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TMI BlogMaster Direction – Export 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 ..... der 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 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 in Master Directions 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 Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 and is without prejudice to permissions/ app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) C.25 Write-off relaxation C.26 Set-off of export receivables against import payables C.27 Netting-off of export receivables against import payments Units in (SEZs) C.28 Exporters' Caution List C.29 Issue of Guarantees by an Authorised Dealer C.30 Issuance of Electronic Bank Realisation Certificate (eBRC) Part-D Remittances connected with Export D.1 Agency commission on exports D.2 Refund of export proceeds Appendix 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 the Government of India and the Directions issued by Reserve Bank from time to time. In exercise of the powers conferred by clause (a) of sub-section (1) and sub-section (3) of Section 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notifications. Central Government may relax provisions of this paragraph in appropriate cases. Export contracts and invoices can be denominated in Indian rupees against EXIM Bank/Government of India line of credit. (d) Invoicing, payment and settlement of exports and imports is also permissible in INR subject to compliances as under RBI s A.P. (DIR Series) Circular No.10 dated 11th July, 2022. Accordingly, settlement of trade transactions in INR shall take place through the Special Rupee Vostro Accounts opened by AD banks in India as permitted under Regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016, in accordance to the following procedures: (i) Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the Special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier. (ii) Indian exporters, undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner countr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in their Nostro account or if the AD Category I bank concerned is not the Credit Card servicing bank, on production of a certificate by the exporter from the Credit Card servicing bank in India to the effect that it has received the equivalent amount in foreign exchange, AD Category I banks may also receive payment for exports made out of India by debit to the credit card of an importer where the reimbursement from the card issuing bank/ organization will be received in foreign exchange. (iii) Processing of export related receipts through Online Payment Gateways Processing of export related receipts through online payment gateways shall be in terms of Notification No. CO.DPSS.POLC.No.S-786/02-14-008/2023-24 dated October 31, 2023. 5 (iv) Settlement System under ACU Mechanism 6 a) In order to facilitate transactions / settlements, effective March 06, 2020, participants in the Asian Clearing Union will have the option to settle their transactions either in ACU Dollar or in ACU Euro or in ACU Japanese Yen. Accordingly, the Asian Monetary Unit (AMU) shall be denominated as ACU Dollar , ACU Euro and ACU Yen which shall be equivalent in value to one US Dollar, one Euro and one Japanese Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d party remittance in the Export Declaration Form and it would be responsibility of the Exporter to realise and repatriate the export proceeds from such third party named in the EDF; d) It would be responsibility of the Exporter to realise and repatriate the export proceeds from such third party named in the EDF; e) Reporting of outstanding, if any, would continue to be shown against the name of the exporter. However, instead of the name of the overseas buyer from where the proceeds have to be realise, the name of the declared third party should appear in the outstanding report. f) In case of shipments being made to a country 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 to imports including those on advance payment being made for import of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any country, AD bank in India may open Special Rupee Vostro Accounts of correspondent bank/s of the partner trading country. In order to allow settlement of international trade transactions through this arrangement, it has been decided that: (i) Indian importers undertaking imports through this mechanism shall make payment in INR which shall be credited into the Special Vostro account of the correspondent bank of the partner country, against the invoices for the supply of goods or services from the overseas seller /supplier. (ii) Indian exporters undertaking exports of goods and services through this mechanism, shall be paid the export proceeds in INR from the balances in the designated Special Vostro account of the correspondent bank of the partner country. d) The export / import undertaken and settled in this manner shall be subject to usual documentation and reporting requirements. Letter of Credit (LC) and other trade related documentation may be decided mutually between banks of the partner trading countries under the overall framework of Uniform Customs and Practice for Documentary Credits (UCPDC) and incoterms. Exchange of messages in safe, secure, and efficient way may be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l INR VOSTRO account. The AD bank will seek approval from the Reserve Bank with details of the arrangement. AD bank maintaining the special Vostro Account shall ensure that the correspondent bank is not from a country or jurisdiction in the updated FATF Public Statement on High Risk Non Co-operative Jurisdictions on which FATF has called for counter measures. A.4 Foreign Currency Account (i) Participants in international exhibition/trade fair have been granted general permission vide 10 Regulation 5(E)(5) of Foreign Exchange Management (Foreign Currency Accounts by a person Resident in India) Regulations dated January 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 Bank may consider applications in Form EFC from exporters having good track r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Currency 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 14 Regulation 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 their EEFC bank accounts on former or survivor basis. (iii) This account shall be maintained only in the form of non-interest bearing current account. No credit facilities, either fund-based or non-fund based, shall