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TMI BlogMaster Direction – Import of Goods and Services (Updated as on August 29, 2024)X X X X Extracts X X X X X X X X Extracts X X X X ..... ished through amendment notifications. 2. Within the contours of the Regulations, Reserve Bank of India also issues directions to Authorised Persons under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act (FEMA), 1999. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/constituents with a view to implementing the regulations framed. 3. Instructions issued on import of goods and services into India have been compiled in this Master Direction. The list of underlying circulars/ notifications which form the basis of this Master Direction is furnished in the Appendix. Reporting instructions can be found in Master Direction on reporting (Master Direction No. 18 dated January 01, 2016). 4. It may be noted that, whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be amended suitably simultaneously. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 reference to the Reserve Bank should first be made to the Regional Office of the Foreign Exchange Department situated in the jurisdiction where the applicant person resides, or the firm / company functions, unless otherwise indicated. If, for any particular reason, they desire to deal with a different office of the Foreign Exchange Department, they may approach the Regional Office of its jurisdiction for necessary approval. Such references should be routed through the Compliance Head of the AD bank. Section II - General Guidelines for Imports B.1. General Guidelines Rules and regulations to be followed by the AD Category - I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not exist, AD Categor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antee of performance, etc. 6Further, for the disruptions due to outbreak of COVID-19 pandemic, with effect from May 22, 2020, the time period for completion of remittances against normal imports (except in cases where amounts are withheld towards guarantee of performance etc.) was extended from six months to twelve months from the date of shipment for such imports made on or before July 31, 2020. (ii) AD Category - I banks may permit settlement of 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 Any deferred payment arrangements (including suppliers' and buyers' credit) entered into, for up to three years in case of import of capital goods and up to one year or the operating cycle whichever is less, in case of import of non-capital goods, shall be treated as trade credits for which the procedural guidelines as laid down in the Master Direction on External Commercial Bor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reserve Bank may allow a person to bring into India currency notes of Government of India and / or of Reserve Bank subject to such terms and conditions as the Reserve Bank may stipulate. B.6.1. Import of Foreign Exchange into India A person may- (i) Send into India, without limit, foreign exchange in any form other than currency notes, bank notes and travellers cheques; (ii) Bring into India from any place outside India, without limit, foreign exchange (other than unissued notes), subject to the condition that such person makes, on arrival in India, a declaration 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 brought in by such person at any one time does not exceed USD 5,000 (US Dollars five thousand) or its equivalent. B.6.2. Import of India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m time to time and subject to such terms and conditions as may be specified by Reserve Bank of India from time to time. B.8.3 An authorised dealer may, in the ordinary course of his business, give a guarantee in favour of a non-resident service provider, on behalf of a resident customer who is a service importer, subject to such terms and conditions as stipulated by Reserve Bank of India from time to time: Provided that no guarantee for an amount exceeding USD 500,000 or its equivalent shall be issued on behalf of a service importer other than a Public Sector Company or a Department / Undertaking of the Government of India / State Government: Provided further that where the service importer is a Public Sector Company or a Department / Undertaking of the Government of India / State Government, no guarantee for an amount exceeding USD 100,000 or its equivalent shall be issued without the prior approval of the Ministry of Finance, Government of India. B.8.4 An authorised dealer may, subject to the directions issued by the Reserve Bank of India in this behalf, permit a person resident in India to issue corporate guarantee in favour of an overseas lessor for financing import thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 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 should have a good track record. iii. AD Category - I banks should, undertake the transaction based on their commercial judgment and after being satisfied about the bonafides of the transaction. iv. Advance payments should be made strictly as per the terms of the sale contract and should be made directly to the account of the company concerned, that is, to the ultimate beneficiary and not through numbered accounts or otherwise and AD banks should ensure that they have created the Outward Remittance Message (ORM) for all such outward remittances in IDPMS. v. Further, due caution may be exercised to ensure that remittance is not permitted for import of conflict diamonds (Kimberly Certification). vi. KYC and due diligence exercise should b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elated Purchases, not eligible under clause (1) above can make advance remittance without bank guarantee, in terms of Para C.1.1 above. 