Exports -

Regulations
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.

Export Transactions must

be in conformity with

DGFT extended Foreign Trade Policy 2015-20 and

Handbook of Procedures 2015-20 till 31st March 2021
 Foreign Exchange
Management Act,
1999

Foreign Exchange Foreign Exchange

Management (Current Management (Export
Account Transactions) of Goods and Services)
Rules, 2000 Regulations, 2015

Master Direction –
Export of Goods
and Services
Issuance of Guarantees in favour of non-residents on behalf of resident Exporters

Foreign Exchange
Management
(Guarantees)
Regulations, 2000

In terms of Regulation 4 of the Foreign Exchange

Management (Guarantees) Regulations, 2000, AD
Category – I banks have been permitted to issue
guarantees on behalf of exporter clients on account
of exports out of India subject to specified conditions.
Realization and Repatriation of proceeds of Goods / Software / Services

Exporters are under obligation to realize and repatriate the full value of goods /
software / services to India within a stipulated period from the date of export

Units in SEZs Units in EHTPs

Status holder
Units in STPs
Exporters The stipulated period at present is
Export Oriented Units in BTPs nine months from the date of
Units export for all exporters

All other Exporters See next slide for relaxation in

the wake of Covid-19
SEZ: Special Economic Zone; EHTP: Electronic
Hardware Technology Park; STP : Software
Technology Park; BTP : Bio-Technology Park
 Realization and Repatriation of proceeds of Goods /
Software / Services …. Contd…

The stipulated period at present is nine months from the date of export for all
exporters including units in Special Economic Zones (SEZs), Status Holder Exporters –
1-Start to 5-Star Exporters, Export Oriented Units (EOUs), Units in a) Electronics
Hardware Technology Parks - EHTPs, b) Software Technology Parks – STPs; c) Bio-
Technology Parks (BTPs).

For Goods exported to a warehouse established outside India, proceeds are to be

realized within fifteen months from the date of shipment of goods.

In the wake of Covid-19 Pandemic, Reserve Bank of India vide AP(Dir) Circular No. 27
Dated 1st April 2020, has extended the present period of realization and repatriation
to India of the amount representing the full export value of goods or software or
services from nine months to fifteen months from the date of export in respect of
exports made up to or on 31st July 2020. Fifteen months period permitted in respect of
goods exported to a warehouse established outside India, remains unchanged.
 STATUS HOLDER EXPORTERS FTP: 2015-20
WHO IS A STATUS HOLDER EXPORTER : AS PER FOREIGN TRADE POLICY 2015-
2020, THERE ARE FIVE CATEGORIES OF STATUS HOLDER EXPORTERS
EXPORT PERFORMANCE FOB/FOR (AS CONVERTED) VALUE IN US DOLLARS
MILLION DURING CURRENT YEAR AND TWO PREVIOUS YEARS

ONE STAR EH TWO STAR EH THREE STAR EH FOUR STAR EH FIVE STAR EH

3 25 100 500 2000

Double Weightage: Micro, Small and Medium Double Weightage is

applicable for One Star
Enterprises; Manufacturing units having ISO/BIS; Units
Export House only. Only
located in North Eastern States including J&K and one of the conditions of
Sikkim; Units located in Agri Export Zones (There are Double Weightage can be
60 notified Agri-Export Zones) taken
 Invoicing of Export Contracts in Indian Rupees

There is no restriction on invoicing of export contracts in Indian Rupees in

terms of the Rules, Regulations, Notifications and Directions framed under the
Foreign Exchange Management Act 1999

Para 2.52 of the Foreign Trade

Policy (2015- 2020):

OR
“All export contracts and
invoices shall be denominated
either in freely convertible
currency or Indian rupees, but
export proceeds shall be Freely Convertible Currencies
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”
 ASIAN CLEARING UNION - Members

Central Bank of Islamic Republic of Iran

Iran
(Membership since 1974)