be permitted against the security of balances held in EEFC accounts by the AD Category I banks. (iv) All categories of foreign exchange earners are allowed to credit 100% of their foreign exchange earnings to their EEFC Accounts subject to the condition that a) The sum total of the 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 approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ternational prices in conformity with the Foreign Trade Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made there under. (ii) No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year (i.e., in a block of 12 months) and the banks 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 copies of EDF where exports are made to neighboring countries by road, rail or river transport: (i) In case of exports by barges/country craft/road transport, the form should be presented by exporter or his agent at the Customs station at the border through which the vessel or vehicle has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 capital requirements subject to conditions as under: AD banks may take their own business decision to enter into export factoring arrangement on non-recourse basis. They should ensure that their client is not over financed. Accordingly, they may determine the working capital requirement of their clients taking into account the value of the invoices purchased for factoring. The invoices purchased should represent genuine trade invoices. In case the export financing has not been done by the Export Factor, the Export Factor may pass on the net value to the financing bank/ Institution after realising the export proceeds. AD bank, being the Export Factor, should have an arrangement with the Import Factor for credit evaluation collection of payment. Notation should be made on the invoice that importer has to make payment to the Import Factor. After factoring, the Export Factor may close the export bills and report the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... toring by the AD Category I bank(s) / Exim Bank, Project / Service exporters may deploy their temporary cash surpluses, generated 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 per cent of contract value in respect of on-site contracts by software exporter company / firm has been dispensed with. They should, however, repatriate the profits of on-site contracts after completion of the contracts. A.15 Export of goods on lease, hire, etc. Prior approval of the Reserve Bank is required for export of machinery, equipment, etc., on lease, hire basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import. Exporters should apply for necessary permission, through an AD Category I banks, to the Regional Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi) In case of exports made under deferred credit arrangement or to joint ventures abroad against equity participation or under rupee credit agreement, the number and date of the Reserve Bank approval and/or number and date of the relative RBI circular shall be recorded at the appropriate place on the EDF. (vii) Where duplicate copy of EDF is misplaced or lost, AD may accept copy of duplicate EDF duly certified by Customs. B.2 Export of goods/ software done through EDI ports (i) The shipping bill shall be submitted in duplicate to the authority concerned (Commissioner of Customs or the SEZ, if the export is made through it). (ii) After verifying and authenticating, the authority concerned shall hand over to the exporter, one copy of the shipping bill marked Exchange Control (EC) Copy for being submitted to the AD bank within 21 days from the date of export for collection/negotiation of shipping documents. However, in cases where EC copy of shipping bill is not printed in terms of CBEC s Circular No. 55/2016-Customs dated November 23, 2016 and data of shipping bill is integrated with EDPMS, requirement of submission of EC copy of shipping bill with the AD bank would not be there. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rough an AD. Or The AD is satisfied, on the basis of the standing and track record of the exporter and the arrangements made for realization of the export proceeds. In such cases, particulars of advance payment/letter of credit / AD s certification of standing, etc., of the exporter should be furnished on the form under proper authentication. (v) Any alteration in the name and address of consignee on the EDF form should also be authenticated by 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 prescribed by the Ministry of agriculture, Government of India, the EDF declaration procedure in this regard has been rationalised in consultation with the Government of India as outlined below should be followed by the exporter in conformity with Regulati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 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 should bill their overseas clients periodically, i.e., at least once a month or on reaching the milestone as provided in the contract entered into with the overseas client and the last invoice / bill should be raised not later than 15 days from the date of completion of the contract. It would be in order for the exporters to submit a combined SOFTEX form for all the invoices raised on a particular overseas client, including advance remittances received in a month. b) Contracts involving only one-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 valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the form and manner prescribed, attaching thereto the unused duplicate copy of EDF and the shipping bill. The Customs will verify that the shipment was actually shut out, certify the copy of the notice as correct and forward it to the Reserve Bank 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 individual shippers. b) AD Category I banks may negotiate HAWBs only if the relative letter of credit specifically provides for negotiation of these documents in lieu of Airway Bills issued by the airline company. (ii) Consolidation of sea cargo a) AD Category I banks may accept Forwarder s Cargo Receipts (FCR) issued by IATA approved agents, in lieu of bills of lading, for negotiation / collection of shipping documents, in respect of export transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roducts, vaccines and lifesaving drugs to health programmes of international agencies such as UN, WHO-PAHO and Government health programmes, the annual limit shall be up to 8% of the average annual export realisation during preceding three licensing years. Such free of cost supplies shall not be entitled to Duty Drawback or any other export incentive under any export promotion scheme. 