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Master Direction Export of Goods and Services ((Updated as on May 26 2016)

FEMA - 16/2015-16 - Dated:- 1-1-2016 - RBI/FED/2015-16/11 FED Master Direction No. 16/2015-16 January 1, 2016 (Updated as on May 26, 2016) (Updated as on May 12, 2016) To, All Authorised Dealer Category - I banks and Authorised Banks Madam / Sir, Master Direction - Export of Goods and Services Export of Goods and Services from India is governed by clause (a) of sub-section (1) and sub-section (3) of Section 7 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G. .....

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t (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 export of goods and services from 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 .....

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) Chief General Manager * Since this Master Direction has been significantly amended, it has been replaced rather than showing the changes in track mode for reader convenience. The changes are listed at the end of Master Direction in any case. INDEX PART - A General A.1 Introduction A.2 Realization and repatriation of proceeds of export of goods / software / services A.3 Manner of receipt and payment A.4 Foreign Currency Account A.5 Diamond Dollar Account (DDA) A.6 Exchange Earners Foreign Curre .....

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rts B.2 Export of goods/ software done through EDI ports B.3 Export of goods through post B.4 Mid-sea trans-shipment of catch by deep sea fishing vessels B.5 SOFTEX Forms B.6 Citing of specific identification numbers B.7 Export of services B.8 Third party export proceeds B.9 Random verification B.10 Short Shipments and Shut out Shipments B.11 Consolidation of air cargo/ sea cargo B.12 Exemption from Declaration PART -C Obligations of Authorised Dealers C.1 Grant of EDF waiver C.2 Receipt of adva .....

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exporter C.11 Part Drawings /Undrawn Balances C.12 Consignment Exports C.13 Opening / hiring of warehouses abroad C.14 Export Bills Register C.15 Follow-up of overdue bills C.16 Reduction in invoice value on account of prepayment of usance bills C.17 Reduction in invoice value in other cases C.18 Change of buyer/consignee C.19 Export of goods by Special Economic Zones (SEZs) C.20 Extension of time C.21 Shipments lost in transit C.22 Export claims C.23 Write-off of unrealized export bills C.24 W .....

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pendix PART-A General A.1 Introduction (i) Export trade is regulated by the Directorate General of Foreign Trade (DGFT) and its regional offices, functioning under the Ministry of Commerce and Industry, Department of Commerce, Government of India. Policies and procedures required to be followed for exports from India are announced by the DGFT, from time to time. (ii) AD Category - I banks may conduct export transactions in conformity with the Foreign Trade Policy in vogue and the Rules framed by .....

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ese Regulations have been notified vide Notification No. FEMA 23(R)/2015-RB dated January 12, 2016. (iii) The Directions contained in this Document should be read with the Rules notified by the Government of India, Ministry of Finance, vide Notification No.G.S.R.381 (E) dated May 3, 2000, as also Regulations notified by Reserve Bank vide its 3Notification No. FEMA 23(R)/2015-RB dated January 12, 2016. (iv) In terms of Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000 .....

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Trade Policy (2015-2020), All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency. However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan. Indian Rupee is not a freel .....

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o March) is reckoned as the time base for all transactions pertaining to trade related issues. A.2 Realization and repatriation of proceeds of export of goods / software / services It is obligatory on the part of the exporter to realize and repatriate the full value of goods / software / services to India within a stipulated period from the date of export, as under: (i) It has been decided in consultation with the Government of India that the period of realization and repatriation of export proc .....

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yment (i) The amount representing the full export value of the goods exported shall be received through an AD Bank in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2016 notified vide Notification No. FEMA.14 (R)/2016-RB dated May 02, 2016. (ii) When payment for goods sold to overseas buyers during their visits is received in this manner, EDF (duplicate) should be released by the AD Category - I banks only on receipt of funds in their Nostr .....

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of export related receipts through Online Payment Gateway Service Providers (OPGSPs) Authorised Dealer Category - I (AD Category - I) banks have been allowed to offer the facility of repatriation of export related remittances by entering into standing arrangements with Online Payment Gateway Service Providers (OPGSPs) subject to the following conditions - a) The AD Category-I banks offering this facility shall carry out the due diligence of the OPGSP. b) This facility shall only be available for .....

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o the NOSTRO collection account opened by the AD Category-I bank. d) A separate NOSTRO collection account may be maintained for each OPGSP or the bank should be able to delineate the transactions in the NOSTRO account of each OPGSP. e) Under this arrangement, the permissible debits to the NOSTRO collection account are for repatriation of funds representing export proceeds to India for credit to the exporters account, payment of fee/commission to the OPGSP as per the predetermined rates / frequen .....

