duly verified and authenticated by appropriate Customs authorities. In the case of SDF form, the Shipping Bill No. should be the same as that appearing on the Bill of Lading.

ii. Bill of Lading/Airway Bill issued on ‘freight prepaid’ basis may be accepted where the sale contract is on f.o.b., f.a.s. etc. basis provided the amount of freight has been included in the invoice and the bill. Conversely, in the case of c.i.f., c.& f. etc. contracts whose freight is sought to be paid at destination, it should be ensured that the deduction made is only to the extent of freight declared on GR/SDF form or the actual amount of freight indicated on the Bill of Lading/Airway Bill, whichever is less. Likewise, where the marine insurance is taken by the exporters on buyer’s account, authorised dealer should verify that the actual amount paid is received from the buyer through invoice and the bill.

iii. The documents submitted do not reveal any material inter se discrepancies in regard to description of goods exported, export value or country of destination.

Note :

A. The export realisable value may be more than what was originally declared to/accepted by Customs on the GR/SDF form in certain circumstances such as where in c.i.f. or c. & f. contracts, part or whole of any freight increase taking place after the contract was concluded is agreed to be borne by buyers or where as a result of subsequent devaluation of the currency of the contract, buyers have agreed to an increase in price.

B. In cases where the documents are being negotiated by a person other than the exporter who has signed GR/PP/SDF/SOFTEX Form in respect of the concerned consignment of export, authorised dealers may negotiate the documents after ensuring compliance with Regulation 12 of "Export Regulations".

C. In certain lines of export trade, final settlement of price may be dependent on the results of quality analysis of samples drawn at the time of shipment; but the results of such analysis will become available only after the shipment has been made. Sometimes, contracts may provide for payment of penalty for late shipment of goods in conformity with trade practice concerning the commodity. In these cases, while exporters declare to Customs the full export value based on the contract price, invoices submitted along with shipping documents for negotiation/collection may reflect a different value arrived at after taking into account the results of analysis of samples or late shipment penalty, as the case may be.

As such variations stem from the terms of contract, authorised dealers may accept them on production of documentary evidence after verifying the arithmetical accuracy of the calculations and on conforming the terms of underlying contracts.

C. 3 Trade Discount

Bills in respect of exports by sea or air which fall short of the value declared on GR/SDF forms on account of trade discount may be accepted for negotiation or collection only if the discount has been declared by exporter on relative GR/SDF form at the time of shipment and accepted by Customs.

C. 4 Advance Payments against Exports

Exporters may receive advance payments (with or without interest) from their overseas buyers. It should, however, be ensured that the shipments made against the advance payments are monitored by the authorised dealer through whom the advance payment is received. The appropriations made against every shipment must be endorsed on the original copy of the inward remittance certificate issued for advance remittance.

Note : Purchase of foreign exchange from the market for refunding advance payment credited to EEFC account may be allowed only after utilising the entire balances held in the exporter’s EEFC accounts maintained at different branches/banks.

C. 5 Part Drawings

In certain lines of export trade, it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight, quality, etc. to be ascertained after arrival and inspection, weighment or analysis of the goods. In such cases, authorised dealers may negotiate bills, provided

a. the amount of undrawn balance is considered normal in the particular line of export trade, subject to a maximum of 10 per cent of the full export value; and

b. an undertaking is obtained from exporter on the duplicate of GR/SDF/PP forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realisation.

Note : In cases where exporter has not been able to arrange for repatriation of the undrawn balance in spite of best efforts, authorised dealers on being satisfied with the bona fides of the case, should ensure that the exporter has realised at least the value for which the bill was initially drawn (excluding undrawn balances) or 90% of the value declared on GR/PP/SDF form, whichever is more and a period of one year has elapsed from the date of shipment.

C. 6 Consignment Exports

(i) When goods have been exported on consignment basis, authorised dealer, 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 realisation 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 the exports.

(ii) The agents/consignees may deduct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds to the exporter

(iii) The account sales received from the Agent/Consignee should be verified by the authorised dealer. Deductions in Account Sales should be supported by bills/receipts in original except in case of petty items like postage/cable charges, stamp duty etc.

Notes :

A. In case of goods exported on consignment basis, freight and marine insurance must be arranged in India.

B. Reserve Bank will permit, on application, exporters with satisfactory track record a longer period up to twelve months for realisation of export proceeds for exports on consignment basis made to CIS countries and East European countries financed in any permitted currency.

C. Authorised Dealers may consider the applications received from exporters and grant permission for opening / hiring warehouses abroad subject to the following conditions :

The above permissions may be granted to the exporters initially for a period of one year and the renewal thereof may be considered subject to the applicant satisfying the requirement at (a) above. Authorised Dealers granting such permission / approvals should maintain a proper record of the approvals granted.