India Reserve Bank of India

Royal Monetary Authority of Bhutan
(Membership since 1974) Bhutan
(Became Member in 1999)

Central Bank of Sri Lanka

Sri Lanka
(Membership since 1974)

State Bank of Pakistan Maldives Maldives Monetary Authority

Pakistan
(Membership since 1974) (Became Member in 2009)

Bangladesh Bangladesh Bank

(Membership since 1974)

Central Bank of Myanmar

Myanmar (Membership since 1974)

Nepal Rastra Bank

Nepal (Membership since 1974)
 MANNER OF RECEIPT OF FOREIGN EXCHANGE -I
Foreign Exchange Management (Manner of Receipt and
Payment) Regulations, 2016

Regulation : 3
Manner of Receipt of Foreign Exchange

A: Asian Clearing Union B: All countries other than

ACU
Bangladesh, Myanmar, Pakistan, Sri Nepal Islamic
Lanka, Republic of Maldives and Republic
Bhutan of Iran a) Receipts in Rupees from
the account of a Bank
situated in any country
Exports Other than Exports Payment In any freely other than a member
may be convertible
in country of the Asian
currency –
Rupees or in terms Clearing Union
Other than
Myanmar of directions b) Receipt in any freely
Myanmar
issued by convertible currency
RBI to ADs

ACU Dollar / a) ACU Dollar / ACU Euro /

ACU Euro / ACU Yen ##
ACU Yen ## b) In any freely convertible
currency Receipts for export of goods
to Nepal may be made in
## : By Debit to ACU Dollar/ACU Euro or ACU Yen free foreign exchange,
account of banks in Member countries maintained in provided the importer
India; or by Credit to ACU Dollar / ACU Euro or ACU resident in Nepal has been
Yen account of AD Bank maintained in Member permitted by Nepal Rashtra
countries Bank
 MANNER OF RECEIPT OF FOREIGN EXCHANGE - II
Foreign Exchange Management (Manner of Receipt and
Payment) Regulations, 2016

Regulation : 4
Manner of Receipts in certain cases
4.1 : Receipt for Export may also be made by exporter as under

Through
Govt. to
Exchange In the form
Debit to Payment Govt.
From Buyer Houses of Precious
FCNR/ NRE / through Arrangemen
During Visit [Not more than Metals [SEZs
SNRR Credit Card Rs. 15 Lakh per ts / Exim
/ EOUs]
export Bank
transaction)

4.2 : Any person resident in India may also receive any payment for other than exports by means of
postal order issued by a post office outside India or by a postal money order issued by such post
office
 PROCESSING OF EXPORT RELATED RECEIPTS THROUGH ONLINE PAYMENT
GATEWAY SERVICE PROVIDERS – OP-GSPs

AD-I Banks have been allowed to offer the facility of repatriation of export related
remittances by entering into standing arrangements with OPGSPs. Following are the
conditions:
❖ AD-I Bank to carry due diligence of OPGSP
❖ Ceiling of USD 10000 on value of Export per export transaction
❖ AD I Bank to open NOSTRO collection account for receipt of export related payments through
such arrangement – Exporter to open notional account with OPGSP, no funds should remain in this
notional account – funds to be automatically swept into NOSTRO collection account of AD I Bank
❖ Bank may open separate OPGSP wise Nostro Collection account also for better reconciliation
❖ Permitted debits to Nostro Collection account are: Repatriation of proceeds to India; Fee
Commission etc. of OPGSP as per predetermined rates and on predetermined frequency; Charge
back to the importer where exporter has failed in discharging its obligations under the sales
contract
❖ Balances held in Nostro Collection Account shall be repatriated and collected to exporter’s
account immediately after receipt of confirmation from Importer – in no case later than 7 days
from date of credit to Nostro Collection Account
❖ AD Bank to satisfy itself regarding bona-fides of transactions and should ensure that appropriate
purpose codes are reported to RBI
❖ AD Bank to submit all relevant information to RBI as and when advised
❖ Reconciliation and Audit of Nostro collection should be carried out on quarterly basis
❖ Resolution of complaints of exporter is the responsibility of OPGSP
❖ AD Bank to report details of arrangement to RBI FED Central Office, Mumbai
 Third party payments for export transactions

