EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK Forex operation can be critical and risky so government tried to develop a systematic

process and regulated it. The FEMA [Foreign Exchange Management Act] is the law which regulates the forex market .The regulatory authority for the Indian forex market is the RBI. The RBI issues Guidelines/regulations/instructions from time to time which govern the functioning of the market .Only A.D’s [Authorised Dealers] licensed by the RBI can participate directly in the forex market. These are usually schedule commercial banks.

Foreign exchange operations can be regulated and controlled by following guidelines: 1. Trade Management-Managed by ministry of Finance – through DGFT Import & Export - Foreign Trade Policy (2009-14) 2. Exchange management – -Managed by ministry of Finance – through Reserve Bank of India - Authorised dealers 3. UCPDC -Managed by International Chambers of Commerce (ICC) - defines set of rules governing L/C 4. ECGC -Managed by ministry of CommerceThrough board of directors representing Govt, Banking, trade & industry

EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK 5. BANKS TO MAINTAIN PROPER RECORDS . Bank Policies -Services charged -Internal documentation -Finance -Security DIMENSIONS TO TRADE FINANCE • • • TRADE CONTROL EXCHANGE CONTROL BANK POLICY TRADE CONTROL • • • • • • PHYSICAL MOVEMENT OF GOODS IN AND OUTSIDE INDIA MIN OF COMMERCE THRO DGFT TRADE POLICY 2009-2014 HANDBOOK OF PROCEDURES-2VOLS HS CLASSIFICATION CODE BOOK PUBLIC NOTICES EXCHANGE CONTROL • • • • • PHYSICAL MOVEMENT OF FUNDS RBI THROUGH FEMA THROUGH ADs CUSTOMS FOR ACTUAL EXPORTS AND IMPORTS:END USE ENFORCEMENT DIRECTORATE: CHECK FOR ADHERENCE AND FOR VIOLATIONS.

ISBP ICC PUB NO. UCPDC ICC PUB NO.BOOK OF RULES AMENDED WEF 1ST OCT 1999 3. URC 3. 522 ICC PUB NO. PRESCRIBES FLOOR LIMITS FOR TRADING • ECGC: POLICIES TO EXPORTERS AND GUARANTEES AGAINST TO RISK 1.577 01-10-1997 01-01-1998 2. 645 2 ARE OPTIONAL 1. CREDIT INSURANCE 2. APEX BODY OF ADs AND AMCs 2. DOCDEX ICC PUB NO. 600 2. 525 1. URR 4.EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK • OTHER INSTITUTIONS FEDAI: 1. 581 . ISSUES 3. CONCILIATION ICC PUB NO. GUARANTEES PROTECT BANKERS IN CASE OF DEFAULT…OF ADVANCES TO EXPORTERS • INDIAN BANKS ASSOCIATION:FOR BACK TO BACK LETTER OF CREDIT (INLAND LETTER OF CREDIT) ICC • • • HQ AT PARIS 18 PUBLICATIONS 3 ARE MANDATORY AS PER RBI 01-07-2007 01-01-1996 01-07-1996 Jan 2003 ICC PUB NO. POLICIES BANKS[FOR EXPORTS] PROTECT EXPORTERS OVERSEAS( IMPORTER’S DEFAULT) 4. FRAMES RULES CHARGES. AR CIRCULARS 4.

by notification in the Official Gazette. (d) undertake functions on behalf of other agencies. It is an investor friendly legislation which aims to facilitate external trade and payments as well as promote an orderly development and maintenance of foreign exchange market. (b) check smuggling. Details about the rate and nature of customs duty leviable on any . India and for matters connected therewith or incidental thereto. It is headed by the 'Director General of Foreign Trade' and is responsible for formulating and executing the Foreign Trade Policy/Exim Policy with the main objective of promoting Indian exports. Customs Act.(i) may make provisions for facilitating and controlling foreign trade. guidelines and procedures related to all situations emerging from the export and import trade transactions. 1992. (iv) is also authorised to appoint a 'Director General of Foreign Trade' for the purpose of the Act. a "Directorate General of Foreign Trade (DGFT)" has been set up as an attached office of the Ministry of Commerce and Industry. The Act provides for the development and regulation of foreign trade by facilitating imports into. restrict and regulate exports and imports. 1962. the most important law which regulates all foreign exchange transactions including investments abroad is the Foreign Exchange Management Act (FEMA). 1962 came into operation on December 13. including formulation and implementation of the export-import policy. The primary objectives of this Act are to (a) regulate the genuine export and import trade transactions in keeping with the national economic policies and objectives. (ii) may prohibit. In India. regulations and norms pertaining to overseas investments in consultation with the Central Government. (iii) is authorised to formulate and announce an export and import policy and also amend the same from time to time.1999 .EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK In India. (c) collect revenue. the Ministry of Commerce and Industry has been set up as the most important organ concerned with the promotion and regulation of foreign trade in India. As per the provisions of the Act. and augmenting exports from. This comprehensive Act provides the legal framework. Accordingly. and (e) gather i trade statistics. the main legislation concerning foreign trade is the Foreign Trade (Development and Regulation) Act. In accordance with the provisions of the Act. the Government :. in all or specified cases as well as subject them to exemptions. 1962 The consolidated and self-contained Customs Act. Reserve Bank of India (RBI) has been authorised to frame various rules. The DGFT also issues licences to exporters and monitors their corresponding obligations through a net work of 32 regional offices. Under the Act.