3. The remittances for the transactions at 1 and 2 above shall be subject to the following conditions: i. The AD Category - I banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafide of the transactions. KYC and due diligence exercise should be done by the AD Category-I banks for the Indian importer entity and the overseas manufacturer company as well. ii. Advance payments should be made strictly as per the terms of the sale contract and directly to the account of the manufacturer (supplier) concerned. iii. AD Category - I banks may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. iv. In the case of a Public Sector Company or a Department / Undertaking of Central /State Governments, the AD Category - I bank shall ensure that the requirement of bank guarantee has been specifically waived by the Ministry of Finance, Government of India for advance remittances exceeding USD 100,000. v. Physical import of goods into Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failing which, the amount should be repatriated to India. 15(d) AD Category - I banks should ensure generation of ORMs and marking off in the IDPMS etc., as per extant IDPMS guidelines. C.2. Interest on Import Bills (i) AD 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/any other widely accepted/Alternative reference rate of the currency in which the goods have been invoiced, whichever is applicable. Where interest is not separately claimed or expressly indicated, remittances may be allowed after deducting the proportionate interest for the unexpired portion of usance at LIBOR/any other widely accepted/Alternative reference rate16 of the currency of invoice. 17(iii) In case of change in value due to (i) or (ii) above, the respective AD bank should ensure proper remark/indicator is ente ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gory I bank should ensure compliance with IDPMS guidelines as applicable. C.6. Receipt of Import Bills/Documents 20Concerned AD Category banks to ensure generation of ORMs, BoE entries and BoE settlement with the respective ORMs in compliance with IDPMS guidelines as applicable. C.6.1 Receipt of import documents by the importer directly from overseas suppliers Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD Category - I bank should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: (i) Where the value of import bill does not exceed USD 300,000. (ii) Import bills received by wholly-owned Indian subsidiaries of foreign companies from their principals. (iii) Import bills received by Status Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units / Units in Special Economic Zones, Public Sector Undertakings and Limited Companies. (iv) Import bills received by all limited companies viz. public limited, deemed public limited and private limited companies. C.6.2. Receip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through which the relative remittance was made, to ensure that the importer submits:- 22 (a) The importer shall submit BoE number, port code and date for marking evidence of import under IDPMS as detailed in para C.8. (b) Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities, where import has been made by post, or Courier Bill of Entry as declared by the courier companies to the Customs Authorities in cases where goods have been imported through couriers, as evidence that the goods for which the payment was made have actually been imported into India, or (c) For goods imported and stored in Free Trade Warehousing Zone (FTWZ) or SEZ Unit warehouses or Customs bonded warehouses, etc., the Exchange Control Copy of the Ex-Bond Bill of Entry or Bill of Entry issued by Customs Authorities by any other similar nomenclature the importer shall submit applicable BoE number, port code and date for marking evidence of import under IDPMS as detailed in para C.8. (ii) In respect of imports on Delivery against acceptance basis, AD Category - I bank shall verify the evidence of import from IDPMS at the time of effecting remittance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould advise importers to keep Customs Authorities informed of the imports made by them under this clause. 25 26C.8. Detailed Operational Procedures for IDPMS The operational guidelines are summarised as below: (i) AD banks are required to create Outward Remittance Message (ORM) for all outward remittance/s for import payments on behalf of their importer customer for which the prescribed documents for evidence of import have not been submitted. (ii) Creation of ORM for all outstanding outward remittance/s for import payments need to be completed on or before October 31, 2016 Settlement of ORM with BoE (iii) Based on the AD code declared by the importer, the banks shall download the Bill of Entry (BoE) issued by EDI ports from "BOE Master" in IDPMS. For non-EDI ports, AD bank of the importer shall upload the BoE data in IDPMS as per message format "Manual BOE reporting" on daily basis on receipt of BoE from the customer/Customs office. 27In order to enhance the ease of doing business and reduce transaction costs, submission of hardcopy of evidence of import documents i.e., BoE Exchange Control copy has been discontinued with effect from December 1, 2016 as the same is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cumstances. (xiii) While allowing write off, AD Category - I banks must ensure that: a. The case is not the subject matter of any pending civil or criminal suit; b. The importer has not come to the adverse notice of the Enforcement Directorate or the Central Bureau of Investigation or any such other law enforcement agency; and c. There is a system in place under which internal inspectors or auditors of the AD category - I banks (including external auditors appointed by authorised dealers) should carry out random sample check / percentage check of write-off of import bills; (xiv) Extension and write off cases not covered by the extant guidelines may be referred to the concerned Regional Office of Reserve Bank of India for necessary approval. 