Firm Irrevocable Order backed by a tripartite

agreement

May not be insisted in cases where documentary

evidence for circumstances leading to third party
payments has been produced subject to -
THIRD PARY a) AD Bank should be satisfied with the bona-fides of
IMPORTER the transaction and export documents, such as
Invoice/FIRC

a) AD Bank should consider the FATF statements while

handling such transactions

Third party payment should be routed through banking

channel only
Exporter to declare the third-party remittance in the
Export Declaration Form and it would be responsibility
of exporter to realize and repatriate the export
EXPORTER proceeds from such third party named in the EDF

Reporting of outstanding, if any in the XOS would continue to be shown against the name of exporter
but name of third party to be mentioned in place of overseas buyer
 FOREIGN CURRENCY ACCOUNT IN INDIA BY RESIDENTS

Foreign Exchange Management (Foreign Currency Accounts by

a Person Resident in India) Regulations dated 21-Jan-2016

Opening, Holding, Maintaining Foreign Currency Account in India

By a Unit in a
Special Economic
SEZ Zone

Diamond Dollar
Account RFC Resident Foreign
DDA Currency
(D) (Domestic) Account

Who have undertaken a

EXP RFC
Resident Foreign
Currency Account
construction contract or
a turnkey project outside
India

OTH EEFC Exchange Earners

Foreign Currency
Account

✓ Agents of Shipping / Airlines companies

✓ Ship manning / crew managing agencies
✓ Foreign Co’s Project Offices set up in India
✓ Indian Co. receiving FDI
✓ Organizers of Seminars, conferences etc.
 FOREIGN CURRENCY ACCOUNT OUTSIDE INDIA BY RESIDENTS

Foreign Exchange Management (Foreign Currency Accounts by

a Person Resident in India) Regulations dated 21-Jan-2016

Opening, Holding, Maintaining Foreign Currency Account outside India

Exporters – who have

undertaken construction or
For making turnkey projects outside India
Overseas Direct
Investments
ODI EXP
Startups having overseas
subsidiary Accounts of Co’s
office/branch / Rep
Start Offices
Accounts in respect
BO
of Start-ups
-ups

OTH ADs Accounts of

authorised dealers
or their branches
 FOREIGN CURRENCY ACCOUNTS
- A few types given in Master Directions for Exports

1) By participants in International Exhibition / Trade Fair

AD-I Banks have been general authority to allow opening and maintaining of Foreign
Currency Accounts by Exporters who are participating in International Exhibition /
Trade Fair. Balance in such accounts is to be repatriated to India through normal
banking channels within a period of one month from the date of closure of exhibition
/ trade fair
2) By exporter with good track record:
RBI may consider applications in form EFC from exporters having good track record
for opening a foreign currency account with AD Banks in India or Outside India
subject to terms and conditions
3) By Indian Entity can also open hold and maintain a foreign currency account with
a bank outside India, in terms of its overseas office / branch

4) A Unit located in Special Economic Zone may open, hold and maintain a foreign
currency account with an AD I Bank in India subject to conditions stipulated in the
FEM(FC accounts by a person resident in India) Regulations

5) A Project or Service Exporter (resident in India) may open, hold and maintain FC
account with a bank outside or in India, subject to terms and conditions in PEM.
 DIAMOND DOLLAR ACCOUNT

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 2 years in import /
export of diamonds / coloured gemstones /diamond and coloured gemstones
studded jewellery / plain gold jewellery and having an average turnover of Rs. 3
Crore or above during preceding three licensing years are permitted to transact
their business through Dimond Dollar Account.