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e bona-fides of the transactions and ensure that the purpose codes reported to the Reserve Bank in the online payment gateways are appropriate. h) AD Category -I banks shall submit all the relevant information relating to any transaction under this arrangement to the Reserve Bank, as and when advised to do so. i) Each NOSTRO collection account should be subject to reconciliation and audit on a quarterly basis. j) Resolution of all payment related complaints of exporters in India shall remain the .....

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/ settlements, effective January 01, 2009, participants in the Asian Clearing Union will have the option to settle their transactions either in ACU Dollar or in ACU Euro. Accordingly, the Asian Monetary Unit (AMU) shall be denominated as ACU Dollar and ACU Euro which shall be equivalent in value to one US Dollar and one Euro, respectively. b) Further, AD Category - I banks are allowed to open and maintain ACU Dollar and ACU Euro accounts with their correspondent banks in other participating cou .....

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de transactions with Iran should be settled in any permitted currency outside the ACU mechanism, until further notice. e) In view of the understanding reached among the members of the ACU during the 44th Meeting of the ACU Board in June, 2015, it has been decided to permit the use of the Nostro accounts of the commercial banks of the ACU member countries, i.e., the ACU Dollar and ACU Euro accounts, for settling the payments of both exports and imports of goods and services among the ACU countrie .....

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the irrevocable order/ invoice has been produced subject to: (i) AD bank should be satisfied with the bona-fides of the transaction and export documents, such as, invoice / FIRC. (ii) AD bank should consider the FATF statements while handling such transaction. b) Third party payment should be routed through the banking channel only; c) The exporter should declare the third party remittance in the Export Declaration Form and it would be responsibility of the Exporter to realize and repatriate the .....

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ntry in Group II of Restricted Cover Countries, (e.g. Sudan, Somalia, etc.), payments for the same may be received from an Open Cover Country; and g) In case of imports, the Invoice should contain a narration that the related payment has to be made to the (named) third party, the Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party and the importer should comply with the related extant instructions relating .....

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ment of such export transactions (excluding those put through the ACU mechanism), subject to conditions as under: a) Exporter shall be a customer of the AD Bank, b) Signed contract / invoice is in a freely convertible currency, c) The beneficiary is willing to receive the payment in the currency of beneficiary instead of the original (freely convertible) currency of the invoice/ contract, Letter of Credit as full and final settlement, d) AD bank is satisfied with the bonafides of the transaction .....

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y 21, 2016 for opening a 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 through normal banking channels within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the AD Category - I banks concerned. (ii) Reserve .....

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account will be maintained. (iii) An Indian entity can also open, hold and maintain a foreign currency account with a bank outside India, in the name of its overseas office/branch, by making remittance for the purpose of normal business operations of the said office/branch or representative subject to conditions stipulated in 7Regulation 5 (B) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 21, 2016. (iv) A unit located in a Spe .....

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Memorandum PEM. A.5 Diamond Dollar Account (DDA) (i) Under the scheme of Government of India, firms and companies dealing in purchase / sale of rough or cut and polished diamonds / precious metal jewellery plain, minakari and / or studded with / without diamond and / or other stones, with a track record of at least 2 years in import / export of diamonds / colored gemstones / diamond and colored gemstones studded jewellery / plain gold jewellery and having an average annual turnover of ₹ 3 .....

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ency Account (EEFC Account) (i) A person resident in India may open with, an AD Category - I bank in India, an account in foreign currency called the Exchange Earners Foreign Currency (EEFC) Account, in terms of 10Regulation 4 (D) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations, 2015 dated January 21, 2016. (ii) Resident individuals are permitted to include resident close relative(s) as defined in the Companies Act 2013 as a joint holder(s) in .....

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e accruals in the account during a calendar month should be converted into Rupees on or before the last day of the succeeding calendar month after adjusting for utilization of the balances for approved purposes or forward commitments. b) The facility of EEFC scheme is intended to enable exchange earners to save on conversion/transaction costs while undertaking forex transactions. This facility is not intended to enable exchange earners to maintain assets in foreign currency, as India is still no .....

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ing Zone, Software Technology Park or Electronic Hardware Technology Park for supply of goods to similar such unit or to a unit in Domestic Tariff Area and also payments received in foreign exchange by a unit in Domestic Tariff Area for supply of goods to a unit in Special Economic Zone (SEZ); (vi) AD Category - I banks may 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 provi .....

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lip; representing ….. percent of the export realization credited to the EEFC account maintained by the exporter with…… A.7 Counter-Trade Arrangement Counter trade proposals involving adjustment of value of goods imported into India against value of goods exported from India in terms of an arrangement voluntarily entered into between the Indian party and the overseas party through an Escrow Account opened in India in US Dollar will be considered by the Reserve Bank subject to .....