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 that the shipment of goods is made within one year from the date of receipt of advance payment; the rate of interest, if any, payable on the advance payment does not exceed London Inter-Bank Offered Rate (LIBOR)/ 17 any other widely accepted / Alternative reference rate + 100 basis points; and the documents covering the shipment are routed through the AD Category I bank through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Dealer banks are required to issue bank guarantee (BG) / Stand by Letter of Credit (SBLC) for export performance, then the issuance should be rigorously evaluated as any other credit proposal keeping in view, among others, prudential requirements based on board approved policy. a) BG / SBLC may be issued for a term not exceeding two years at a time and further rollover of not more than two years at a time may be allowed subject to satisfaction with relative export performance as per the contract. b) 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 Categ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt advances flow into India. Doubtful cases as also instances of chronic defaulters may be referred to Directorate of Enforcement (DoE) for further investigation. A quarterly statement indicating details of such cases may be forwarded to the concerned Regional Offices of RBI within 21 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 up to the value of USD 5000 per exporter, per exhibition/trade fair. AD Category I banks may approve EDF of export items for display or display-cum-sale in trade fairs/exhibitions outside India subject to the following: (i) The exporter shall produce relative Bill of Entry within one month of re-import into India of the unsold items. (ii) The exporter shall report to the AD Category I banks the method of dispos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 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 conditions: a) The overseas branch/office has been set up or representative is posted overseas for conducting normal business activities of the Indian entity; b) The overseas branch/office/representative shall not enter into any contract or agreement in contravention of the Act, Rules or Regulations made there under; c) The overseas office (trading / non-trading) / branch / representative should not create any financial liabilities, contingent or otherwise, for the head office in India and also 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank is satisfied, on the basis of standing and track record of the exporter and arrangements have been made for realization of export proceeds. (ii) AD Category I banks may also permit 'Status Holder Exporters (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. 20 (iii) AD Category I banks may regularize cases of dispatch of shipping documents by the exporter direct to the consignee or his agent resident in the country of the final destination of goods, irrespective of the value of export shipment, subject to the following conditions: a) The export proceeds have been realised in full except for the amount written off, if any, in accordance with the extant provisions for write off. b) The exporter is a regular customer of AD Category I bank for a period of at least six months. c) The exporter s account with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tegory 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 the goods are exported on consignment basis, freight and marine insurance must be arranged in India. (v) AD Category I banks may allow the exporters to abandon the books, which remain unsold at the expiry of the period of the sale contract. Accordingly, the exporters may show the value of the unsold books as deduction from the export proceeds in the Account Sales. C.13 Opening / hiring of warehouses abroad AD Category I banks may consider the applications received from exporters and grant permission 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 for a period of one yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of interest is not stipulated in the contract. C.17 Reduction in invoice value in other cases (i) If, after a bill has 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 any. (ii) In the case of exporters who have been in the export business for more than three years, reduction in invoice value may be allowed, without any percentage ceiling, subject to the above conditions as also subject to their track record being satisfactory, i.e., the export outstanding do not exceed 5 per cent of the average annual export realization during the preceding three financial years. (iii) For the purpose of reckoning the percentage of export bills outstanding to the average export realizations during the preceding three financial years, outstanding of exports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beyond his control, c) The exporter submits a declaration that the export proceeds will be realised during the extended period, d) While considering extension beyond one year from the date of export, the total outstanding of the exporter does not exceed USD one million or 10 per cent of the average export realizations during the preceding three financial years, whichever is higher. 22 23 e) In cases where the exporter has filed suits abroad against the buyer, extension may be granted irrespective of the 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 known. (ii) In cases where the claim is payable abroad, the AD Category - banks must arrange to collect the full amount of claim due on the lost shipment, through the medium of their overseas branc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organization; The goods exported have been auctioned or destroyed by the Port / Customs / Health authorities in the importing country; The overseas buyer is not traceable over a reasonably long period of time. The unrealised 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; The cost of resorting to legal action would be disproportionate to the unrealised amount of the export bill or where the exporter even after winning the Court case against the overseas buyer could not execute the Court decree due to reasons beyond his control; Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amounts have remained unrealised consequent on dishonor of the bills by the overseas buyer and there are no prospects of realization. C.23.3. Notwithstanding anything contained in para C.23.1 