30(xv) The extant instructions and guidelines for Evidence of Import in Lieu of Bill of Entry will apply mutatis mutandis. The evidence of import in lieu of BoE in permitted/approved conditions will be created and uploaded by AD Category - I bank of the importer in the form of BoE data as per message format "Manual BOE reporting" in IDPMS. Follow-up for Evidence of Import 31(xvi) AD Category - I banks shall continue to follow up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort of Gold C.11.1 Import of Gold. i. The 20:80 scheme of import of gold was withdrawn on November 28, 2014. However, the obligation to export under the 20:80 scheme would apply to the unutilised gold imported before November 28, 2014. 37ii. Nominated banks and nominated agencies, as notified by DGFT, are permitted to import gold on consignment basis. In addition to the above, qualified jewellers and Tariff Rate Quota Holders (TRQ Holders) under India-UAE CEPA, as notified by International Financial Services Centres Authority (IFSCA) will be permitted to import gold under specific ITC (HS) Codes through India International Bullion Exchange IFSC Limited (IIBX). All sale of gold domestically will, however, be against upfront payment. Nominated banks are free to grant gold metal loans. 38iii. The Status Holder Exporters shall adhere to the guidelines contained in extant Foreign Trade Policy, as amended from time to time. iv. The import of gold coins and medallions is permitted. However, prohibition on sale of gold coins and medallions by banks continues pending further review. 39Head Offices / International Banking Divisions of AD Category - I banks shall henceforth submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... * The advance remittance for import of Gold should not be leveraged in what-so-ever form for importing Gold worth more than the advance remittance made. * In case the import of Gold through IFSCA authorised exchange, for which advance remittance has been made, does not materialise, or the advance remittance made for the purpose is more than the amount required, the unutilized advance remittance shall be remitted back to the same AD bank within the specified time limit of eleven days. * For gold imported through IIBX, QJ shall submit the Bill of Entry (or any other such applicable document issued/approved by Customs Department for evidence of import), issued by Customs Authorities to the AD bank from where advance payment has been remitted. * All payments by Qualified Jewellers for imports of gold through IIBX, shall be made through exchange mechanism as approved by IFSCA in terms of IFSC Act and regulations. Any deviation from the extant guidelines for import of Gold through IIBX need to be approved in advance by IFSCA and other applicable and appropriate authority/ies. ii. IFSC Authority (IFSCA) will conduct all required due diligence on the exchange - IIBX including al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 42Further, AD banks may allow extension of time in respect of such clean credit for import of rough, cut and polished diamonds, for a period exceeding 180 days from the date of shipment to a maximum period of 180 days beyond the prescribed period/ due date beyond which they may refer the cases to the respective Regional Office of the Reserve Bank. Such extension by AD banks may be subject to the conditions such as: (i) AD banks being satisfied of the genuineness of the reason and bonafides of the transaction and also that no interest payment is involved for the additional period; (ii) reasons for such extension are due to financial difficulties and/ or quality disputes; (iii) importer is not under investigation and is not a frequent offender. AD banks may submit a half yearly report (half year shall be April- September and October-March) of such extensions allowed customer-wise, to the res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of shipment. All rules, regulations and directions applicable to exports (except Export Declaration Form) and imports (except Bill of Entry) shall be complied with for the export leg and import leg respectively. * AD bank shall satisfy itself with the bonafides of the transactions. Further, KYC and AML guidelines shall be scrupulously adhered to by the AD bank while handling such transactions. * The entire merchanting trade is to be routed through the same AD bank. The AD bank shall verify the documents like invoice, packing list, transport documents and insurance documents (if originals are not available, Non-negotiable copies duly authenticated by the bank handling documents may be taken) and satisfy itself about the genuineness of the trade. The AD bank may, if satisfied, rely on online verification of Bill of Lading/ Airway Bill on the website of International Maritime Bureau or Airline web check facilities. However, the AD bank shall ensure that the requisite details are made available /retrievable at the time of Inspection/Audit/investigation of the transactions. * The entire MTT shall be completed within an overall period of nine months and there shall not be any ou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gainst confirmed export order, keeping in view the foreign exchange outlay of four months and completion of the MTT within nine months and subject to compliance with the instructions issued by Department of Banking Regulation on "Guarantees and Co-acceptances", as amended from time to time. * AD bank shall ensure one-to-one matching in case of each MTT and report defaults in any leg by the traders to the concerned Regional Office of the Reserve Bank, on half yearly basis in the format as annexed, within 15 days from the close of each half year, i.e. June and