C-7 Despatch of Shipping Documents

(i) While Authorised dealers should normally despatch shipping documents to their overseas branches/correspondents expeditiously, they may despatch shipping documents direct to the consignees or their agents resident in the country of final destination of goods in cases where advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/letter of credit provides for despatch of documents direct to the consignee or his agent resident in the country of final destination of goods.

(ii) In cases not covered by (i) above also, authorised dealers may accede to the request of the exporter, for despatch of documents for whatever reason, direct to the consignee/agent provided the exporter is a regular customer and the authorised dealer is satisfied, on the basis of standing and track record of the exporter and the arrangements made for realisation of export proceeds, that the request can be acceded to.

(iii) Documents in respect of goods or software which are accompanied with a declaration by the exporter that they are not more than rupees twenty five thousand in value and not declared on GR/SDF/PP/SOFTEX form, in terms of paragraph A.2 may be directly sent by the exporter to the consignee.

(iv) Documents in respect of goods exported against 100% advance remittance, in terms of paragraph C.4 may be directly sent by the exporter to the consignee.

(v) Authorised Dealers may permit `Status Holder Exporters' (as defined in the EXIM Policy), and units in Special Economic Zones (SEZ) to despatch the export documents to the consignees outside India subject to the terms and conditions that

a. the export proceeds are repatriated through the authorised dealer named in the GR Form

and

b. the duplicate copy of the GR form is submitted to the Authorised Dealer for monitoring purposes, by the exporters within 21 days from the date of export.

C.8 Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade Representative

Authorised dealers may deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel or trade representative, in respect of exports to certain landlocked countries if the shipment is covered by an irrevocable letter of credit and the documents conform strictly to the terms of the Letter of Credit which, inter alia, provides for such delivery.

C. 9 Export Bills Register

i. Authorised dealers should maintain Export Bills Register, in physical or electronic form. Details of GR/SDF/PP form number, due date of payment, the fortnightly period of R Supplementary Return with which ENC statement covering the transaction was sent to Reserve Bank, should be available.

ii. Authorised dealers should ensure that all types of export transactions are entered in the Export Bills Register and are given bill numbers on calendar year basis (i.e. January to December). The bill numbers should be recorded in ENC statement and other relevant returns submitted to Reserve Bank.

C.10 Follow-up of Overdue Bills

(i) Authorised dealers should closely watch realisation of bills and in cases where bills remain outstanding, beyond the due date for payment or six months from the date of export, the matter should be promptly taken up with the concerned exporter. If the exporter fails to arrange for delivery of the proceeds, within six months or seek extension of time beyond six months the matter should be reported to Reserve Bank stating, where possible, the reason for the delay in realising the proceeds. The duplicate copies of GR / SDF / PP Forms should, however, continue to be held by authorised dealer until full proceeds are realised except in case of undrawn balances covered by Note under paragraph C 5. Authorised dealers should follow up export outstandings with exporters systematically and vigorously so that action against defaulting exporters does not get delayed. Any laxity in the follow up of realisation of export proceeds by authorised dealers will be viewed seriously by Reserve Bank leading to the invocation of the penal provision under FEMA 1999.

(ii) Exporters who have been certified as `Status Holder' in terms of EXIM Policy are permitted to realise and repatriate the full value of export proceeds within a period of 12 months from the date of shipment.

(iii) The stipulation of twelve months or extended period thereof for realisation of export proceeds is no longer applicable for units located in Special Economic Zones (SEZs). The units in SEZs will however continue to follow the GR/ PP / Softex export procedure outlined in Section B - Part

III of this circular.

(iv) Authorised dealers should furnish to Reserve Bank, on half-yearly basis, a consolidated statement in Form XOS giving details of all export bills outstanding beyond six months from the date of export as at the end of June and December every year. The statement should be submitted in triplicate within fifteen days from the close of the relative half-year.

C. 11 Reduction in invoice value on account of prepayment of usance bills

Occasionally, exporters may approach authorised dealers for reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bills. In such cases authorised dealers 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. 12 Reduction in Value

If, after a bill has been negotiated or sent for collection, the amount thereof is desired to be reduced for any reason, authorised dealer may approve such reduction, if satisfied about genuineness of the request, provided :

a. the reduction does not exceed 10% of invoice value,

b. it does not relate to export of commodities subject to floor price stipulations,

c. the exporter is not on the exporters’ caution list of Reserve Bank, and

d. the exporter is advised to surrender proportionate export incentives availed of, if any.

In the case of exporters who have been in the export business for more than three years, reduction in invoice value may be allowed, without any percentage ceiling, subject to the above conditions as also subject to their track record being satisfactory, i.e., the export outstandings do not exceed 5% of the average annual export realisation during preceding three calendar years.

