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Master Circular on Import of Goods and Services(Updated as on September 24 2015)

FEMA - 13/2015-16 - Dated:- 1-7-2015 - RBI/2015-16/82 Master Circular No. 13/2015-16 July 01, 2015 To, All Category - I Authorised Dealer Banks Madam / Sir, Master Circular on Import of Goods and Services Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transaction) Rules, 2000 as amended from time to .....

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ised Persons and the Authorised Dealer Category - I banks may refer to respective circulars/ notifications for detailed information, if so needed. Yours faithfully, (A. K. Pandey) Chief General Manager INDEX Section I - Introduction Section II - General Guidelines for imports B.1. General Guidelines B.2. Remittances for Import Payments B.3. Import Licenses B.4. Obligation of Purchaser of Foreign Exchange B.5. Time Limit for Settlement of Import Payments B.6. Import of Foreign exchange / Indian R .....

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nd Preservation C.10. Follow up for Import Evidence C.11. Issue of Bank Guarantee C.12. Import of Gold C.13. Import of Other Precious Metals C.14. Import Factoring C.15. Merchanting Trade C.16. Import Payments through Online Payment Gateway Service Providers Annex-1 Annex-2 Annex -3 Appendix Consolidated List of Circulars in the Master Circular Section I - Introduction (i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, .....

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follow normal banking procedures and adhere to the provisions of Uniform Customs and Practices for Documentary Credits (UCPDC), etc. while opening letters of credit for import into India on behalf of their constituents. (iii) Compliance with the provisions of Research & Development Cess Act, 1986 may be ensured for import of drawings and designs. (iv) AD Category - I banks may also advise importers to ensure compliance with the provisions of Income Tax Act, wherever applicable. (v) Any refe .....

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d regulations to be followed by the AD Category - I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not exist, AD Category - I banks may be governed by normal trade practices. AD Category - I banks may particularly note to adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Regulation) in all their dealings. B.2. .....

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for import. While opening letters of credit, the For Exchange Control purposes copy of the licence should be called for and adherence to special conditions, if any, attached to such licences should be ensured. After effecting remittances under the licence, AD Category - I banks may preserve the copies of utilised licence /s till they are verified by the internal auditors or inspectors. B.4. Obligation of Purchaser of Foreign Exchange (i) In terms of Section 10(6) of the Foreign Exchange Manageme .....

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mporter furnishes evidence of import viz., Exchange Control Copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to the value of remittance have been imported. (iii) In addition to the permitted methods of payment for imports laid down in Notification No.FEMA14/2000-RB dated 3rd May 2000, payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank in Ind .....

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f import dues delayed due to disputes, financial difficulties, etc. However, interest if any, on such delayed payments, usance bills or overdue interest is payable only for a period of up to three years from the date of shipment and may be permitted in terms of the directions in para C.2 of Section III below. B.5.2. Time Limit for Deferred Payment Arrangements Deferred payment arrangements(including suppliers and buyers credit) upto five years, are treated as trade credits for which the procedur .....

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special permission of the Reserve Bank, import or bring into India, any foreign currency. Import of foreign currency, including cheques, is governed by clause (g) of sub-section (3) of Section 6 of the Foreign Exchange Management Act, 1999, and the Foreign Exchange Management (Export and Import of Currency) Regulations 2000, issued by Reserve Bank vide Notification No.FEMA 6/2000-RB dated May 3, 2000, as amended from time to time. (ii) Reserve Bank may allow a person to bring into India currency .....

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claration to the Custom Authorities at the Airport in the Currency Declaration Form (CDF) annexed to these Regulations; provided further that it shall not be necessary to make such declaration where the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques brought in by such person at any one time does not exceed USD 10,000 (US Dollars ten thousand) or its equivalent and/or the aggregate value of foreign currency notes (cash portion) alone brough .....

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y). (ii) A person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India for any amount in denominations up to ₹ 100/-. B.7. Third Party Payment for Import Transactions AD category I banks are allowed to make payments to a third party for import of goods, subject to conditions as under: Firm irrevocable purchase order / tripartite agreement should be in place. However this requirement may not be insisted upon in case where documentary evi .....

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ion that the related payment has to be made to the (named) third party; Importer should comply with the related extant instructions relating to imports including those on advance payment being made for import of goods. Section III - Operational Guidelines for Imports C.1. Advance Remittance C.1.1. Advance Remittance for Import of Goods (i) AD Category - I bank may allow advance remittance for import of goods without any ceiling subject to the following conditions: (a) If the amount of advance re .....