December; * Merchant traders with outstanding of 5% or more of their annual export earnings shall be liable for caution listing. C.14.2 The merchanting traders shall be genuine traders of goods and not mere financial intermediaries. Confirmed orders must be received by them from the overseas buyers. AD banks shall satisfy themselves about the capabilities of the merchanting trader to perform the obligations under the order. The merchanting trade shall result in profit which shall be determined by subtracting import payments and related expenses from export proceeds for the specific MTT. C.14.3 Write-off of unrealized am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss basis, against the undermentioned codes: Trade Purpose Code under FETERS Description Export P0108 Goods sold under merchanting /receipt against export leg of merchanting trade Import S0108 Goods acquired under merchanting /payment against import leg of merchanting trade C.14.8. Merchanting trade to Nepal and Bhutan As Nepal and Bhutan are landlocked countries, there is a facility of transit trade whereby goods are imported from third countries by Nepal and Bhutan through India under the cover of Customs Transit Declarations in terms of the Government of India Treaty of Transit with these two countries. 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.15. Processing of import related payments through Online Payment Gateway Service Providers (OPGSPs) AD Category-l banks have been permitted to offer facility of payment for imports of goods and software of valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d List of Circulars on Import of Goods and Services Sr. No AP (DIR Series) Circular No Subject Date of Circular 1 106 Import of goods and services into India. June 19, 2003 2 4 Merchanting Trade Transactions - Clarifications - Short term credit July 19, 2003 3 9 Evidence of Import - Liberalisation August 18, 2003 4 15 Advance Remittance for Imports September 17, 2003 5 49 Advance Remittance for Imports December 15, 2003 6 66 Imports into India - Direct Receipt of Import Bills/Documents February 6, 2004 7 72 Foreign Exchange Management Act, 1999 - Import of Goods into India - Evidence of Import February 20, 2004 8 2 Import of Gold by (i) Export Oriented Units (EOUs), (ii) Units in SEZ/EPZ, and (iii) Nominated Agencies July 9, 2004 9 34 Import of Gold on Loan Basis - Tenor of Loan and Opening of Stand-By Letter of Credit February 18, 2005 10 1 Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import July 12, 2005 11 33 Liberalisation of Export and Import procedures February 28, 2007 12 34 Import of Goods of Value USD 100,000 and Less -Clarification on Follow up for Evidence of Import March 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies/Entities December 31, 2013 40 95 Merchanting Trade Transactions January 17, 2014 41 100 Third party payments for export / import transactions February 04, 2014 42 103 Import of Gold / Gold Dore by Nominated Banks /Agencies /Entities - Clarifications February 14, 2014 43 115 Merchanting Trade Transactions - Revised guidelines March 28, 2014 44 116 Advance Remittance for Import of Rough Diamonds April 01, 2014 45 122 Trade Credits for Imports into India - Review of all-in-cost ceiling April 10, 2014 46 133 Import of Gold by Nominated Banks / Agencies / Entities May 21, 2014 47 146 Export & Import of Currency- Enhanced Facilities June 19, 2014 48 2 Import of Rough, Cut and Polished Diamonds - credit relaxation July 07, 2014 49 42 Import of Gold by Nominated Banks/Agencies November 28, 2014 50 76 Form A1- Payments for Imports - Discontinuance thereof February 12, 2015 51 79 Guidelines on Import of Gold by Nominated Banks / Agencies February 18, 2015 52 96 Merchanting Trade to Nepal and Bhutan April 30, 2015 53 16 Processing and settlement of import and export related payments facilitated by Online Payment Gateway Service Provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the procedural guidelines as laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed." 8 Inserted vide AP DIR Series circular No.65 dated April 28, 2016 9 Clarification: may be considered as date of shipment 10 Inserted vide AP DIR Series circular No.05 dated October 06, 2016 11 Modified vide Notification No.6(R)/2015-RB prior to modification it read as "Notification No. FEMA 6/2000-RB dated May 3, 2000" 12 Inserted vide AP (DIR Series) Circular dated No.5 dated October 06, 2016 13 Point viii to xi. Inserted vide AP (DIR Series) Circular No.5 dated October 06, 2016 14 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016 15 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016 16 Inserted vide AP (DIR Series) Circular No. 13 dated September 28, 2021 17 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016 18 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016 25 Clarification: ORM not applicable for non physical imports 26 Modified vide AP (DIR series circular) No.5 dated October 05, 2016 prior to modification it read as "Issue of Acknowledgement : AD Category - I bank should acknowledge receipt of evidence of import e.g. Exchange Control Copy of the Bill of Entry, Postal Appraisal Form, or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions." 27 Inserted vide AP (DIR Series) Circular No.27 dated January 12, 2017 28 Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017 29 Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017 30 Inserted vide AP (DIR Series) Circular No. 27 dated January 12, 2017 31 Modified vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to modification it read as "AD Category - I banks are required to follow up for submission of prescribed documents for evidence of import in terms of extant guidelines on the subject" 32 Modified vide AP (DIR Series) Circular No. 27 date ..... 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