For the purpose of reckoning the percentage of outstanding export bills to average export realisations during the preceding three calendar years, outstandings in respect of exports made to countries facing externalisation problems may be ignored provided the payments have been made by the buyers in the local currency.

C. 13 Export Claims

Authorised dealers may remit export claims on application, provided the relative export proceeds have already been realised and repatriated to India and the exporter is not on the caution list of Reserve Bank. In all such cases of remittances, the exporter should be advised to surrender proportionate export incentive, if any, received by him.

C.14 Change of buyer/consignee

Prior approval of 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 10% and the realisation of export proceeds is not delayed beyond the period of six months from the date of export. Where the reduction in value exceeds 10%, all other relevant conditions stipulated in paragraph C.12 should also be satisfied.

C.15 Self write-off and extension of time

All exporters (including Status Holder) have been allowed, subject to certain terms and conditions, to

(a) write off (including reduction in invoice value) outstanding export dues and,

(b) extend the prescribed period of realization beyond 180 days or further period as applicable,

. for exports made after 1st July 2003 and proceeds are due on January 1, 2004 and in case of exports where Reserve bank has prescribed longer period of realization the facility would be available for exports made prior to July 2003 but proceeds of which are due for realization within the prescribed period of one year,

· provided aggregate value of such export bills written off (including reduction in invoice value) and bills extended for realization does not exceed 10 per cent of the export proceeds due during the calendar year and such export bills are not a subject of investigation by Enforcement Directorate/Central bureau of Investigation or any other investigating agencies.

Exporters dealing with more than one authorized dealer can avail of this facility through each AD.

Exporters operating under a consortium of banks or with multiple banks can also compute the 10 per cent limit on aggregate basis with all the banks provided the lead bank of the consortium or nodal bank in case of multiple banking undertakes to verify the annual performance of the exporter on behalf of all the banks.

C.16 Extension of time limit in other cases

1. (i) In cases where an exporter has not been able to realise proceeds of a shipment made within the period prescribed, for reasons beyond his control, but expects to be able to realise proceeds if extension of the period is allowed to him, necessary application (in duplicate) should be made to the concerned Regional Office of Reserve Bank in form ETX through his authorised dealer with appropriate documentary evidence in respect of cases not falling under para (ii) below.

(ii) Reserve Bank of India have permitted authorised dealers to extend the period of realization of export proceeds beyond 6 months from the date of export where the invoice value does not exceed US $ 1,00,000 subject to following conditions;

a. The Authorised Dealer is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control

b. The exporter submits a declaration that he will realise the export proceeds during the extended period.

c. The extension may be granted upto a period of 3 months at a time and while considering the extension beyond one year from the date of export the total export outstandings of the exporter should not be more than 10% of the average of export realisations during the preceding 3 financial years.

2. The ceiling of US $ 1,00,000 would not apply where the exporter has filed suits against the importer abroad. In such cases extension may be granted upto six months at a time, irrespective of the amount involved.

3. Cases which are not covered by the above instructions and cases indicated below would require prior approval from the Regional Office of the Reserve Bank.

I. Where the export invoices are under investigation by Enforcement Directorate / Central Bureau of Investigation or other investigating agencies.

II. where invoice value exceeds US $ 1,00,000 (except in cases covered under paragraph 2 above).

All the export bills outstanding beyond six months from the date of export may be reported in XOS statement as usual. However, where extension of time has been granted by authorized dealer, the date upto which extension has been granted may be indicated in the 'Remarks' column.

4. As a temporary measure for a period of one year w.e.f. September 1, 2001, exporters were allowed a period of 360 days from the date of shipment, for realisation and repatriation of full value of goods/software for exports to certain specified countries. This relaxation has been further extended upto August 31, 2004

5. Manufacturers/exporters of certain specified products and having export contracts of Rs.100 crores and above in value term in one year have been allowed w.e.f. 1st October 2001, for a period of 365 days from the date of shipment for realisation and repatriation of full value of ` the exports of the products specified. This relaxation has been further extended upto September 30, 2004.

6. There is no time limit for realisation of export proceeds for export made by units in Special Economic Zone (SEZ).

C. 17 Shipments Lost in Transit

When shipments from India for which payment has not already been received either by negotiation of bills under letters of credit or otherwise are lost in transit, authorised dealer must ensure that insurance claim is made as soon as the loss is known. The duplicate copy of GR/SDF/PP form should be forwarded to Reserve Bank with following particulars :

a. Amount for which shipment was insured.

b. Name and address of insurance company.

c. Place where claim is payable.