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ks may pay interest at the applicable rate. (iii) No fund based/or non-fund based facilities would be permitted against the balances in the Escrow Account. (iv) Application for permission for opening an Escrow Account may be made by the overseas exporter / organization through his / their AD Category - I bank to the Regional Office concerned of the Reserve Bank. A.8 Exports to neighboring countries by road, rail or river The following procedure should be adopted by exporters for filing original .....

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r submission to Customs. (ii) As regards exports by rail, Customs staff has been posted at certain designated railway stations for attending to Customs formalities. They will collect the EDF for goods loaded at these stations so that the goods may move straight on to the foreign country without further formalities at the border. The list of designated railway stations can be obtained from the Railways. For goods loaded at stations other than the designated stations, exporters must arrange to pre .....

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2015 shall be settled in any permitted currency in addition to the Asian Clearing Union mechanism. A.10 Counter -Trade arrangements with Romania The Reserve Bank will consider 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 utilize the funds for i .....

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of commitment fee / service charges, etc., payable by the exporter as approved by the EXIM Bank / AD Category - I banks concerned may be done through an AD bank. Such remittances may be made in advance in one lump sum or at monthly intervals as approved by the authority concerned. A.13 Export factoring on non-recourse basis AD banks have been permitted to factor the export receivables on a non-recourse basis, so as to enable the exporters to improve their cash flow and meet their working capita .....

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t Factor, the Export Factor may pass on the net value to the financing bank/ Institution after realising the export proceeds. iii) AD bank, being the Export Factor, should have an arrangement with the Import Factor for credit evaluation & collection of payment. iv) Notation should be made on the invoice that importer has to make payment to the Import Factor. v). After factoring, the Export Factor may close the export bills and report the same in the Export Data Processing and Monitoring Syst .....

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ts . Indian exporters are required to obtain the approval of the AD Category - I banks/ Exim Bank at post-award stage before undertaking execution of such contracts. Regulations relating to Project Exports and Service Exports are laid down in the revised Memorandum of Instructions on Project and Service Exports (PEM-July 2014). (ii) Accordingly, AD banks / Exim Bank may consider awarding post-award approvals without any monetary limit and permit subsequent changes in the terms of post award appr .....

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rding recovery of market value (not less than book value) of the machinery, etc., from the transferee project has been withdrawn. Further, exporters may use the machinery / equipment for performing any other contract secured by them in any country subject to the satisfaction of the sponsoring AD Category - I bank(s) / Exim Bank and also subject to the reporting requirement and would be monitored by the AD Category - I bank(s) / Exim Bank. b) Inter-Project transfer of funds - AD Category - I bank .....

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nerated outside India investments in short-term paper abroad including treasury bills and other monetary instruments with a maturity or remaining maturity of one year or less and the rating of which should be at least A-1/AAA by Standard & Poor or P-1/-AAA by Moody s or F1/AAA by Fitch IBCA etc., and as deposits with branches / subsidiaries outside India of AD Category - I banks in India. d) Repatriation of funds in case of On-site Software Contracts - The requirement of repatriation of 30 p .....

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ld apply for necessary permission, through an AD Category - I banks, to the Regional Office concerned of the Reserve Bank, giving full particulars of the goods to be exported. A.16 Export on elongated credit terms Exporters intending to export goods on elongated credit terms may submit their proposals giving full particulars through their banks for consideration to the Regional Office concerned of the Reserve Bank. A.17 Export of Currency In terms of Foreign Exchange Management (Export and Impor .....

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; 25,000 (Rupees twenty five thousand only); and (ii) Any person resident outside India, not being a citizen of Pakistan and Bangladesh and also not a traveler coming from and going to Pakistan or Bangladesh, and visiting India may take outside India currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding ₹ 25,000 (Rupees twenty five thousand only) while exiting only through an airport. PART-B EDF / SOFTEX Procedure B.1 Export of goods through Cu .....

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ity in the form and return it to the exporter for submission to AD for negotiation or collection of export bills. (iv) Within 21 days from the date of export, exporter shall lodge the duplicate copy together with relative shipping documents and an extra copy of the invoice to the AD named in the EDF. (v) After the documents have been negotiated / sent for collection, the AD shall report the transaction through Export Data Processing and Monitoring System (EDPMS) to the Reserve Bank and retain th .....