Permitted Credits:
Maximum
Five Currency ❑ Pre-shipment and post-shipment credit availed in USD
Current
Diamond of Realisation of export proceeds of rough, cut, polished
account, no
Dollar denominati diamonds/ diamond studded jewellery
interest to
Accounts on is US ❑ Realization in USD from local sale of rough, cut polished
be paid
can be Dollar only
diamonds
opened

Permitted Debits
❑ Payment for import / purchase of rough diamonds from overseas / local sources
❑ Payment for purchase of cut and polished diamonds, colour gemstones and plain
local jewellery from local market
❑ Payment for import / purchase of gold from overseas / nominated agencies and
repayment of US Dollars loans availed from the bank
❑ Transfer to rupee account of the exporter
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 approved
purposes or forward commitments.
 NON-INTEREST-BEARING CURRENT ACCOUNT

100% OF FOREIGN EXCHANGE EARNINGS

CAN BE CREDITED TO EEFC
EXPORTER
JOINT ACCOUNT – FORMER
OR SURVIVOR PERMITTED
with RESIDENT CLOSE
RELATIVE

AD-I Bank

JOINT
NO CREDIT FACILITIES – FUND BASED OR
HOLDER NON-FUND BASED TO BE ALLOWED AGAINST
SECURITY OF EEFCHey

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 approved purposes or forward commitments.
 EXCHANGE EARNERS FOREIGN CURRENCY (EEFC) ACCOUNT

A person resident in India may open, hold and maintain with an authorised dealer in India, a foreign
currency account known as Exchange Earners Foreign Currency (EEFC) Account subject to the terms
and conditions as under:
LIMIT UP TO WHICH FOREIGN CURRENCY MAY BE CREDITED TO EEFC ACCOUNT
100 Per Cent of Foreign Exchange Earnings – as specified below, can be credited in EEFC Account

Inward Remittances through Banking Channel , other than following

1 ➢ remittance received pursuant to any undertaking given to RBI; or

➢ which represents foreign currency loan raised or investment received from
outside India; or
➢ Those received for meeting specific obligations by the account holder

➢ Payment received in Foreign Exchange by a 100% EOU; Unit in EPZ, STP, EHTP, for
supply of goods to a similar unit or to unit in DTA ( Domestic Tariff Area); or
2 ➢ Payment received in foreign exchange by unit in DTA for supply of goods to a
unit in SEZ
 EEFC ACCOUNT ….. Contd.

➢ Payment received by an exporter from an account maintained with an

3 authorised dealer for the purpose of counter trade, in accordance with the
approval granted in terms of Export Regulations – as amended

4 ➢ Advance remittance received by an exporter towards exports of goods or

services

➢ Payment received for export of goods and services, out of funds representing
5 repayment of State Credit in USD held in the account of Bank for Foreign
Economic Affairs, Moscow, with an AD in India

➢ Professional earnings including director’s fees, lecture fees, honorarium and

6 similar other earnings received by a professional by rendering services in his
individual capacity

➢ Payment received by an Indian startup, or any other entity as may be notified

7 by RBI in consultation with Central Government, arising out of exports/sales
made by the said entity or its overseas subsidiary, if any
 EXCHANGE EARNERS FOREIGN CURRENCY ACCOUNT
:::PURPOSE, DEBITS:::

❑ 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 provisions of FEM(CAT) Rules 2000 as amended from time to time.

❑ AD Category – I banks may permit exporters to repay packing credit advances whether availed
in Rupee or in foreign currency from balances in their EEFC account and / or Rupee resources to
the extent exports have actually taken place.

