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EXPORTS G.Mohan AGM,FED R.B.I.. Exports regulations under FEMA, 1999 Notification No.FEMA 23/2000-RB dated 3.5.2000 Notification No.FEMA 14/2000 dated.

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Presentation on theme: "EXPORTS G.Mohan AGM,FED R.B.I.. Exports regulations under FEMA, 1999 Notification No.FEMA 23/2000-RB dated 3.5.2000 Notification No.FEMA 14/2000 dated."— Presentation transcript:


2 Exports regulations under FEMA, 1999 Notification No.FEMA 23/2000-RB dated 3.5.2000 Notification No.FEMA 14/2000 dated 3.5.2000 Master circular No.8 dated 1 st July 2005 Memorandum on Project & Sevices Exports (PEM)

3 Importance of Exports follow up The most dependable source of foreign exchange for any country RBI to ensure realisations in time to prevent leads & lags Necessary for preventing volatility in the forex markets – affects monetary stability

4 Categories of exports Cash Exports Deferred Payment Exports Project Exports Software Exports Services Exports

5 Agencies connected with Exports Director General of Foreign Trade -Formulation of trade policy; allotment of importer-exporter code number Customs -Valuation of goods, physical aspects of exports Reserve Bank of India & Authorised Dealers - Monitoring receipts of payments & follow up

6 Declaration of Exports Mandatory to declare the export of goods & Services outside India (except Nepal & Bhutan) by exporter to the specified authority in the prescribed forms (Regulation 3) -Full value of goods or software -Where value not ascertainable – the value expected to be realized given the market conditions Export of services – no form prescribed – however liable to repatriate the exchange so earned

7 Exemptions from Declaration Trade samples, publicity material supplied free, personal effects of travellers (accompanied/unaccompanied) Ship’s stores, transshipment cargo, Military/Naval/Air Force requirements, Aircraft Engine Spares Goods/Software of value less than US.$.25000/- - declaration from exporter Gifts for value upto Rs.5.00 lakh – declaration

8 Exemptions from Declaration- Contd Goods imported free of cost on re-export basis Goods exported upto $ 1000 to Myanmar under Barter Trade Agreement Replacement of goods free of charge as per EXIM Policy From EPZ/FTZ after permission of Development Commissioner -Imported goods found defective for replacement -Goods imported from suppliers/collaborators on loan basis -Goods imported from suppliers/collaborators free of cost - found excess after production operations

9 Payment of Export Value of Goods Notification No.FEMA 14/2000-RB-Manner of Receipt & Payment Regulations For all ACU Countries except Nepal – through ACU Dollar Account 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. For the rest of the world – by debit to the Rupee Account of a bank situated in countries other than the ACU countries or in any permitted currency For export to Myanmar – in any freely convertible currency or through ACU mechanism

10 Receipt of Payment In the form of bank draft, pay order, foreign currency notes, travellers cheques from buyer during visit to India – surrender as per time limit Debit to NRE/FCNR Accounts of the buyer In Rupees from credit card servicing bank against charge slip signed by buyer using a credit card In accordance with directions of RBI for arrangements between Governments/Exim Bank In the form of precious metals equivalent to the value of jewellery exported by Gems & Jewellery units in SEZ Rupee account of Exchange Houses - up to Rs. 2lakhs per transaction

11 Export Procedure Declaration in Form GR/SDF to be submitted in duplicate to Customs along with shipping bills SOFTEX Forms in the triplicate to STPI/FTZ/EPZ Customs Number the form – certify value of goods & assessable value/if SOFTEX, official of STPI/FTZ/EPZ will certify Return duplicate to exporter – original sent to RBI directly GR form resubmitted to Customs along with goods to be shipped Customs certify quantity & return form to exporter

12 Export Procedure Exporter submits duplicate GR to AD within 21 days of shipment with invoice, shipping documents etc. AD negotiates/sends for collection – report to RBI in form ENC with R-Return GR form endorsed for amounts credited to EEFC account ADs no longer required to submit the duplicate export declaration form & EC copy of shipping bill to RBI after realisation of export proceeds

13 SOFTEX Form Procedure Form to be submitted in triplicate to STPI/FTZ/EPZ Designated officials of Ministry of Information Technology, GOI at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones (SEZs) have been authorised to certify exports declared on SOFTEX forms Designated officials of STPIs/EPZs/SEZs also authorised to certify the Softex Form