2011.. However.R. 1 976 have generally been retained. Registration is granted only after thorough security vetting of the activities and antecedents of the organization and office bearers thereof. the Foreign Contribution (Regulation) Act. 1975 with regard to imports and exports. viz. The Act also seeks to regulate flow of foreign funds to voluntary organizations with the objective of preventing any possible diversion of such funds towards activities detrimental to the national interest and to ensure that individuals and organizations may function in a manner consistent with the values of the sovereign democratic republic. such organization is free to receive foreign contribution from any foreign source for its stated objectives. The prime objective of the Act is to regulate the acceptance and utilization of foreign contribution and foreign hospitality by persons and associations working in the important areas of national life. 2010 was notified in the Gazette of India – Extraordinary – Part II . 2011.EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK item. public servants. Consequently. respectively.S. The registration is granted only to such association which has proven track record of functioning in the chosen field of work during last three years and after registration. While the provisions of the repealed FCRA. Organizations seeking foreign contributions for definite cultural. 2010. as decided by the Central government. The Foreign Contribution (Regulation) Act. 1976has been repealed. judges and other people working the important areas of national life like journalists. 2010 have also come into force simultaneously with FCRA. such organizations which are newly established and do not have proven track record of functioning may also receive foreign contribution for specific activities. 2010 (42 of 2010) dated the 26th September. social. 349 (E) dated the 29th April. 2010 is an improvement over the repealed Act as more stringent provisions have been made in order to prevent misutilisation of the foreign contribution received by the associations.R. are specified in the First and Second Schedule of the Customs Tariff Act. the FCRA. the Act has come into force with effect from the 1 st May. The Foreign Contribution (Regulation) Rules. 2010 vide Gazette Notification vide G. for . economic. The focus of the Act is to ensure that the foreign contribution and foreign hospitality is not utilized to affect or influence electoral politics. 2011 vide Gazette Notification vide G. printers and publishers of newspapers.Section I dated the 27th September. etc. 349 (E) dated the 29th April. However.S. educational or religious programmes may either obtain registration or prior permission to receive foreign contribution from Ministry of Home Affairs by making application in the prescribed format and furnishing details of the activities and audited accounts.2011 made under section 48 of FCRA. the earlier Act.

intelligence. dated 18th November 2004 as the central national agency responsible for receiving. and and was more complex consist of only 49 sections. PMLA and the Rules notified there under came into force with effect from July 1. Presumption of negative These presumptions of Mens . strengthening against responsible coordinating international crimes. seizure and confiscation of the proceeds of crime. Explain The Difference Between FERA and FEMA ANS: DIFFERENCES BETWEEN FERA AND FEMA Sr. FIU-IND and Director (Enforcement) have been conferred with exclusive and concurrent powers under relevant sections of the Act to implement the provisions of the Act. FEMA is much simple. PMLA defines money laundering offence and provides for the freezing. Financial Intelligence Unit – India (FIU-IND) was set by the Government of India vide O.M. processing. The PMLA and rules notified there under impose obligation on banking companies. maintain records and furnish information to FIU-IND. analyzing and disseminating FIU-IND efforts information is of also national and relating and related to for suspect financial and transactions. is an investigation and enforcement agencies in pursuing the global efforts money laundering FIU-IND independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister THINGS TO REMEMBER 1. 2005. DIFFERENCES No 1 2 PROVISIONS FEATURES FERA FEMA FERA consisted of 81 sections. Director.EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK a specific purpose and from a specific source after seeking project based prior permission (PP) from the Ministry of Home Affairs. The Prevention of Money Laundering Act The Prevention of Money Laundering Act. 2002 (PMLA) forms the core of the legal framework put in place by India to combat money laundering. financial institutions and intermediaries to verify identity of clients.