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ports (i) The shipping bill shall be submitted in duplicate to the Commissioner of Customs concerned. (ii) After verifying and authenticating, the Commissioner of Customs shall hand over to the exporter, one copy of the shipping bill marked Exchange Control (EC) Copy for being submitted to the AD within 21 days from the date of export for collection/negotiation of shipping documents. (iii) The manner of disposal of EC copy of Shipping Bill shall be the same as that for EDF. The duplicate copy o .....

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ertificate issued by ECGC/ private insurance companies. The certificate will indicate the number of declaration form, name of the exporter, name of the AD, date of negotiation, bill number, invoice value and the amount actually received by ECGC/private insurance company. B.3 Export of goods through Post Postal Authorities shall allow export of goods by post only if the original copy of the EDF has been countersigned by an AD. Therefore, EDF which involve sending goods by post should be first pre .....

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n/collection, within the prescribed period of 21 days. (iii) The concerned overseas branch or correspondent shall be instructed to deliver the parcel to consignee against payment or acceptance of relative bill. (iv) AD may, however, countersign EDF covering parcels addressed direct to the consignees, provided: a) An irrevocable letter of credit for the full value of export has been opened in favor of the exporter and has been advised through the AD concerned. Or b) The full value of the shipment .....

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AD under its stamp and signature. B.4 Mid-sea trans-shipment of catch by deep sea fishing vessels (i) Since deep sea fishing involves continuous sailing outside the territorial limit, trans-shipment of catches takes place in the high sea leading to procedural constraints in regulatory reporting requirement viz. the Declaration of Export in terms of Notification No.FEMA.23(R)/2015-RB dated January 12, 2016. (ii) For mid-sea trans-shipment of catches by Indian owned vessels, as per the norms presc .....

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f shipment (date of transfer of catch), etc duly supported by a certificate from an international cargo surveyor. b) Bill of Lading / receipt of trans-shipment issued by the carrier vessel should include the EDF Number. c) The prescribed period of realization and repatriation should be reckoned with reference to the date of transfer of catch as certified by the Master of the vessel or the date of the invoice, whichever is earlier. d) The EDF, both original and duplicate, should indicate the numb .....

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licate copy to the exporter as the value certification of the export has already been done as mentioned above. g) Rules, Regulations and Directions issued in respect of the procedure for submission of the EDF by exporter to the AD Category-I banks, and the disposal of these forms by these banks will be same as applicable to the other exporters. B.5 SOFTEX Forms (i) All software exporters can now file single as well as bulk SOFTEX form in the form of a statement in excel format to the competent a .....

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sed to declare single as well as bulk software exports. (iii) Reserve Bank of India has extended the facility for online generation of the EDF Form Number and the SOFTEX Form Number (Single as well as Bulk for use in off-site software exports). The facility of manual allotment of single as well bulk SOFTEX form number by Regional Offices of RBI has been dispensed with accordingly. (iv) Invoicing of software exports a) For long duration contracts involving series of transmissions, the exporters s .....

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shot operation , the invoice/bill should be raised within 15 days from the date of transmission. c) The exporter should submit declaration in Form SOFTEX in quadruplicate in respect of export of computer software and audio / video / television software to the designated official concerned of the 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 .....

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the EDF and SOFTEX forms should invariably be cited. B.7 Export of Services it is clarified that, in respect of export of services to which none of the Forms specified in these Regulations apply, the exporter may export such services without furnishing any declaration, but shall be liable to realise the amount of foreign exchange which becomes due or accrues on account of such export, and to repatriate the same to India in accordance with the provisions of the Act, and these Regulations, as als .....

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owers delegated to them or has been duly approved by the Reserve Bank, wherever necessary. B.10 Short Shipments and Shut out Shipments (i) When part of a shipment covered by an EDF already filed with Customs is short-shipped, the exporter must give notice of short-shipment to the Customs in the form and manner prescribed. In case of delay in obtaining certified short-shipment notice from the Customs, the exporter should give an undertaking to the AD banks to the effect that he has filed the shor .....

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k together with unused duplicate copy of the EDF. In this case, the original EDF received earlier from Customs will be cancelled. If the shipment is made subsequently, a fresh set of EDF should be completed. B.11 Consolidation of air cargo/sea cargo (i) Consolidation of air cargo a) Where air cargo is shipped under consolidation, the airline company s Master Airway Bill will be issued to the Consolidating Cargo Agent. The Cargo agent in turn will issue his own House Airway Bills (HAWBs) to indiv .....

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ve letter of credit specifically provides for negotiation of this document, in lieu of bill of lading even if the relative sale contract with the overseas buyer does not provide for acceptance of FCR as a shipping document, in lieu of bill of lading b) Further, Authorized Dealers may, at their discretion, also accept FCR issued by Shipping companies of repute/IATA approved agents (in lieu of bill of lading), for purchase/discount/collection of shipping documents even in cases, where export trans .....