In cases where claim is payable abroad, authorised dealer must arrange to collect the full amount of claim due on the lost shipment, through the medium of his overseas branch/correspondent and forward the duplicate copy of GR/SDF/PP form to Reserve Bank only after the amount has been collected. A certificate for the amount of claim received should be furnished on the reverse of the duplicate copy.

Note : Sometimes claims on shipments lost in transit are also partially settled directly by shipping companies/airlines under carrier’s liability. Authorised dealers should ensure that amounts of such claims if settled abroad are also repatriated to India by exporters.

C. 18 Payment of Claims by ECGC

Authorised Dealers shall, on an application received from the exporter supported by documentary evidence from the ECGC confirming that the claim in respect of the outstanding bills has been settled by them, write off the relative export bills and delete them from the XOS statement. Such write-off will not be restricted to the limit of 10 per cent indicated in paragraph C.19 (A) below.

Surrender of incentives, if any, in such cases will be as provided in the Exim Policy.

It is clarified that the claims settled in rupees by ECGC should not be construed as export realisation in foreign exchange.

C. 19 A "Write off" of Unrealised Export Bills

(i) An exporter who has not been able to realise the outstanding export dues despite best efforts, may approach the authorised dealer, who had handled the relevant shipping documents, with appropriate supporting documentary evidence with a request for write off of the unrealised portion. Authorised dealers may accede to such requests subject to the undernoted conditions :

a. The relevant amount has remained outstanding for one year or more;

b. The aggregate amount of write off allowed by the authorised dealer during a calendar year does not exceed 10% of the total export proceeds realised by the concerned exporter through the concerned authorised dealer during the previous calendar year;

c. Satisfactory documentary evidence is furnished in support of the exporter having made all efforts to realise the dues;

d. The case falls under any of the undernoted categories :

i. The overseas buyer has been declared insolvent and a certificate from the official liquidator indicating that there is no possibility of recovery of export proceeds produced;

ii. The overseas buyer is not traceable over a reasonably long period of time;

iii. The goods exported have been auctioned or destroyed by the Port/Customs/Health authorities in the importing country;

iv. The unrealised amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organisation;

v. The unrealised amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remained outstanding and turned out to be unrealisable despite all efforts made by the exporter;

vi. The cost of resorting to legal action would be disproportionate to the unrealised 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;

vii. Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amount has remained unrealised consequent on dishonour of the bills by the overseas buyer and there are no prospects of realisation.

e. The case is not the subject matter of any pending civil or criminal suit;

f. The exporter has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agency;

g. The exporter has surrendered proportionate export incentives, if any, availed of in respect of the relative shipments. The authorised dealer should obtain documents evidencing surrender of export incentives availed of before permitting the relevant bills to be written off. Authorised dealers are to put in place a system under which their internal inspectors or auditors carry out random sample check/percentage check of outstanding export bills written off.

(ii) Where there is no further amount to be realised against the GR/SDF/PP form covered by the write off, authorised dealer should certify the duplicate form as under :

"Write off of...........……………………………….. (Amount in words and figures) permitted in terms of paragraph C.18 of Directions to Authorised Dealers."

Date …………………………..

Stamp & Signature of
Authorised Dealer

(iii) Status holders exporters (viz. Export Houses, Trading Houses, Star Trading Houses, Superstar Trading Houses) and manufacturer exporters exporting more than 50% of their production, and recognised as such by DGFT, may be permitted to " write off" outstanding export bills upto an annual limit of 5% of their average annual realisations (not turnover) during the preceding three calendar years. The limit of 5% will be cummulatively available in a year and subject to the following conditions.

1. The exporter should submit to the concerned authorised dealer a Chartered Accountant’s certificate indicating –

a. the export realisation in the preceding three calendar years and also the amount of "write off " already availed of during the year, if any.

b. the relevant GR/SDF Nos. to be written off, Bill No., invoice value, commodity exported, country of export,

c. the export benefits, if any, availed of by the exporter have been surrendered.

2. It is clarified that the following do not qualify for the "write off" facility :-

a. Exports made to countries with externalisation problem i.e. where the overseas buyer has deposited the value of export in local currency but the amount has not been allowed to be repatriated by the central banking authorities of the country.

b. GR/SDF forms 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.

3.After the "write off" has been permitted authorised dealer may certify the duplicate form as under :-

"write off of ……………………(Amount in words and figures) permitted in terms of AP(DIR Series) Circular No.30 dated April 4, 2001."

Date

Stamp & Signature of
Authorised Dealer"

4. Authorised dealers may note to take into account the amount written off under this facility while arriving at the eligible amount under paragraph C.18 of AP (DIR Series) Circular No.12 of September 9, 2000.

5. Authorised dealers may forward a statement in form EBW to the Regional Office of Reserve Bank under whose jurisdiction they are functioning, indicating details of write offs etc.