punishable with imprisonment as per code of criminal procedure. under COMPARED WITH FERA. 1973 7 QUANTUM PENALTY. money changes. person. current account Transaction person.EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK intention (Mens Rea ) and Rea and abatement have been joining hands in offence excluded in FEMA (abatement) existed in FERA NEW TERMS FEMA IN Terms like Capital Account Transaction. Now the criteria of "In India for 182 days" to make a person resident has been brought under FEMA. service etc. Terms like Capital Account Transaction.. 1961 will also be considered a non-resident for the purposes of application of FEMA. MEANING OF There was a big difference in the "RESIDENT" AS definition of "Resident". 5 PUNISHMENT 6 Any offence under FERA. the offence is considered to be a civil offence only punishable with some amount of money as a penalty. service etc. were not defined in FERA. for instance a business man going abroad and staying therefor a period of 182 days or more in a financial year will become a non-resident under FEMA. have been defined in detail in FEMA 3 4 DEFINITION AUTHORISED PERSON OF Definition of "Authorised Person" The definition of Authorised in FERA was a narrow one ( 2(b) person has been widened to include banks. Imprisonment is prescribed only when one fails to pay the penalty. are in consistent with income Tax Act. . (2 ( c ) The provision of FEMA. and Income Tax Act INCOME TAX ACT. Here. but a person who is considered to be non-resident under FEMA may not necessarily be a non-resident under the Income Tax Act. in respect to the definition of term " Resident". current Account Transaction. decreased to three times the amount involved. was nearly the five penalty has been considerably times the amount involved. was a criminal offence . Therefore a person who qualifies to be a non-resident under the income Tax Act. off shore banking Units etc. OF The monetary penalty payable Under FEMA the quantum of under FERA.

should ensure that the imports into India are in conformity with the Export Import Policy in force and Foreign Exchange Management (Current Account Transactions) Rules.381 (E) dated May 3. In respect of units operating in the Domestic Tariff Area. Who regulate Import Trade in India? ANS. 2000 and the directions issued by RBI under Foreign Exchange Management Act from time to time. G.35) 8 9 RIGHT OF ASSISTANCE DURING LEGAL PROCEEDINGS. Branches while undertaking import transactions."An appeal from an order of Appellate Tribunal would lie to the High Court. FERA did not contain any express provision on the right of on impleaded person to take legal assistance FEMA expressly recognises the right of appellant to take assistance of legal practitioner or chartered accountant (32) 10 POWER SEARCH SEIZE OF FERA conferred wide powers on The scope and power of search AND a police officer not below the and seizure has been curtailed rank of a Deputy Superintendent to a great extent of Police to make a search 2.EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK APPEAL An appeal against the order of "Adjudicating office". Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry. This form can be downloaded from the DGFT website or from this site under the .R.18. Government of India. Department of Commerce. The units located in the EPZ or the EOUs can obtain the same from the Development Commissioners concerned. 3. 2000 framed by Government of India vide Notification No.S. What is Importer Exporter Code (IEC) and where can this be obtained? ANS: Importer Exporter Code (IEC) is required for carrying out import or export activity. IEC can be obtained from the office of the Director General of Foreign Trade. (sec 17. before " Foreign Exchange Regulation Appellate Board went before High Court The appellate authority under FEMA is the special Director ( Appeals)Appeal against the order of Adjudicating Authorities and special Director (appeals) lies before "Appellate Tribunal for Foreign Exchange.

If an IEC holder does not wish to operate allotted IEC number. If it is provided it will facilitate faster communication. E-mail is not mandatory. Bankers Certificate 4.00 (Expert TIP : Pay via EFT (Electronic Fund Transfer ).DGFT Office. What are the documents required for obtaining IEC Number? What categories of importers or exporters are exempted from obtaining Importer . • Each individual page of the application has to be signed by the applicant. he may surrender the same by informing issuing authority. Validity of IEC An IEC number allotted to an applicant shall be valid for all its branches / divisions / units / factories. PAN Number 2. . The physical application containing required documents should reach DGFT RLA concerned within 15 days of its online submission. and submit IEC Online Application form.Exporter Code (IEC) number Ans: Full From of IEC Code is : “Importer Exporter Code ”. To import or export in India. • Part 1 & Part 4 has to be filled in by all applicants. IEC Code Number Application Fee Rs 250. No person or entity shall make any Import or Export without IEC Code Number. Current Bank Account 3. IEC Code is unique 10 digit code issued by DGFT Only one IEC would be issued against a single PAN. 4. Mandatory Requirements to apply for IEC Code Number 1. Check List of Documents to apply for IEC Code Covering Letter on your company's letter head for issue of new IEC Code Number. If you wish to receive IEC Number instantly) 5. issuing authority shall immediately cancel it and electronically transmit it to DGFT and Customs authorities. 6.EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK Heading Exim Policy and Procedures. • • Two copies of the application in prescribed format ( Aayaat Niryaat Form ANF 2A ) must be submitted to your regional Jt. In case of applications submitted electronically. On receipt of such intimation. IEC Code is mandatory.