and C.23.2 above, the AD Category-1 bank may, on request of the expor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Bank. C.24 Write off in cases of payment of claims by ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority (IRDA) (i) AD Category I banks shall, on an application received from the exporter supported by documentary 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 25 in 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 should not be construed as export realization in foreign exchange. C.25 Write-off relaxation As announced in the Foreign Trade Policy (FTP), 2015-20, realization of export proceeds shall not be insisted upon under any of the Export Promotion Schemes under the said FTP, subject to the following conditions: a) The write off on the basis of merits is allowed by the Reserve Bank or by AD Category I bank on behalf of the Reserve Bank, as per extant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Category I bank shall ensure compliance with all the regulatory requirement relating to the transactions; AD Category I bank may seek Auditors/CA certificate wherever felt necessary. Each of the export and import transaction shall be reported separately (gross basis) in FETERS/EDPMS/IDPMS, as applicable. AD Category I bank to settle the transaction in E/IDPMS by utilizing the set-off indicator and mentioning the details of shipping bills/bill of entry/invoice details being settled in the remark column (including details of entities involved). C.27 Netting-off of export receivables against import payments Units in Special Economic Zones (SEZs) AD Category - I banks may allow requests received from exporters for netting off of export receivables against import payments for units located in Special Economic Zones subject to the following: (i) The netting off of export receivables against import payments is in respect of the same Indian entity and the overseas buyer / supplier (bilateral netting) and the netting may be done as on the date of balance sheet of the unit in SEZ. (ii) The details of export of goods are documented in EDF (O) forms / DTR as the case may be while details of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ocuments 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 in India as an exporter, on account of exports from India. (2) An authorised dealer may give a guarantee in respect of any debt, obligation or other liability incurred by a person resident outside India, in the following cases, namely: (i) where such debt, obligation or liability is owned to a person resident in India in connection with a bonafide trade transaction: Provided that the guarantee given under this clause is covered by a counter-guarantee of a bank of international repute resident broad; (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. C.30 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the track record of the exporter; Verify the bona-fides of the transactions; Obtain from the exporter a certificate issued by DGFT / Custom authorities that no export incentive has been availed by the exporter against the relevant export or the proportionate incentives availed, if any, have been surrendered; Not insist on the requirement of re-import of goods, where exported goods have been auctioned or destroyed by the Port / Customs / Health authorities/ any other accredited agency in the importing country subject to submission of satisfactory documentary evidence. D.2.1. In all other cases AD banks shall ensure that procedures as applicable to normal imports are adhered to and that an undertaking from the exporter, to re-import the goods within three months from the date of refund of export proceeds, shall be obtained. Appendix List of Circulars which have been consolidated in the Master Direction on Export of Goods and Services Sl No Circular No. Subject Date 1 FEMA Notification No.23(R)/2015-RB dated January 12, 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 maintainin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of Electronic Bank Realisation Certificate (eBRC) September 15, 2017 22 A.P. (DIR Series) Circular No. 10 Re-export of unsold rough diamonds from Special Notified Zone of Customs without Export Declaration Form (EDF) formality November 22, 2019 23 A.P. (DIR Series) Circular No. 22 Settlement system under Asian Clearing Union (ACU) Mechanism March 17, 2020 24 A.P. (DIR Series) Circular No. 27 Export of Goods and Services- Realisation and Repatriation of Export Proceeds-Relaxation April 01, 2020 25 A.P. (DIR Series) Circular No. 03 Export Data Processing and Monitoring System (EDPMS) Module for Caution/De-caution Listing of Exporters - Review October 09, 2020 26 A.P. (DIR Series) Circular No. 08 External Trade Facilitation - Export of Goods and Services December 04, 2020 27 A.P. (DIR Series) Circular No. 13 Use of any Alternative reference rate in place of LIBOR for interest payable in respect of export / import transactions September 28, 2021 28 A.P. (DIR Series) Circular No. 09 Asian Clearing Union (ACU) Mechanism Indo-Sri Lanka trade July 08, 2022 29 A.P. (DIR Series) Circular No. 10 International Trade Settlement in Indian Rupees (INR) July 11, 2022 1 FEM (Export of Goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by FEM (Export of Goods and Services) Regulations, 2015 with effect from January 12, 2016 16 Inserted vide Gazette Notification No. 28.2015-2020 dated August 27, 2018. Prior to deletion it read as: AD Category I banks may consider requests for grant of EDF waiver from exporters as under: Status holders shall be entitled to export freely exportable items (excluding Gems and Jewellery, Articles of Gold and precious metals) on free of cost basis for export promotion subject to an annual limit of Rupees One Crore or 2% of average annual export realisation during preceding three licensing years, whichever is lower. For export of pharma products by pharmaceutical companies, the annual limit would be 2% of average annual export realisation during preceding three licensing years. In case of supplies of pharmaceutical products, vaccines and lifesaving drugs to health programmes of international agencies such as UN, WHO-PAHO and Government health programmes, the annual limit shall be upto 8% of the average annual export realisation during preceding three licensing years. Such free of cost supplies shall not be entitled to Duty Drawback or any other export incentive under any export promotion ..... X X X X Extracts X X X X X X X X Extracts X X X X
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