C. 19B 'Netting off' of export receivables against import payments - Units in Special Economic Zones (SEZs)

Authorised dealers may allow requests received from exporters for 'netting off' of export receivables against import payments for units located in Special Economic Zones subject to the following :

i. The 'netting off' of export receivables against import payments is in respect of the same Indian entity and the overseas buyer / supplier (bilateral netting). The netting may be done as on date of balance sheet of the unit in SEZ.

ii. The details of export of goods is documented in GR(O) forms / DTR as the case may be while details of import of goods / services is recorded through A1 / A2 form as the case may be. The relative GR / SDF forms will be treated as complete by the designated authorized dealer only after the entire proceeds are adjusted / received.

iii. Both the transactions of sale and purchase in 'R' Returns under FET-ERS 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 authorised dealer who should comply with all the regulatory requirements relating to the transactions.

C.20 Return of Documents to Exporters

The duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to authorised dealers for negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectification of errors and resubmission.

C.21 Exporters’ Caution List

Authorised dealers will also be advised whenever exporters are cautioned in terms of provisions contained in Regulation 17 of "Export Regulations" ADs may approve GR/SDF/PP forms of exporters who have been placed on caution list if the exporter concerned produce evidence of having received an advance payment or a irrevocable letter of credit in his favour covering the full value of the proposed exports. Such approval may be given even cases where usance bills are to be drawn for the shipment provided the relative letter of credit covers the full export value and also permits such drawings and the usance bill mature within six months from the date of shipment.

Section D-REMITTANCES CONNECTED WITH EXPORT

D.1 Agency Commission on Exports

(i) Authorised dealers may allow payment of commission, either by remittance or by deduction from invoice value, on application submitted by the exporter. The remittance on agency commission may be allowed subject to the following conditions:

a. Amount of commission has been declared on GR/SDF/PP/SOFTEX form and accepted by Customs authorities or Ministry of Information Technology, Government of India / EPZ authorities as the case may be. In cases where the commission has not been declared on GR/SDF/PP/SOFTEX form, remittance thereof may be allowed after satisfying about the reasons adduced by the exporter for not declaring commission on Export Declaration Form, provided a valid agreement/written understanding between the exporter and/or beneficiary for payment of commission subsists.

b. The relative shipment has already been made.

(ii) Authorised dealers may allow payment of commission by Indian exporters, in respect of their exports covered under counter trade arrangement through Escrow Accounts designated in U.S.dollar, subject to the following conditions :

a. The payment of commission satisfies the conditions as at (a) and (b) stipulated in paragraph above.

b. The commission is not payable to Escrow Account holders themselves.

c. The commission should not be allowed by deduction from the invoice value.

NOTE : 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 for tea & tobacco.

D.2 Refund of Export Proceeds

Refund of export proceeds may be allowed by authorised dealers through whom the proceeds were originally received, provided such goods are re-imported into India on account of poor quality etc. and evidence of re-import has been submitted. In all such cases, exporters should be advised to surrender the proportionate incentives availed of, if any, against the relevant export.

Annex-2

Foreign Exchange Management (Current Account Transactions) Rules
GSR 381 (E), May 3, 2000

(as amended by Notification S.O.301(E) dated March 30,2001, GSR 831(E) dated December 17,2002,GSR.397(E) dated May 1,2003 and GSR.731 (E) dated September 5,2003)

G.S.R.381(E)---In exercise of the powers conferred by Section 5 and sub-section (1) and clause (a) of sub-section (2) of Section 46 of the Foreign Exchange Management Act, 1999, and in consultation with the Reserve Bank, the Central Government having considered it necessary in the public interest, makes the following rules, namely :--

1. Short title and commencement.---(1) These rules may be called the Foreign Exchange Management (Current Account Transactions) Rules, 2000;

(2) They shall come into effect on the 1st day of June 2000.

2. Definitions.---In these rules, unless the context otherwise requires :

(a) “Act” means the Foreign Exchange Management Act, 1999 (42 of 1999);

(b) “Drawal” means drawal of foreign exchange from an authorised person and includes opening of Letter of Credit or use of International Credit Card or International Debit Card or ATM Card or any other thing by whatever name called which has the effect of creating foreign exchange liability;

(c) “Schedule” means a schedule appended to these rules;

(d) The words and expressions not defined in these rules but defined in the Act shall have the same meanings respectively assigned to them in the Act.

3. Prohibition on drawal of Foreign Exchange.---Drawal of foreign exchange by any person for the following purpose is prohibited, namely:

a. a transaction specified in the Schedule I; or

b. a travel to Nepal and/or Bhutan; or

c. a transaction with a person resident in Nepal or Bhutan.