14 SOFTEX Form Procedure Original Sent Directly to RBI by Certifying Agency Duplicate Retuned to Exporter Triplicate Retained by STPI/FTZ/EPZ Duplicate form to be submitted to AD within 21 days of certification Billing to be done for long term contracts on reaching "milestones" or once a month – for others within 15 days of completion and for certification by the authorities in the STP

15 Short/Shut shipment Short shipment- When part of the shipment declared on GR form not shipped Shut shipment – no shipment made at all In case of short shipment, certificate given by customs on the actual quantity/value of goods exported In case of no shipment(shut shipment) duplicate GR form cancelled & advised to RBI by customs

16 Despatch of documents Documents to be despatched as soon as possible to overseas branches/correspondents Documents may be sent directly to consignee where L/C or advance remittance received Can also be done for customers with good track record

17 Despatch of Documents Exporters who are “Status Holder Exporters” can despatch documents directly to consignees, subject to: the export proceeds are repatriated through the authorised dealer named in the GR form 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 shipment of export

18 PP Form Procedure Original PP form to be countersigned by AD –AD to countersign when parcel addressed to their branch or correspondent in the country of import –Can be sent directly to consignee if export against LC or advance payment has been received or the AD is satisfied based on the track record of the exporter

19 Direct Despatch of Documents Authorised Dealers may permit units in Special Economic Zones (SEZs) to despatch export documents direct to the consignees outside India subject to: the export proceeds are repatriated through the Authorised Dealer named in the GR/SDF/PP/SOFTEX Form the duplicate copy of the respective declaration form is submitted to the Authorised Dealer for monitoring purposes by the exporters within 21 days from the date of shipment

20 Reduction in Value AD allowed to reduce amount of bill upto 10% of invoice value subject to production of documentary evidence Not allowed if exporter is on RBI caution list; or commodities subject to floor price For exporters having good track record write off allowed without any ceiling Xos not>5% of average annual export realisation during preceding 3 calnder years

21 Write off of Unrealised Bills Powers delegated to ADs to write off outstanding bills provided: Bill outstanding for >360 days Aggregate write off does not exceed 10% of export realisations of previous year Unrealised amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) Overseas buyer declared insolvent/buyer not traceable

22 Write off of Unrealised Bills Goods destroyed by Customs/Health Authorities/sold in auction The case is not the subject matter of any civil or criminal suit which is pending Cost of legal action should not be disproportionate to the value of the bill Satisfactory documentary evidence Exporter not under investigation by CBI/ED Exporter surrenders proportionate export incentives

23 Write of Unrealised Bills Certify on the GR form “Write off permitted “ when no further amount is to be realised Exporters permitted to “write off” outstanding export bills upto an annual limit of 10 per cent of their export proceeds due for the export made after 1.7.2003

24 Time period for realisation of exports Irrespective of the tenor of the bill to be realised and repatriated within six months from the date of export Time period for realisation of one year also for export of certain products and exporters having contracts above Rs.100 crores in one year.

25 Time period for realisation of Exports For exports to warehouses established with RBI approval – date of realisation or 15 months whichever is earlier 10% EOU – 12 months SEZ Units – No time limit for realisation of exports Exporters with proven track record who have been certified as “Status Holder” in terms of the EXIM Policy can realise and repatriate the full value of export proceeds within a period of twelve months from the date of shipment

26 Extension of time for realisation of exports by ADs Power to grant extension of time for realisation of export proceeds delegated to AD which handled the export documents for invoice value upto US.$.100,000 subject to application by exporter to AD giving the reasons for extension AD is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control The exporter submits a declaration that he will realise the export proceeds during the extended period The extension may be granted upto a period of 3 months at a time 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 three financial years

27 Extension of time for realisation of exports by ADs The ceiling of US.$ 1,00,000 would not apply where the exporter has filed suits against the importer abroad – extension may be granted upto six months at a time, irrespective of the amount involved Cases under investigation by Enforcement Directorate/CBI or any other investigating agency and beyond the limit of $ 1,00,000 to be referred to RBI for extension To be reported in XOS statement with appropriate remarks when extension has been granted by AD

28 Extension of Time All exporters allowed to Write off(including reduction in invoice value)outstanding export dues & Extend the period of realisation beyond 180 days or further period as applicable(APDIR40/Dec5,2003)

29 Extension of Time & Write off Aggregate value of export bills written off(including reduction in invoice value)&bills extended for realisation does not exceed 10% of exports due during the calender year & Export bills are not a subject of investigation by ED/CBI

