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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 ..... ns. 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. This Master Direction is issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 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 Category I banks may be governed by normal trade practices. AD Category I banks may particularly note to adhere to Know Your Customer (KYC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Borrowings, Trade Credits and Structured Obligations may be followed. 7 B.5.3. Time Limit for Import of Books Remittances against import of books may be allowed without restriction as t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 Indian Currency and Currency Notes (i) Any person resident in India who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 through operating lease effected in conformity with the Foreign Trade Policy in force and under the provisions of the Foreign exchange Management (Current Account Transactions) Rules, 2000 framed by the Government of India vide Notification No. G. S. R. 381 (E) dated May 3, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter 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 India is made within six months (three years in case of capital goods) from the date of remittance and the importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period. It is clarified that where advance is paid as milestone payments, the date of last remittance made in terms of the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 rate 16 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 entered for ORM mark off in IDPMS etc. as per extant IDPMS guidelines. C.3. Remittances against Replacement Imports Where goods are short-supplied, damaged, short-landed or lost in transit and the Exchange Control Copy of the import licence has already been utilised to cover the opening of a letter of credit against the original goods which have been lost, the original endorsement to the ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. Receipt of import documents by the importer directly from overseas suppliers in case of specified sectors As a sector specific measure, AD Category - I banks are permitted 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es 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 of import bill. However, if importers fail to produce documentary 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. 23 (iii) AD banks are required to create Outward Remittance Message (ORM) for all such outward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce/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. 27 In 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 available in IDPMS. The revised procedure is as under: (iv) AD banks shall enter BoE details (BoE number, port code and date) for ORM associated with the advance payments for import transactions as per the message format BOE settlement . (v) In case of payment after receipt of BoE, the AD bank shall generate ORM for import payments made by its importer customer as per the message format BOE settlement . (vi) Multiple ORMs can be settled against single BoE and also multiple BoE can be settled against one ORM. 28 (vii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 for outward remittance made for import (i.e. unsettled ORM) in terms of extant guidelines and instructions on the subject. In cases where relevant evidence of import data is not available in IDPMS on due dates against the ORM, AD Category I bank shall follow up with the importer for submission of documentary evidence of import. Similarly, if BoE data is not settled against ORM within the prescribed period, AD Category I banks shall follow up with the importer in terms of extent instructions. 32 C.9. Verification and Preservation (i) Internal inspectors and IS auditors (including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 38 iii. 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. 39 Head Offices / International Banking Divisions of AD Category - I banks shall henceforth submit the following returns under Centralised Information Management System (CIMS) having URL: https://sankalan.rbi.org.in from December 26, 2023 onwards. Return on half yearly basis (end March / end September), showing the quantity and value of gold imported by the nominated banks/ agencies/ qualified jewellers/ EOUs/ SEZs in Gem Jewellery Sector, mode of payment-wise under return code R133 named 'Import of gold by EOUs, units in SEZ/EPZ and nominated agencies(HY)' Return on monthly basis showing the quantity and value of gold imports by the nominated agencies (other than the nominated banks)/ EOUs/ qualified jewel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ), 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 all other entities involved in enabling import of Gold by QJs in terms of the IFSCA regulations. IFSCA shall also put in place necessary system to ensure that the advance remittance received from QJs are solely for the purpose for import of gold through IIBX. iii. AD bank shall ensure that: all required documentation, custom duty related procedures and filing Bill of Entry (BoE) as evidence of import, etc. is complete for the import of gold by QJ within the specified applicable period. single/multiple ORMs created and matched with corresponding BoEs and closed appropriately in IDMPS. the importer that is QJs comply with the related extant instructions relating to i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 respective Regional Office of the Reserve Bank within 15 days of the end of the respective half year 43 . (b) AD Category I banks should ensure that due diligence is undertaken and Know Your Customer (KYC) norms and Anti-Money Laundering (AML) guidelines, issued by the Reserve Bank are adhered to while undertaking import of the precious metals and rough, cut and polished diamonds. Further, any large or abnormal increase in the volume of business should be closely examined to ensure that the transactions are bonafide and are not intended for interest / currency arbitrage. C.12.2. Import of Platinum / Silver on Unfixed Price Basis The nominated agency/bank may allow import of platinum and silver, on outright purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 