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t would be advisable for the exporters to ensure due diligence on the overseas buyer, in such cases. B.12 Exemption from Declaration The requirement of declaration of export of goods and software in the prescribed form will not apply to the cases indicated in Regulation 4 of 11Foreign Exchange Management (Export of Goods and Services) Regulations dated January 12, 2016. The exporters shall, however, be liable to realize and repatriate export proceeds as per FEMA Regulations. PART-C Obligations o .....

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ceding three licensing years (April-March), whichever is 12lower. Exports of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of EDF procedure from the Reserve Bank. C.2 Receipt of advance against exports (1) In terms of Regulation 15 of Notification No. FEMA 23 (R)/2015-RB dated January 12, 2016, where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall be under an obligation to ensure tha .....

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ance payment, no remittance towards refund of unutilized portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank. 13EDPMS will capture the details of advance remittances received for exports in EDPMS. Henceforth, AD Category - I banks will have to report all the inward remittances including advance as well as old outstanding inward remittances received for export of goods/ software to .....

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port of goods subject to the conditions as under: (i) Firm irrevocable supply orders and contracts should be in place. The contract with the overseas party/ buyer should be vetted and the same shall clearly specify the nature, amount and delivery timelines of the products over the years and penalty in case of non-performance or contract cancellation. Product pricing should be in consonance with prevailing international prices. (ii) Company should have capacity, systems and processes in place to .....

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ank only. (vii) Authorised Dealer bank should ensure compliance with AML / KYC guidelines (viii) Such export advances shall not be permitted to be used to liquidate Rupee loans classified as NPA. (ix) Double financing for working capital for execution of export orders should be avoided. (x) Receipt of such advance of USD 100 million or more should be immediately reported to the Trade Division, Foreign Exchange Department, Reserve Bank of India, Central Office, Mumbai. (xi) In case Authorized Dea .....

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) BG / SBLC should cover only the advance on reducing balance basis. c) BG / SBLC issued from India in favor of overseas buyer should not be discounted by the overseas branch / subsidiary of bank in India. Note: AD Category - I banks may also be guided by the Master Circular on Guarantees and Co-acceptances issued by Department of Banking Regulation. (xii) AD Category - I banks may allow the purchase of foreign exchange from the market for refunding advance payment credited to EEFC account only .....

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e by the AD Category - I bank for the overseas buyer; (ii) Compliance with the Anti-Money Laundering standards has been ensured; (iii) The AD Category-I bank should ensure that export advance received by the exporter should be utilized to execute export and not for any other purpose i.e., the transaction is a bonafide transaction; (iv) Progress payment, if any, should be received directly from the overseas buyer strictly in terms of the contract; (v) The rate of interest, if any, payable on the .....

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t should be made without the prior approval of the Reserve Bank. (4) (i) As it has been observed that there is substantial increase in the number and amount of advances received for exports remaining outstanding beyond the stipulated period on account of non-performance of such exports (shipments in case of export of goods), AD Category -I banks are advised to efficiently follow up with the concerned exporters in order to ensure that export performance (shipments in case of export of goods) are .....

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days from the end of each quarter. C.3 EDF Approval for Trade Fair/Exhibitions abroad Firms / Companies and other organizations participating in Trade Fair/Exhibition abroad can take/export goods for exhibition and sale outside India without the prior approval of the Reserve Bank. Unsold exhibit items may be sold outside the exhibition/trade fair in the same country or in a third country. Such sales at discounted value are also permissible. It would also be permissible to 'gift unsold goods .....

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Such transactions approved by the AD Category - I banks will be subject to 100 per cent audit by their internal inspectors/auditors. C.4 EDF approval for export of goods for re-imports (i) AD Category - I banks may consider request from exporters for granting EDF approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration, etc., subject to the condition that the exporter shall produce relative Bill of Entry within one month of re-import of t .....

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is clarified that the unsold rough diamonds, when re-exported from the SNZ (being an area within the Customs) without entering the Domestic Tariff Area (DTA), do not require any EDF formality. (ii) Entry of consignment containing different lots of rough diamonds into the SNZ should be accompanied by a declaration of notional value by way of an invoice and a packing list indicating the free cost nature of the consignment. Under no circumstance, entry of such rough diamonds is permitted into DTA. .....

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penses up to fifteen per cent of the average annual sales/income or turnover during the last two financial years or up to twenty-five per cent of the net worth, whichever is higher. (ii) For recurring expenses, remittances up to ten per cent of the average annual sales/income or turnover during the last two financial years may be sent for the purpose of normal business operations of the office (trading/non-trading)/branch or representative office outside India subject to the following terms and .....