Provided that the prohibition in clause (c) may be exempted by RBI subject to such terms and conditions as it may consider necessary to stipulate by special or general order.

4. Prior approval of Govt. of India.---No person shall draw foreign exchange for a transaction included in the Schedule II without prior approval of the Government of India, Provided that this Rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) and Resident Foreign Currency (Domestic) Account of the remitter.

5. Prior approval of Reserve Bank.

No person shall draw foreign exchange for a transaction included in the Schedule III without prior approval of the Reserve Bank;

Provided that this Rule shall not apply where the payment is made out of funds held in Resident Foreign Currency (RFC) and Resident Foreign Currency (Domestic) Account of the remitter.

6 (1) Nothing contained in Rule 4 or Rule 5 shall apply to drawal made out of funds held in Exchange Earners’ Foreign Currency (EEFC) account of the remitter.

(2) Notwithstanding anything contained in sub-rule (1), restrictions imposed under rule 4 or rule 5 shall continue to apply where the drawal of foreign exchange from the Exchange Earners Foreign Currency (EEFC) Account is for the purpose specified in items 10 and 11 of Schedule II, or item 3, 4, 11, 16 & 17 of Schedule III as the case may be.

7. Use of International Credit Card while outside India-

Nothing contained in Rule 5 shall apply to the use of International Credit Card for making payment by a person towards meeting expenses while such person is on a visit outside India.

However, the restrictions on the use of the card for prohibited items will continue.

Schedule I
(See Rule 3)

1. Remittance out of lottery winnings.
2. Remittance of income from racing/riding etc. or any other hobby
3. Remittance for purchase of lottery tickets, banned/proscribed magazines, football pools, sweepstakes, etc.
4. Payment of commission on exports made towards equity investment in Joint Ventures/ Wholly Owned Subsidiaries abroad of Indian companies.

5. Remittance of dividend by any company to which the requirement of dividend balancing is applicable.
6. Payment of commission on exports under Rupee State Credit Route, except commission upto 10% of invoice value of exports of tea and tobacco.

7. Payment related to "Call Back Services" of telephones.
8. Remittance of interest income on funds held in Non-Resident Special Rupee (Account) Scheme.

Schedule II
(See Rule 4)

Purpose of Remittance	Ministry/Department of Govt. of India whose approval is required
1. Cultural Tours	Ministry of Human Resources Development, (Department of Education and Culture)
2. Advertisement in foreign print media for the purposes other than promotion of tourism, foreign investments and international bidding (exceeding USD 10,000) by a State Government and its Public Sector Undertakings	Ministry of Finance, (Department of Economic Affairs)
3. Remittance of freight of vessel chartered by a PSU	Ministry of Surface Transport, (Chartering Wing)
4. Payment of import by a Govt. Department or a PSU on c.i.f. basis (i.e. other than f.o.b. and f.a.s. basis)	Ministry of Surface Transport, (Chartering Wing)
5. Multi-modal transport operators making remittance to their agents abroad	Registration Certificate from the Director General of Shipping
6. Hiring of transponders by TV Channels and Internet Service providers #	Ministry of Information and Broadcasting
7. Remittance of container detention charges exceeding the rate prescribed by Director General of Shipping	Ministry of Surface Transport (Director General of Shipping)
8. Remittances under technical collaboration agreements where payment of royalty exceeds 5% on local sales and 8% on exports and lump-sum payment exceeds USD 2 million	Ministry of Industry and Commerce
9. Remittance of prize money/sponsorship of sports activity abroad by a person other than International / National / State Level sports bodies, if the amount involved exceeds USD 100,000.	Ministry of Human Resources Development (Department of Youth Affairs and Sports)
10. Deleted #
11. Remittance for membership of P& I Club	Ministry of Finance, (Insurance Division)

# Please refer to A.P.(DIR Series) Circular No.76 dated Feb.24,2004.The related Notification will be issued separately.

Schedule III
(See Rule 5)

1. Deleted ##

2. Release of exchange exceeding USD 10,000 or its equivalent in one calendar year, for one or more private visits to any country (except Nepal and Bhutan).

3. Gift remittance exceeding USD 5,000 per remitter/donor per annum.

4. Donation exceeding USD 5000 per remitter/donor per annum.

5. Exchange facilities exceeding USD 100,000 for persons going abroad for employment.

6. Exchange facilities for emigration exceeding USD 100,000 or amount prescribed by country of emigration.

7. Remittance for maintenance of close relatives abroad,

i. exceeding net salary (after deduction of taxes, contribution to provident fund and other deductions) of a person who is resident but not permanently resident in India and –

(a) is a citizen of a foreign State other than Pakistan; or

(b) is a citizen of India, who is on deputation to the office or branch or subsidiary or joint venture in India of such foreign company.

ii. exceeding USD 100,000 per year, per recipient, in all other cases.