30 Extension of Time & Write Off Available for exports made after July1,2003 & proceeds due for realisation on January 1,2004 Exporter to submit a statement within a month from the close of the calendar year to AD

31 Remittances Connected With Exports Export claims ADs allowed to remit –Export proceeds should have been realised & repatriated to India –Exporter is not on caution list of RBI –Exporter to be advised to surrender proportionate export incentive, if any received by him

32 Consignment Exports Documents sent at the risk of the exporter Documents sent to correspondent to be delivered to consignee against trust receipt Repatriations within time limit for exports Agent allowed to deduct expenses incurred with the sale Account sales to be received along with remittance

33 Consignment Exports Freight & insurance to be arranged in India Realisation period 15 months for exporters having warehouses abroad with prior RBI approval Exports to East European Countries – period upto 12 months allowed by RBI to exporters with good track record

34 Caution Listing By RBI Regulation 17 of Export Regulations In respect of exporters who default in repatriating export proceeds Notice issued to ADs/Customs Ads may approve the GR/PP/SDF &Softex forms of caution listed exporters if the exporter has received Advance payment/LC in their favour.(AP DIR68/FEB11,2004)

35 Crystallisation The process of transferring the exchange risk liability back to the exporter Demand bills unpaid - on the 30th day after transit period For usance bills - on the 30th day of the notional due date

36 Transfer Of Documents AD can accept documents for negotiation/ collection covering exports from his constituent (other than the one who signed the declaration under Regulation 3), provided –the constituent also signs a declaration to abide by the Regulations; –such constituent shall be deemed to be the exporter

37 ADs Responsibilities Credit of export proceeds on time to exporters account Permissible credits to EEFC a/c Operations of escrow account as per RBI approval Prompt & correct reporting in various statements

38 ADs Responsibilities Ensure GR form submitted in 21 days Bills not realised within 180 days to be reported to RBI Extension of time - with RBI approval/Ads approval/Exporter Vigorous follow up with exporters for export realisation Furnish consolidated statement to RBI every June & December for all bills outstanding beyond 180 days (XOS )

39 Advance Payments for Exports Goods to be exported within one year of receipt of advance payment (with or without interest) Rate of interest not to exceed LIBOR + 100 basis points Documents to be routed through AD through whom advance remittance received Refunds in case of no exports taking place – after one year needs prior RBI approval Where agreement provides for shipment after one year – prior RBI approval

40 Changes under FEMA, 1999 Uniform period for realisation of export proceeds regardless of the tenor of the bill of exchange – concept of due date done away with Limit on agency commission on export removed – no limit provided it has been declared to the Customs on the declaration form Powers delegated to ADs to grant extension of time for realisation of exports upto US.$1,00,000

41 Changes under FEMA, 1999 No GR Drill for exports upto Rs.25,000 limit on gift through exports raised to Rs.5 lakh

42 Special Facilities for Units in SEZs Payment of export may also be received by the gem & jewellery units in SEZs and EOUs in 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 metal is indicated in the relevant GR/SDF/PP forms

43 What are Project Exports Export of engineering goods on deferred payment terms Execution of turnkey projects/civil construction contracts abroad Export of services


45 Working Group Members EXIM Bank ECGC Reserve Bank of India (ECD & IECD) Authorised Dealer & Exporter invited as special invitees

46 Criteria for consideration Economic, political conditions of the importers country Creditworthiness of importers Experience of the applicant Immediate & long term benefits in terms of forex earnings Period of deferred credit, interest rate, adequacy of advance Nature of security available Facilities required by applicant Economic viability of the proposal

47 Facilities Allowed Foreign Currency Accounts abroad Site Office abroad Bridge finance from India Performance guarantees Payment of agency commission Export of equipment from India on re-import

48 Clearance of Proposals Turnkey Projects Authorised Dealers Rs.50 Crores Exim Bank Rs.200 Crores Working Group – above Rs.200 Crores

49 Other Criteria Civil construction contracts – only MOC approved contractors Company to have good track record – adherence to time & cost schedules Satisfactory record of repatriation from previous projects Profitability of 10% to 15% Sourcing of materials from India At least 30% of contract value to be repatriated to India

50 Export of Services No approval if services on cash basis & no facilities required Prompt repartition of earnings Software companies to repatriate at least 30% of contract value When facilities required, approval from appropriate authority

51 Completed Projects Remit all profits/dues to India Close foreign currency accounts Wind up liaison offices Ensure performance guarantees are discharged Liquidate overdrafts abroad Obtain completion certificate


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