❑ Where a part of the export proceeds are credited to an EEFC account, the export declaration
(duplicate) form may be certified as: “Proceeds amounting to …… representing ….. percent of
the export realization credited to the EEFC account maintained by the exporter with……”

Clients having units / office in SEZ need to open SEZ Accounts

only and there CANNOT BE EEFC accounts for same
 COUNTER-TRADE ARRANGEMENT

❑ Reserve Bank to consider proposals involving adjustment of value of goods imported into India
against value of goods exported in terms of an arrangement voluntarily entered into between
Indian party and the overseas party through an Escrow Account opened in India in US Dollar –
following are the conditions :

No interest will be payable on

All imports and exports under the
arrangement should be at
international prices in conformity
with FTP, FEMA, FEM RULES, FEM
REGULATIONS
balances standing to the credit of
Escrow Account but funds temporarily
01 rendered surplus may be held in short-
term deposit for 3 months in a block of 02
12 months and interest will be payable
at applicable rate

Application for permission for opening

No Fund-based or non-fund-based
facilities would be permitted against
the balances in the Escrow Account
an Escrow Account may be made by
03 the overseas exporter / organization
through his / their AD Category – I 04
bank to the Regional Office
concerned of the Reserve Bank.
 FEW MORE POINTS UNDER PART A

A.8 Export to neighbouring countries by rail, road or river

Custom station at border when through water/road
Custom station at designated railway stations

A.9 Border trade with Myanmar has been discontinued

A.10 Counter trade arrangement with Romania (To be referred to RBI)

A.11 Repayment of State Credit : Erstwhile USSR non-convertible rupee funds to the credit of USSR –
separate instructions

A.12 Forfaiting

A.13 Export Factoring on non-recourse basis

A.14 Project export and services exports

A.15 Export of goods on lease, hire (RBI approval)

A.16 Elongated terms: Refer to RBI

A.17 Export of Currency (Rs 25000 is the limit for carrying Indian Currency – other than Nepal/Bhutan)
End of Part A
Exports -
Regulations
 Section 7(1) & Section 7(3) of Foreign Exchange Management Act, 1999

Section 7(1) Every exporter of goods shall

a) furnish to Reserve Bank or to such other authority a declaration in such form and in such
manner as may be specified, containing true and correct material particulars, including the
amount representing the full export value or, if the full export value of the goods is not
ascertainable at the time of export, the value which the exporter, having regard to prevailing
market conditions, expects to receive on the sale of the goods in a market outside India;
b) furnish to the Reserve Bank such other information as may be required by the Reserve Bank for
the purpose of ensuring the realisation of the export proceeds by such exporter

Section 7(3) Every exporter of services shall furnish to Reserve Bank or to such other authority a
declaration in such form and in such manner as may be specified, containing the true and
correct material particulars in relation to payment for such services

As specified in regulations, exporters are required to declare full value of exports at the port of
shipment on EDF/Shipping Bill form. Export of Software through electronic medium is to be declared
on form SOFTEX.

EDF is used for declaration of Export of Goods at Non-EDI ports. Form now Shipping Bill is used for
Declaration of Exports of Goods at EDI ports.
 Procedure in case of exports taking place through Non-EDI Ports

Examination of Goods –
Certification of Quantity
passed for shipment on AD-I Bank
EDF form at Duplicate Copy
Non EDI Port

Duplicate EDF duly

assessed given to exporter

CARGO together
with Duplicate EDF
Within 21
Days from
Duplicate Date of
copy of Shipment
EDF
 EDF Procedure: Non-EDI Port: Reporting transaction in EXPORT DATA PROCESSING &
MONITORING SYSTEM

❑ After the documents have been negotiated /

sent for collection, the AD shall report the
transaction through Export Data Processing AD-I Bank
and Monitoring System (EDPMS) to the
Reserve Bank and retain the documents at
their end.

❑ 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 Within 21
the EDF. Days from
Date of
❑ Where duplicate copy of EDF is misplaced or Shipment
lost, AD may accept copy of duplicate EDF
duly certified by Customs.
 Liberalization and simplification of procedure in case of exports taking
place through the EDI Ports

AD-I Bank
Brings Cargo to
SHIPPING BILL Customs
PREPARED ON
ICEGATE AND
UPLOADING OF Examination of Goods
DOCUMENTS – Certification of
Quantity passed for
shipment in ICEGATE

Within 21
Exporter gets Days from
information about Date of
Shipping Bill No. Shipment
 EDF PROCEDURE – EXPORTS BY POST