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not invest surplus funds abroad without prior approval of the Reserve Bank. Any funds rendered surplus should be repatriated to India. (iii) The details of bank accounts opened in the overseas country should be promptly reported to the AD Bank. (iv) AD Category - I banks may also allow remittances by a company incorporated in India having overseas offices, within the above limits for initial and recurring expenses, to acquire immovable property outside India for its business and for residential .....

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ent to the AD Category - I banks. C.7 Delay in submission of shipping documents by exporters In cases where exporters present documents pertaining to exports after the prescribed period of 21 days from date of export, AD Category - I banks may handle them without prior approval of the Reserve Bank, provided they are satisfied with the reasons for the delay. C.8 Return of documents to exporters The duplicate copies of EDF and shipping documents, once submitted to the AD Category - I banks for neg .....

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such delivery. C.10 Direct dispatch of documents by the exporter (i) AD Category - I banks should normally dispatch shipping documents to their overseas branches/correspondents expeditiously. However, they may dispatch shipping documents direct to the consignees or their agents resident in the country of final destination of goods in cases where: a) Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/let .....

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s (as defined in the Foreign Trade Policy), and units in Special Economic Zones (SEZ) to dispatch the export documents to the consignees outside India subject to the terms and conditions that: a) The export proceeds are repatriated through the AD banks named in the EDF. b) The duplicate copy of the EDF is submitted to the AD banks for monitoring purposes, by the exporters within 21 days from the date of shipment of export. (iii) AD Category - I banks may regularize cases of dispatch of shipping .....

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The AD Category - I bank is satisfied about the bonafides of the transaction. e) In case of doubt, the AD Category - I bank may consider filing Suspicious Transaction Report (STR) with FIU_IND (Financial Intelligence Unit in India). C.11 Part Drawings/ Undrawn Balances (i) 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, .....

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been able to arrange for repatriation of the undrawn balance in spite of best efforts, AD Category - I banks, on being satisfied with the bona fides of the case, should ensure that the exporter has realized at least the value for which the bill was initially drawn (excluding undrawn balances) or 90 per cent of the value declared on EDF form, whichever is more and a period of one year has elapsed from the date of shipment. C.12 Consignment Exports (i) When goods have been exported on consignment .....

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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 AD Category - I banks. 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. (iv) In case .....

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rmission for opening / hiring warehouses abroad subject to the following conditions: (i) Applicant s export outstanding does not exceed 5 per cent of exports made during the previous financial year. (ii) Applicant has a minimum export turnover of USD 100,000/- during the last financial year. (iii) Period of realization should be as applicable. (iv) All transactions should be routed through the designated branch of the AD Banks. (v) The above permission may be granted to the exporters initially f .....

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year basis (i.e. April to March) and same should be reported in EDPMS. C.15 Follow-up of overdue bills (i) AD Category - I banks should closely watch realization of bills and in cases where bills remain outstanding, beyond the due date for payment 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 the stipulated period or seek extension of time beyond the stipulated period, the matter .....

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laxity in the follow up of realization of export proceeds by AD Category - I banks will be viewed seriously by the Reserve Bank, leading to the invocation of the penal provision under FEMA, 1999. (iv) 14With operationalization of EDPMS on March 01, 2014, realization of all export transaction for shipping documents after February 28, 2014 should be reported in EDPMS. C.16 Reduction in invoice value on account of prepayment of usance bills Occasionally, exporters may approach AD Category - I bank .....

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been negotiated or sent for collection, its amount is to be reduced for any reason, AD Category - I banks may approve such reduction, if satisfied about genuineness of the request, provided: a) The reduction does not exceed 25 per cent 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 the Reserve Bank, d) The exporter is advised to surrender proportionate export incentives availed of, if an .....

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realizations during the preceding three financial years, outstanding of exports made to countries facing externalization problems may be ignored provided the payments have been made by the buyers in the local currency. C.18 Change of buyer/consignee Prior approval of the Reserve Bank is not required if, after goods have been shipped, they are to be transferred to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does n .....

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arges are suitably loaded in the export price and are borne by the ultimate buyer. b) The exporter has made satisfactory arrangements for realization of full export proceeds subject to the usual EDF procedure. (ii) AD Category - I banks may permit units in DTAs to purchase foreign exchange for making payment for goods supplied to them by units in SEZs. Authorised Dealer Banks are permitted to sell foreign exchange to a unit in the DTA for making payment in foreign exchange to a unit in the SEZ f .....