Explanation: For the purpose of this item, a person resident in India on account of his employment or deputation of a specified duration (irrespective of length thereof) or for a specific job or assignment; the duration of which does not exceed three years, is a resident but not permanently resident.

8. Release of foreign exchange, exceeding USD 25,000 to a person, irrespective of period of stay, for business travel, or attending a conference or specialised training or for maintenance expenses of a patient going abroad for medical treatment or check-up abroad, or for accompanying as attendant to a patient going abroad for medical treatment/check-up.

9. Release of exchange for meeting expenses for medical treatment abroad exceeding the estimate from the doctor in India or hospital/doctor abroad.

10. Release of exchange for studies abroad exceeding the estimate from the institution abroad or USD 100,000, per academic year, whichever is higher.

11. Commission to agents abroad for sale of residential flats/ commercial plots in India, exceeding USD 25,000 or 5% of the inward remittance per transaction, whichever is higher. ##

12. Deleted ##

13. Deleted ##

14. Deleted ##

15. Remittance exceeding USD 1,000,000 per project, for any consultancy service procured from outside India.

16. Remittances for purchase of trade mark/franchise in India. ##

17. Remittance exceeding USD 100,000 by an entity in India by way of reimbursement of pre-incorporation expenses.

18. Deleted ##

## Please refer to A.P.(DIR Series) Circular No.76 dated Feb.24,2004. The related Notification will be issued separately.

Annex - 3

Notification No.FEMA 23 /2000-RB dated 3rd May 2000

Schedule
( Refer to Regulation 3)

Form GR:	To be completed in duplicate for export otherwise than by Post including export of software in physical form i.e. magnetic tapes/discs and paper media.
Form SDF:	To be completed in duplicate and appended to the shipping bill, for exports declared to Customs Offices notified by the Central Government which have introduced Electronic Data Interchange (EDI) system for processing shipping bills notified by the Central Government.
Form PP:	To be completed in duplicate for export by Post.
Form SOFTEX:	To be completed in triplicate for declaration of export of software otherwise than in physical form, i.e. magnetic tapes/discs, and paper media.

EXCHANGE CONTROL DECLARATION (GR) FORM NO.

Original

Exporter	Invoice No.& Date	SB No.& Date
	AR4/AR4A No.& Date
	Q/Cert No.& Date	Importer-Exporter Code No.
Consignee
	Export Trade Control	If export under:
		Deferred Credit [ ]
		Joint Ventures [ ]
		Rupee Credit [ ]
		Others [ ]
		RBI's Approval/Cir.No. & Date
Custom House Agent L/C.No.

Pre-Carriage by	Place of Receipt		Type of shipment :
	by Pre-Carrier		Outright Sale [ ]
			Consignment Export [ ]
Vessel/Flight No.	Rotatio No.		Others [ ]
			(Specify)
	Port of Loading	Nature of Contract:CIF[ ]/C&F [ ]/FOB [ ]
		Other (Specify) [ ]
Port of Discharge	Country of Destination	Exchange Rate U/S 14 of CA Currency of invoice

S.No	Marks & No. No. & Kind of Pkgs.	Statistical Code & Description of Goods	Quantity	Value FOB
	Container Nos.
	Net Weight
	Gross Weight
	Total FOB Value in words

Analysis of Export Value	Currency Amount		Full export value OR where not ascertainable, the value which exporter expects to receive on the sale of goods.
FOB Value
Freight
Insurance			Currency

Commission		Rate
Discount			Amount
Other Deductions

EXCHANGE CONTROL DECLARATION (GR) FORM NO.

	Is Export under L/C arrangements? Yes [ ] No [ ]	FOR CUSTOMS
	If yes, name of advising bank in India	Customs Assessable value Rs.
		(Rupees _________________________ ________________________________
	Bank through which payment is to be received
		Export Value Verified Customs Appraiser

Whether Payment is to be received through the	Date of Shipment	Customs Appraiser
ACU YES/NO
Declaration under Foreign Exchange Management Act, 1999: I/We hereby declare that I/We am/are the SELLER/CONSIGNOR of the goods in respect of which this declaration is made and that the particulars given above are true and that a)the value as contracted with the buyer is the same as the full export value declared overleaf/ b) *the full export value of the goods is not ascertainable at the time of export and that the value declared is that which I/We, having regard to the prevailing marketconditions, expect to receive on the sale of goods in the overseas market.
I/We undertake that I/We will deliver to the bank named herein the foreign exchange representing the full export value of the goods on or before @ .................................. in the manner soecified in the Regulations under the Act. I/We further declare that I/We am/are resident in India and I/We have a place of business in India.
I/We* am/are OR am/are not in Caution List of the Reserve Bank of India.
......................................
Date................ (Signature of Exporter)
@ State appropriate date of delivery which must be within six months from the date of shipment, but for exports to warehouses established outside India with the permission of the Reserve Bank, the date of delivery must be within fifteen months.
* Strike out whichever is not applicable
SPACE FOR USE BY RESERVE BANK OF INDIA

EXCHANGE CONTROL DECLARATION (GR) FORM NO.