AFTER CUSTOM
CLEARANCE
ORIGINAL EDF
WILL BE RETAINED

Within 21 Days
from Date of
Shipment

Countersign after
ensuring that Post Parcel
addressed to
Correspondent Bank –
AD-I Bank
AD-I Bank Duplicate is retained by
AD Bank
 EDF PROCEDURE – EXPORTS BY POST

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 favour
of the exporter and has been advised through the AD concerned.
Or
(b) The full value of the shipment has been received in advance by the exporter
through an AD.
Or
(c) 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.
 SOFTEX FORM

(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 authority
for certification. Since the SOFTEX data from STPI/SEZ are being
transmitted in electronic format to RBI, the exporters now have to
submit the SOFTEX form in duplicate as per the revised procedure.

(ii) STPI/SEZ will retain one copy and handover duplicate copy to
exporters after due certification. Exporters have to provide
information about all the invoices including the ones lesser than
US$25000, in the bulk statement in excel format.

(iii) A common SOFTEX form has been devised to declare single as well
as bulk software exports
 SOFTEX FORM… contd

(iv) Invoicing of software exports

a) Periodical billing in respect of long duration contracts – at least once in a month

or on reaching a milestone mentioned in the contract. Upon completion of
contract, invoice to be raised within 15 days from date of completion

b) In case of one-shot operation, invoice should be raised within 15 days from 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 officials
may also certify the SOFTEX Forms of EOUs, which are registered with them.

d) The invoices raised on overseas clients as at (a) to (c) above will be subject to
valuation of export declared on SOFTEX form by the designated official concerned
of the Government of India and consequent amendment made in the invoice
value, if necessary.
 SHORT SHIPMENT AND SHUT-OUT SHIPMENT

SHORT SHIPMENT
In respect of Export Declaration Form already filed with Customs if goods are short-
shipped, the exporter must give notice of short-shipment to the Customs in the form
and manner prescribed.

On receipt of short-shipment notice from Customs, the same is to be attached with

Documents

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 short-shipment notice with the Customs and that he will furnish it as soon as it is
obtained.

SHUT-OUT SHIPMENT
Where a shipment has been entirely shut out and there is delay in making
arrangements to re-ship, the exporter will give notice in duplicate to the Customs in
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, and then certify the
copy of the notice as correct and forward it to RBI together with unused duplicate
copy of the EDF.
 CONSOLIDATION OF AIR CARGO / SEA CARGO

CONSOLIDATION OF AIR CARGO

In order to save cost of freight, it is common to engage Consolidating Cargo Agents

who consolidates consignments of several shippers and airship one big consignment
through Airway company. The Airlines issues a Master Airway Bill to the Consolidated
Cargo Agent who in turn issues House Airway Bills (HAWB) to shippers.

When export documents are tendered to AD Bank contains HAWB, bank has to ensure
that Letter of Credit specifically provides for HAWB.
 CONSOLIDATION OF AIR CARGO / SEA CARGO

CONSOLIDATION OF SEA CARGO

For sea consignment the Cargo consolidator is Freight Forwarder, who issues Forwarder’s
Cargo Receipt or FCR.

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 backed by letters of credit, if the relative
letter of credit specifically provides for negotiation of this document, in lieu of bill of
lading.

Even when the documents are not backed by Letter of Credit, bank can
purchase/discount such bills provided FCR is issued by IATA approved agents and
provided their 'relative sale contract' with overseas buyer provides for acceptance of
FCR as a shipping document in lieu of bill of lading.

However, the acceptance of such FCR for purchase/discount would purely be the credit
decision of the bank concerned who, among others, should satisfy itself about the bona
fides of the transaction and the track record of the overseas buyer and the Indian
supplier since FCRs are not negotiable documents. It would be advisable for the
exporters to ensure due diligence on the overseas buyer, in such cases.
 EXEMPTION FROM DECLARATION

Foreign Exchange
Management (Export
of Goods and Services)
Regulations, 2015

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 Foreign 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.