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ds beyond stipulated period of realization from the date of export, up to a period of six months, at a time, irrespective of the invoice value of the export subject to the following conditions: a) The export transactions covered by the invoices are not under investigation by Directorate of Enforcement / Central Bureau of Investigation or other investigating agencies, b) The AD Category - I bank is satisfied that the exporter has not been able to realize export proceeds for reasons beyond his con .....

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amount involved / outstanding. (ii) Cases which are not covered by the above instructions would require prior approval from the concerned Regional Office of the Reserve Bank. (iii) Reporting should be done in EDPMS. C.21 Shipments lost in transit (i) When shipments from India for which payment has not been received either by negotiation of bills under letters of credit or otherwise are lost in transit, the AD Category - I banks must ensure that insurance claim is made as soon as the loss is kno .....

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are partially settled directly by shipping companies/airlines under carrier s liability abroad are also repatriated to India by exporters. C.22 Export claims (i) AD Category - I banks may remit export claims on application, provided the relative export proceeds have already been realized and repatriated to India and the exporter is not on the caution list of the Reserve Bank. (ii) In all such cases of remittances, the exporter should be advised to surrender proportionate export incentives, if an .....

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lder Exporters 10%* Write-off by Authorized Dealer Bank- 10%* *of the total export proceeds realized during the previous calendar year. (ii) The above limits will be related to total export proceeds realized during the previous calendar year and will be cumulatively available in a year. (iii) The above write-off will be subject to conditions that the relevant amount has remained outstanding for more than one year, satisfactory documentary evidence is furnished in support of the exporter having m .....

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ed amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization; e) The unrealized amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) remaining outstanding and turned out to be unrealizable despite all efforts made by the exporter; f) The cost of resorting to legal action would be disproportionate to the unrealized amount of the export bill or where the exporte .....

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any, availed of in respect of the relative shipments. The AD Category - I banks should obtain documents evidencing surrender of export incentives availed of before permitting the relevant bills to be written off. (v) In case of self-write-off, the exporter should submit to the concerned AD bank, a Chartered Accountant s certificate, indicating the export realization in the preceding calendar year and also the amount of write-off already availed of during the year, if any, the relevant EDF to be .....

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of the country. b) EDF which are under investigation by agencies like, Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc. as also the outstanding bills which are subject matter of civil / criminal suit. vii) AD banks should report write off of export bills through EDPMS to the Reserve Bank. viii) AD banks are advised to put in place a system under which their internal inspectors or auditors (including external auditors appointed by authorised dea .....

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ntary evidence from the ECGC and private insurance companies regulated by IRDA confirming that the claim in respect of the outstanding bills has been settled by them, write off the relative export bills 17in EDPMS. (ii) Such write-off will not be restricted to the limit of 10 per cent indicated above. (iii) Surrender of incentives, if any, in such cases will be as provided in the Foreign Trade Policy. (iv) The claims settled in rupees by ECGC and private insurance companies regulated by IRDA sho .....

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from the Foreign Mission of India concerned, about the fact of non-recovery of export proceeds from the buyer; and c) This would not be applicable in self write off cases. C.26 Set-off of export receivables against import payables AD category -I banks may deal with the cases of set-off of export receivables against import payables, subject to following terms and conditions: (i) The import is as per the Foreign Trade Policy in force. (ii) Invoices/Bills of Lading/Airway Bills and Exchange Control .....

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same overseas buyer and supplier and that consent for set-off has been obtained from him. (vii) The export / import transactions with ACU countries should be kept outside the arrangement. (viii) All the relevant documents are submitted to the concerned AD bank who should comply with all the regulatory requirements relating to the transactions. C.27 Netting-off of export receivables against import payments - Units in Special Economic Zones (SEZs) AD Category - I banks may allow requests received .....

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port of goods / services are recorded through A1 / A2 form as the case may be. The relative EDF will be treated as complete by the designated AD Category - I banks only after the entire proceeds are adjusted / received. (iii) Both the transactions of sale and purchase in R- Returns under FETERS are reported separately. (iv) The export / import transactions with ACU countries are kept outside the arrangement. (v) All the relevant documents are submitted to the concerned AD Category - I banks who .....

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tension is granted by AD Category -I bank / RBI. Date of shipment will be considered for reckoning the realisation period. (b) Once related bills are realised and closed or extension for realisation is granted, the exporter will automatically be de-caution listed. (c) The exporters can also be caution listed even before the expiry of two years period based on the recommendation of AD banks. The recommendation may be based on cases where exporter has come to adverse notice of the Enforcement Dire .....

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n of AD Category - I banks. 2) AD Category - I banks should follow the procedure mentioned below while handling shipping documents in respect of caution listed exporters: (a) They will intimate the exporters about their caution listing, giving the details of outstanding shipping bills. When caution listed exporters submit shipping documents for negotiation / purchase/ discount/ collection, etc. the AD Category - I bank may accept the documents subject to following conditions:- i) The exporters c .....