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t/s) is unable to obtain bank guarantee from overseas suppliers and the AD Category - I bank is satisfied about the track record and bonafides of the importer, the requirement of the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances up to USD 5,000,000 (US Dollar five million). AD Category - I banks may frame their own internal guidelines to deal with such cases as per a suitable policy framed by the bank's Board of Directors. (c) A Public Sector Comp .....

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rt of Rough Diamonds a) AD category - I banks are permitted to take decision on overseas mining companies to whom an importer (other than Public Sector Company or Department / Undertaking of Government of India / State Government) can make advance payments, without any limit / bank guarantee/ stand-by letter of Credit. Banks must ensure the following: i. The overseas mining company should have the recommendation of GJEPC. ii. The importer should be a recognised processor of rough diamonds and sh .....

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not permitted for import of conflict diamonds (Kimberly Certification). vi. KYC and due diligence exercise should be done by the AD Category - I banks as per the existing guidelines. vii. AD Category - I banks should follow-up submission of the Bill of Entry / documents evidencing import of rough diamonds into the country by the importer, in terms of the Act / Rules / Regulations / Directions issued in this regard. b) In case of an importer entity in the Public Sector or a Department / Undertaki .....

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ermitted by the Directorate General of Civil Aviation to operate as a scheduled air transport service, can make advance remittance without bank guarantee, up to USD 50 million. Accordingly, AD Category - I banks may allow advance remittance, without obtaining a bank guarantee or an unconditional, irrevocable Standby Letter of Credit, up to USD 50 million, for direct import of each aircraft, helicopter and other aviation related purchases. 2. Importers of Aircrafts/ Helicopters and other Aviation .....

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ntity and the overseas manufacturer company as well. ii. Advance payments should be made strictly as per the terms of the sale contract and directly to the account of the manufacturer (supplier) concerned. iii. AD Category - I banks may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. iv. In the case of a Public Sector Company or a Department / Undertaking of Central /State Governments, the AD Category - I bank shall ensure that the requ .....

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ast remittance made in terms of the contract will be reckoned for the purpose of submission of documentary evidence of import. vii. Prior to making the remittance, the AD Category - I bank may ensure that the requisite in principle approval of the Ministry of Civil Aviation in case of Scheduled Air Service Operators and in other cases approval of the Director General of Civil Aviation/other agencies in terms of the extant Foreign Trade Policy has been obtained by the company, for import. vii. In .....

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tions: (a) Where the amount of advance exceeds USD 500,000 or its equivalent, a guarantee from a bank of international repute situated outside India, or a guarantee from an AD Category - I bank in India, if such a guarantee is issued against the counter-guarantee of a bank of international repute situated outside India, should be obtained from the overseas beneficiary. (b) In the case of a Public Sector Company or a Department/ Undertaking of the Government of India/ State Governments, approval .....

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D Category - I bank may allow payment of interest on usance bills or overdue interest on delayed payments for a period of less than three years from the date of shipment at the rate prescribed for trade credit from time to time. (ii) In case of pre-payment of usance import bills, remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR of the currency in which the goods have been invoiced, w .....

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iginal goods which have been lost, the original endorsement to the extent of the value of the lost goods may be cancelled by the AD Category - I bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided, the insurance claim relating to the lost goods has been settled in favour of the importer. It may be ensured that the consignment being replaced is shipped within the validity period of the license. C.4. Guarantee for Replacement Import In cas .....

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of equipment to be imported and installed at their overseas sites in connection with the setting up of their International Call Centres (ICCs) subject to the following conditions: (i) The BPO company should have obtained necessary approval from the Ministry of Communications and Information Technology, Government of India and other authorities concerned for setting up of the ICC. (ii) The remittance should be allowed based on the AD Category - I banks commercial judgment, the bonafides of the t .....

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overseas suppliers Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD Category - I bank should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: (i) Where the value of import bill does not exceed USD 300,000. (ii) Import bills received by wholly-owned Indian subsidiaries of foreign companies from their principals. (iii) I .....

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mitted to allow remittance for imports by non-status holder importers up to USD 300,000 where the importer of rough diamonds, rough precious and semi-precious stones has received the import bills / documents directly from the overseas supplier and the documentary evidence for import is submitted by the importer at the time of remittance. Status holder importers as defined in the Foreign Trade Policy dealing in the import of rough diamonds, rough precious and semi precious stones can receive impo .....

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ord of the importer customer. Before extending the facility, they should also obtain a report on each individual overseas supplier from the overseas banker or reputed overseas credit rating agency. C.6.1.3. Receipt of import documents by the AD Category - I bank directly from overseas suppliers (i) At the request of importer clients, AD Category - I bank may receive bills directly from the overseas supplier as above, provided the AD Category - I bank is fully satisfied about the financial standi .....