25. 2.EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK • No hard copies of Part 1 may be submitted.00 Bank Receipt (in duplicate)/Demand Draft/EFT details evidencing payment of application fee in terms of Appendix 21B.25. 3. Equipments and Technologies (SCOMET) as listed in Appendix. • Rs 250. Persons importing or exporting goods for personal use not connected with trade or manufacture or agriculture. Persons importing/exporting goods from/to Myanmar through Indo-Myanmar border areas provided the CIF value of a single consignment does not exceed Indian Rs. hard copy of Part 1has to be submitted. • Only relevant portions of Part 2 need to be filled in.postal stamp for delivery of IEC certificate by registered post or challan/DD of Rs. The following permanent IEC numbers shall be used by the categories of importers/ exporters mentioned against them for import/ export purposes. Schedule 2 of the ITC(HS) except in the case of exports by category(ii) above. • Two copies of passport size photographs of the applicant duly attested by the Banker of the applicant. • Self addresses envelope with Rs. The following categories of importers or exporters are exempted from obtaining Importer .. the exemption from obtaining Importer-Exporter Code (IEC) number shall not be applicable for the export of Special Chemicals. The permanent IEC number as mentioned above. 4. shall be used by non-commercial PSUs. 1993.Exporter Code (IEC) number: 1. 6. Importers covered by clause 3 (1) [except sub-clauses (e) and (l)] and exporters covered by clause 3(2) [except sub-clauses (i) and (k)] of the Foreign Trade (Exemption from application of Rules in certain cases) Order. • Certificate from the Banker of the applicant firm in the format given in Appendix 18A.100/.for speed post.25/.000. . • Self certified copy of PAN issuing letter or PAN (Permanent Account Number) Card issued by Income Tax Authority. Materials. Persons importing/exporting goods from/to Nepal provided the CIF value of a single consignment does not exceed Indian Rs.000. However.3. Ministries/Departments of the Central or State Government. Organisms. However in cases where applications are submitted otherwise. 5. Note: Commercial Public Sector Undertaking (PSU) who have obtained PAN will however be required to obtain Importer Exporter Code number.

Indians returning from / going abroad and claiming benefit 0100000045 under Baggage Rules.29 of HBPv1. subject to value ceilings of single consignment as given in Para 2. All Ministries / Departments of any State Government and 0100000029 agencies wholly or partially owned by them. Individuals / Charitable Institution /Registered NGOs importing goods. Director. Persons importing / exporting permissible goods as notified from time to time. National Blood Group Reference Laboratory. . 0100000169 Non-commercial imports and exports by entities who have been authorized by Reserve Bank of India. not connected with trade or manufacture or agriculture.8(iv) above. Bombay 0100000100 or their authorized offices. 0100000126 which have been exempted from Customs duty under Notification issued by Ministry of Finance for bonafide use by victims affected by natural calamity.EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK Code Number CATEGORIES OF IMPORTER AND EXPORTERS All Ministries / Departments of Central Government and 0100000011 agencies wholly or partially owned by them. Namgaya 0100000134 Shipkila and Nathula ports. Counselor officers in India and officials 0100000037 of UNO and its specialized agencies. 0100000061 Persons importing / exporting goods from /to Nepal Persons importing / exporting goods from /to Myanmar through 0100000070 Indo-Myanmar border areas 0100000088 Ford Foundation Importers importing goods for display or use in fairs / exhibitions or similar events under provisions of ATA carnet 0100000096 This IEC number can also be used by importers importing for exhibitions/fairs as per Para 2. Diplomatic personnel. Persons / Institutions / Hospitals importing or exporting goods 0100000053 for personnel use. from / to China through Gunji.

EXPORT-IMPORT TRADE -REGULATORY FRAMEWORK .

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