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handle the shipping documents of caution listed exporters. (b) AD Category - I banks should obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters. C.29 Issue of Guarantees by an Authorised Dealer (1) An authorized dealer may give guarantee in respect of any debt, obligation or other liability incurred by a person resident in India and owned to a person resident outside India, where the debt, obligation or other liability is incurred by the person resident .....

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road; (ii) as a counter-guarantee to cover guarantee issued by his branch or correspondent outside India, on behalf of Indian exporter in cases where guarantees of only resident banks are acceptable to overseas buyers. PART-D Remittances connected with Export D.1 Agency commission on exports (i) AD Category - I banks may allow payment of commission, either by remittance or by deduction from invoice value, on application submitted by the exporter. The remittance on agency commission may be allowe .....

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exporters and/or beneficiary for payment of commission exists. b) The relative shipment has already been made. (ii) AD Category - I banks may allow payment of commission by Indian exporters, in respect of their exports covered under counter trade arrangement through Escrow Accounts designated in US Dollar, subject to the following conditions: a) The payment of commission satisfies the conditions as at (a) and (b) stipulated in paragraph (i) above. b) The commission is not payable to Escrow Acco .....

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may consider requests for refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality. While permitting such transactions, AD Category - I banks are required to: (i) Exercise due diligence regarding the track record of the exporter (ii) Verify the bona-fides of the transactions (iii) Obtain from the exporter a certificate issued by DGFT / Custom authorities that no incentives have been availed by the exporter against the relevant export or t .....

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2016 Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 January 1, 2016 2 A.P. (DIR Series) Circular No.28) Opening, holding and maintaining Foreign Currency Account in India by Unit in Special Economic Zones (SEZs October 3, 2002 3 A.P. (DIR Series) Circular No.41 Issue of Corporate Guarantee in lieu of Bid Bond Guarantee November 8, 2002 4 A.P. (DIR Series) Circular No.91 Export of Goods and Services - Facilities to Units in Special Economic Zones (SEZs) April 1, 200 .....

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6, 2008 10 A.P. (DIR Series) Circular No.84 Compilation of R-Returns : Reporting under FETERS February 29, 2012 11 A.P. (DIR Series) Circular No.46 Supply of Goods and Services by Special Economic Zones to Units in Domestic Tariff Areas October 23, 2012 12 A.P. (DIR Series) Circular No.60 Export Outstanding Statement (XOS) Online Bank wide Submission October 01, 2013 13 A.P. (DIR Series) Circular No.62 Closing of Old Outstanding Bills : Export - Follow-up - XOS Statements October 14, 2013 14 A.P .....

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1 Memorandum of Procedure for channeling transactions through Asian Clearing Union (ACU) October 08, 2015 19 A.P. (DIR Series) Circular No. 68 [(1)/23(R)] Foreign Exchange Management (Exports of Goods and Services) Regulations, 2015 May 12, 2016 20 A.P. (DIR Series) Circular No. 74 Export Data Processing and Monitoring System (EDPMS) - Additional Modules for caution listing of exporters, reporting of advance remittance for exports and migration of old XOS data May 26, 2016 - 1 FEM (Export of Goo .....

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serted by AP (DIR Series) Circular 51 dated February 11, 2016 with effect from February 11, 2016. 5 Inserted by AP (DIR Series) Circular 42 dated February 4, 2016. 6 Inserted by FEM (Foreign Currency Accounts by a person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations, 2000 notified vide Notification No. FEMA 10/2000-RB dat .....

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ly and quarterly reports to RBI on balances of DDA accounts and opening/ closing of DDA accounts has since been done away with vide AP (DIR Series) Circular No. 54 dated March 23, 2016 and FEM (Foreign Currency Accounts by a person Resident in India) Regulations, 2015 with effect from January 21, 2016 10 Inserted by FEM (Foreign Currency Accounts by a person Resident in India) Regulations, 2015 with effect from January 21, 2016. Prior to insertion it read as Regulation 4 of the Foreign Exchange .....

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016 14 Inserted by AP (Dir) Series Circular 74 dated May 26, 2016, to be effected from June 15, 2016. Prior to insertion it read as: With operationalization of EDPMS on March 01, 2014, realization of all export transaction for shipping documents after February 28, 2014 should be reported in EDPMS and old outstanding shipping bills prior to March 01, 2014 should continue to be reported in XOS till completion of the cycle. 15 Omitted by AP (DIR) Series Circular 74 dated May 26, 2016 with effect fr .....

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