outlay of foreign exchange beyond four months. The commencement date of merchanting trade shall be the date of shipment / export leg receipt or import leg payment, whichever is first. The completion date shall be the date of shipment / export leg receipt or import leg payment, whichever is the last. Short-term credit either by way of suppliers' credit or buyers' credit may be extended for MTT to the extent not backed by advance remittance for the export leg, including the discounting of export leg LC by the AD bank, as in the case of import transactions. However, Letter of Undertaking (LoU)/ Letter of Comfort (LoC) shall not be issued for supplier s/ buyer s credit. Any receipts for the export leg, prior to the payment for import leg, may be parked e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 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 amount of export leg: i. AD bank may write-off the unrealized amount of export leg, without any ceiling, on the request made by the Merchanting trader, in the following circumstances: The MTT buyer has been declared insolvent and a certificate from the official liquidator specifying that there is no possibility of recovery of export proceeds has been produced. The goods exported have been auctioned or destroyed by the Port / Customs / Health authorities in the importing country and a certificate to that effect has been produced. The unrealized amount of the export leg represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization; provided, the MTT is in adherence to all other provisions except the delays in timel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliant 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 value not exceeding USD 2,000 by entering into standing arrangements with the OPGSPs subject to the following:- (a) The balances held in the Import Collection account shall be remitted to the respective overseas exporter's account immediately on receipt of funds from the importer and, in no case, later than two days from the date of credit to the collection account. (b) The AD Category I bank will obtain a copy of invoice 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) T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort 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, 2007 13 63 Import of Equipments by BPO Companies in India for International Call Centre May 25, 2007 14 77 Advance Remittance for Import of aircrafts / helicopters / other aviation related purchases June 29, 2007 15 18 Direct Receipt of Import Bills / Documents - Liberalisation November 7, 2007 16 37 Direct Receipt of Import Bills / Documents for Import of Rough Precious Semi-Precious Stones April 16, 2008 17 03 Advance Remittance for Import of Rough Diamonds August 4, 2008 18 08 Advance Remittance for Import of Rough Diamonds August 21, 2008 19 09 Foreign Exchange Management Act, 1999- Advance Remittance for Import of Goods - Liberalisation August 21, 2008 20 12 Foreign Exchange Management Act, 1999 Import of Platinum / Palladium / Rhodium / Silver August 28, 2008 21 13 Direct Receipt of Import Bills / Documents - Liberalisation September 1, 2008 22 15 Foreign Exchange Management Act, 1999 Advance Remittances for Import of Services September 8, 2008 23 21 Advance Remittance for Impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ateway Service Providers September 24, 2015 54 29 Import of Goods into India Evidence of Import November 26, 2015 55 30 Advance Remittance for Import of aircrafts / helicopters /other aviation related purchases November 26, 2015 56 42 Settlement of Export/ Import transactions in currencies not having a direct exchange rate February 4, 2016 57 57 Import of Rough, Cut and Polished Diamonds March 31, 2016 58 65 Import of goods- Import Data Processing and Monitoring System (IDPMS) April 28, 2016 59 05 Import Data Processing and Monitoring System (IDPMS) October 06, 2016 60 11[(1)/14(R)] Foreign Exchange Management (Manner of Receipt and Payment) Regulations 2016 October 20, 2016 61 27 Evidence of Import under Import Data Processing and Monitoring System (IDPMS) January 12, 2017 62 33 Import of goods and services- Extension of time limits for Settlement of import payment May 22, 2020 63 04 Guidelines on import of gold by Qualified Jewellers as notified by The International Financial Services Centers Authority (IFSCA) May 25, 2022 64 13 Use of any Alternative reference rate in place of LIBOR for interest payable in respect of export / import transactions September 28, 2021 65 07 Guidelin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and AP (DIR Series) Circular No.5 dated October 06, 2016 20 Inserted vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016 21 Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as 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 22 Sub points of point no. (i) and point no.(ii) modified vide AP (DIR Series) Circular No. 27 dated January 12, 2017 prior to modification they read as (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 Oriented Units, or (c) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y I bank) should carry out verification of the documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms, or Customs Assessment Certificates, etc. (ii) Documents evidencing import into India should be preserved by AD Category I bank for a period of one year from the date of their verification. However, in respect of cases which are under investigation by investigating agencies, the documents may be destroyed only after obtaining clearance from the investigating agency concerned. 33 Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as exceeding USD 100,000 34 Modified. Prior to modification it read as including issuing registered letters to the importer 35 Modified. Prior to modification it read as On operationalization of IDPMS, all outstanding import remittances, irrespective of the amount involved, will be reported into the system by banks and submission of a separate BEF statement would be discontinued from a date, to be notified separately . which was modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 prior to modification it read as AD Category - I banks should henceforth s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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