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t. C.7. Evidence of Import C.7.1. Physical Imports (i) In case of all imports, where value of foreign exchange remitted / paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory on the part of the AD Category - I bank through which the relative remittance was made, to ensure that the importer submits :- (a) The Exchange Control Copy of the Bill of Entry for Home Consumption, or (b) The Exchange Control Copy of the Bill of Entry for warehousing, in case of 100% Export O .....

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ntary evidence due to genuine reasons such as non- arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD bank may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import. C.7.2. Evidence of Import in Lieu of Bill of Entry (i) AD Category - I bank may accept, in lieu of Exchange Control Copy of Bill of Entry for home consumption, a certificate from .....

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of India or its departments. (ii) The above facility may also be extended to autonomous bodies, including scientific bodies/academic institutions, such as Indian Institute of Science / Indian Institute of Technology, etc. whose accounts are audited by the Comptroller and Auditor General of India (CAG). AD Category - I bank may insist on a declaration from the auditor/CEO of such institutions that their accounts are audited by CAG. C.7.3. Non-physical Imports (i) Where imports are made in non-ph .....

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nge Control Copy of the Bill of Entry, Postal Appraisal Form, or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions. C.9. Verification and Preservation (i) Internal inspectors or auditors (including external auditors appointed by AD Category - I bank) should carry out verification of the documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms, o .....

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red under paragraph C.7. of Section III, within 3 months from the date of remittance involving foreign exchange exceeding USD 100,000, the AD Category - I bank should rigorously follow-up for the next 3 months, including issuing registered letters to the importer. (ii) AD Category - I banks should henceforth submit a statement on half-yearly basis as at the end of June & December of every year, in form BEF furnishing details of import transactions, exceeding USD 100,000 in respect of which i .....

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of import involving amount of USD 100,000 or less provided they are satisfied about the genuineness of the transaction and the bonafides of the remitter. A suitable policy may be framed by the bank's Board of Directors and AD Category - I bank may set their own internal guidelines to deal with such cases. C.11. Issue of Bank Guarantee AD Category - I banks are permitted to issue guarantee on behalf of their importer customers in terms of Notification No. FEMA 8/2000-RB dated May 3, 2000, as .....

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oans. Star and Premier Trading Houses (STH/PTH) can import gold on Document against Payment (DP) basis as per entitlement without any end use restrictions. The import of gold coins and medallions is permitted. However, prohibition on sale of gold coins and medallions by banks continues pending further review. Head Offices / International Banking Divisions of AD Category - I banks shall henceforth submit the following statements under XBRL system from October 2014 onwards.(a) Statement on half ye .....

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ancial YearBoth the statements shall be submitted, even if there is 'Nil' position, by the 10th of the following month / half year, to which it relates. C.12.2. Import of Gold Jewellery Including Jewellery Made of Precious Metals or/and Studded With Diamonds / Precious Stones /Semi-precious. Suppliers and Buyers credit (trade credit) including the usance period of Letters of Credit opened for import of gold in any form, including jewellery made of gold/precious metals or/and studded with .....

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from the date of shipment. However for Clean Credit i.e. credit given by a foreign supplier to its Indian customer/ buyer, without any Letter of Credit (Suppliers Credit) / Letter of Undertaking (Buyers Credit) / Fixed Deposits from any Indian financial institution for import of rough, cut and polished diamonds, precious and semi-precious stones, may be permitted for a period not exceeding 180 days from the date of shipment. (b) AD Category - I banks should ensure that due diligence is undertak .....

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mport of platinum and silver, on outright purchase basis subject to the condition that although ownership of the same shall be passed on to the importers at the time of import itself, the price shall be fixed later as and when the importer sells to the user. C.14. Import Factoring (i) AD Category - I bank may enter into arrangements with international factoring companies of repute, preferably members of Factors Chain International, without the approval of Reserve Bank. (ii) They will have to ens .....

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rade Transactions and ensure that: (a) Goods involved in the transactions are permitted for export / import under the prevailing Foreign Trade Policy (FTP) of India as on the date of shipment and all the rules, regulations and directions applicable to export (except Export Declaration Form) and import (except Bill of Entry) are complied with for the export leg and import leg, respectively, (b) Both the legs of a Merchanting Trade Transaction are routed through the same AD bank. The bank should v .....