Duplicate

Exporter	Invoice No.& Date	SB No.& Date
	AR4/AR4A No.& Date
	Q/Cert No.& Date	Importer-Exporter Code No.
Consignee
	Export Trade Control	If export under:
		Deferred Credit [ ]
		Joint Ventures [ ]
		Rupee Credit [ ]
		Others [ ]
		RBI's Approval/Cir.No. & Date

Custom House Agent L/C.No.
Pre-Carriage by	Place of Receipt		Type of shipment :
	by Pre-Carrier		Outright Sale [ ]
			Consignment Export [ ]
Vessel/Flight No.	Rotation No.		Others [ ]
			(Specify)
	Port of Loading	Nature of Contract:CIF[ ]/C&F [ ]/FOB [ ]
		Other (Specify) [ ]
Port of Discharge	Country of Destination	Exchange Rate U/S 14 of CA Currency of invoice

S.No	Marks & No. No. & Kind of Pkgs.	Statistical Code & Description of Goods	Quantity	Value FOB
	Container Nos.

	Net Weight
	Gross Weight
	Total FOB Value in words

Analysis of Export Value	Currency Amount		Full export value OR where not ascertainable, the value which exporter expects to receive on the
FOB Value			sale of goods.
Freight
Insurance			Currency
Commission		Rate
Discount			Amount
Other Deductions

EXCHANGE CONTROL DECLARATION (GR) FORM NO.

Is Export under L/C arrangements? Yes [ ] No [ ]	FOR CUSTOMS
If yes, name of advising bank in India	Customs Assessable value Rs. (Rupees ____________________________ _____________________________
Bank through which payment is to be received
	Export Value Verified Customs Appraiser
	Cargo shipped in full/part
	Quantity
	Value
Whether Payment is to be received through the	Date of Shipment	Customs Appraiser
ACU YES/NO
Declaration under Foreign Exchange Management Act, 1999: I/We hereby declare that I/We am/are the SELLER/CONSIGNOR of the goods in respect of which this declaration is made and that the particulars given above are true and that a)the value as contracted with the buyer is the same as the full export value declared overleaf/ b) *the full export value of the goods is not ascertainable at the time of export and that the value declared is that which I/We, having regard to the prevailing marketconditions, expect to receive on the sale of goods in the overseas market.
I/We undertake that I/We will deliver to the bank named herein the foreign exchange representing the full export value of the goods on or before @ ................................... in the manner specified in the Regulation made under the Act.
I/We further declare that I/We am/are resident in India and I/We have a place of business in India.
I/We* am/are OR am/are not in Caution List of the Reserve Bank of India. ......................................
Date................ (Signature of Exporter)
@ State appropriate date of delivery which must be within six months from the date of shipment, but for exports to warehouses established outside India with the permission of the Reserve Bank, the date of delivery must be within fifteen months.
* Strike out whichever is not applicable
FOR AUTHORISED DEALER'S USE
Uniform Code Number.........................
Indicate ( ) in the box applicable Date of (I) negotiation (ii) receipt for collection. Bill No..........................
Type of Bill* (i)DA[ ]/(ii)DP [ ]/(iii)Others [ ]....................(Specify)
Type of shipment:*(i) Firm Sale Contract [ ]/(ii)Consignment Basis [ ]/(iii)Others [ ] .......................(Specify)
The GR Form was included in the Statement sent to the Reserve Bank with the R Return for the fortnight ending...........................sent on.......................
We certify and confirm that we have received the total amount of..............…………… (Currency) (amount)
as under being the proceeds of exports declared on this form.

Date of receipt	Currency	Credit to Nostro Account in--------- ----------Country		Debit to NR Rupee Account of a Bank in ------ -------Country		Period of R Return with which the realisation has been reported to RBI
		In our name	In the name of *- ----------------------	Held with us	Held with * -- ----------------- --
(1)	(2)	(3)	(4)	(5)	(6)	(7)



* (Write the name of the concerned Indian Authorised Dealer Branch. ) Any other manner of receipt (Specify) .........................................................................................................
				--------------------------------------- (Stamp & Signature of authorised dealer) Date:........................................ Address:................................................ ................................................ ................................................

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