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e date of shipment / export leg receipt or import leg payment, whichever is first. The completion date would be the date of shipment / export leg receipt or import leg payment, whichever is the last; (e) Short-term credit either by way of suppliers' credit or buyers' credit will be available for Merchanting Trade Transactions, to the extent not backed by advance remittance for the export leg, including the discounting of export leg LC by an AD bank, as in the case of import transactions .....

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fore the outward remittance to the overseas supplier, AD bank may handle such transactions by providing facility based on commercial judgement. It may, however, be ensured that any such advance payment for the import leg beyond USD 200,000/- per transaction, should be made against Bank Guarantee / LC from an international bank of repute, except in cases and to the extent where payment for export leg has been received in advance; (h) Letter of Credit to the supplier is permitted against confirmed .....

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rom the close of each half year, i.e. June and December. (k) Defaulting Merchanting Traders, whose outstandings reach 5% of their annual export earnings, would be caution-listed. (l) The KYC and AML guidelines should be observed by the AD bank while handling such transactions. Merchanting Traders have to be genuine traders of goods and not mere financial intermediaries. Confirmed orders have to be received by them from the overseas buyers. AD banks should satisfy themselves about the capabilitie .....

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es. In consultation with Government of India, it is clarified herein that goods consigned to the importers of Nepal and Bhutan from third countries under merchanting trade from India would qualify as traffic-in-transit, if the goods are otherwise compliant with the provisions of the India-Nepal Treaty of Transit and Indo-Bhutan Treaty of Transit respectively. C.16. Processing of import related payments through Online Payment Gateway Service Providers (OPGSPs) AD Category-l banks have been permit .....

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and airway bill from the OPGSP containing the name and address of the beneficiary as evidence of import and report the transaction in R-Return under the foreign currency payment head. (c) The permitted credits in the OPGSP Import Collection account will be: collection from Indian importers for online purchases from overseas exporters electronically through credit card, debit card and net banking and charge back from the overseas exporters. (d) The permitted debits in the OPGSP Import Collection .....

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hanting Trade Transactions - Clarifications - Short term credit July 19, 2003 3 AP(DIR Series) Circular No. 9 Evidence of Import - Liberalisation August 18, 2003 4 AP(DIR Series) Circular No. 15 Advance Remittance for Imports September 17, 2003 5 AP(DIR Series) Circular No. 49 Advance Remittance for Imports December 15, 2003 6 AP(DIR Series) Circular No. 66 Imports into India - Direct Receipt of Import Bills/Documents February 6, 2004 7 AP(DIR Series) Circular No. 72 Foreign Exchange Management .....

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2, 2005 11 AP(DIR Series) Circular No. 33 Liberalisation of Export and Import procedures February 28, 2007 12 AP(DIR Series) Circular No. 34 Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import March 2, 2007 13 AP(DIR Series) Circular No. 63 Import of Equipments by BPO Companies in India for International Call Centre May 25, 2007 14 AP(DIR Series) Circular No. 77 Advance Remittance for Import of aircrafts / helicopters / other aviation related purchase .....

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09 Foreign Exchange Management Act, 1999- Advance Remittance for Import of Goods - Liberalisation August 21, 2008 20 AP(DIR Series) Circular No. 12 Foreign Exchange Management Act, 1999 - Import of Platinum / Palladium / Rhodium / Silver August 28, 2008 21 AP(DIR Series) Circular No. 13 Direct Receipt of Import Bills / Documents - Liberalisation September 1, 2008 22 AP(DIR Series) Circular No. 15 Foreign Exchange Management Act, 1999 - Advance Remittances for Import of Services September 8, 200 .....

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ng of Stand - By Letter of Credit February 27, 2012 28 AP(DIR Series) Circular No. 103 Data on import of Gold - Statements - Modification April 03, 2012 29 AP(DIR Series) Circular No.83 Import of precious and semi precious stones- Clarification February 20, 2013 30 AP(DIR Series) Circular No.103 Import of Gold by Nominated Banks/Agencies May 13, 2013 31 AP(DIR Series) Circular No.107 Import of Gold by Nominated Banks/Agencies June 4, 2013 32 AP(DIR Series) Circular No. 122 Import of Gold by Nomi .....

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November 11, 2013 38 AP(DIR Series) Circular No. 75 Trade Credit for imports into India- Online submission of data on issuance of Guarantee/Letter of Undertaking (LoU)/Letter of Comfort (LoC) by ADs November 19, 2013 39 AP(DIR Series) Circular No.82 Import of Gold by Nominated Banks/Agencies/Entities December 31, 2013 40 AP(DIR Series) Circular No.95 Merchanting Trade Transactions January 17, 2014 41 AP(DIR Series) Circular No.100 Third party payments for export / import transactions February 0 .....

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