SEE NEXT SLIDE FOR THE LIST OF CASES WHERE EXEMPTION IS AVAILABLE
 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 Foreign 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.

Aircraft or aircraft engines and

Trade Samples of Goods and
1 Publicity Material supplied free of
payment
spare parts for overhauling Goods sent outside India for
5 and/or repairs subject to reimport
into India after repair within 6
9 testing subject to re-import into
India
months from export

Defective goods sent outside

Personal effects of travelers Goods Imported free of cost on India for repair and re-import
2 whether accompanied or 6 re-export basis 10 provided AD’s certificate
unaccompanied accompanies goods

Ship’s stores, trans-shipment
3 cargo and goods supplied
under the order of Central Govt
etc.
Goods permitted by
Export permitted by Reserve
Development Commissioner of
7 SEZ/EHTP/STP – e.g. defective 11 Bank, on an application made
to it subject to stipulated terms
imported goods, goods on loan
and conditions
basis, free of cost found surplus

By way of gift of goods

accompanied by a declaration Replacement goods exported
4 by the exporter that they are 8 free of charge in accordance
not more than five lakh rupees with the provisions of FTP in force
in value
End of Part B
Exports -
Regulations
 GRANT OF EDF WAIVER

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 as below:

All exporters (excluding the exporters of following

For Exporters of these sectors: (1) Gems and
sectors-(1) Gems and Jewellery Sector, (2)
Jewellery Sector, (2) Articles of Gold and precious
Articles of Gold and precious metals sector).
metals sector)

Annual Limit of 2% of Average Annual Annual limit of 2% of average annual

Export Realization during preceding three export realization during preceding three
licensing years; or Rs. 1 Cr whichever is less licensing years
 GRANT OF EDF WAIVER – Supplies for Health Programmes

❑ 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 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.
 Receipt of advance against exports

ADVANCE PAYMENT

IMPORTER

SHIPMENT OF GOODS SHOULD

RATE OF INTEREST, IF ANY
BE MADE WITHIN 12 MONTHS
PAYABLE ON THE ADVANCE
FROM DATE OF RECEIPT OF
PAYMENT SHOULD NOT
ADVANCE PAYMENT BY
EXCEED LIBOR + 100 BPS
EXPORTER

DOCUMENTS TO BE ROUTED IF EXPORTER IS UNABLE TO

THROUGH THE SAME AD BANK EFFECT SHIPMENT PARTLY OR
THROUGH WHOM THE FULLY, WITHIN ONE YEAR NO
ADVANCE PAYMENT IS REMITTANCE TOWARDS REFUND
RECEIVED OR INTT PAYMENT WITHOUT RBI
APPROVAL

✓ EDPMS will capture the details of advance remittances received for exports in EDPMS.
✓ Further, AD – I banks need to report the electronic FIRC to EDPMS wherever such FIRCs
are issued against inward remittances.
 Long term Export Advance

AD - I banks can also allow exporters having a minimum of three years’ satisfactory
track record to receive long term export advance up to a maximum tenor of 10 years to
be utilized for execution of long-term supply contracts for export of goods subject to the
conditions as under:
Firm Irrevocable Supply Orders and Contracts should be in place, which AD I Bank has to vet. It
should clearly specify the nature, amount and delivery timelines of the products over the years
and Penalty in case of non-performance or cancellation of the contract. Pricing should be in line
with prevailing international prices

Exporter should have capacity, systems and processes in place to ensure that the orders over the
duration of the sid tenure can actually be executed

This facility of long term advance is to be provided to those entities, which have not come under
the adverse notice of Enforcement Directorate / other such agency and is not caution listed

Such advances to be adjusted through future exports

Rate of interest payable, if any, should not exceed LIBOR Plus 200 Basis Points
 Long term Export Advance … contd
The documents should be routed through one AD Bank only

KYC / AML guidelines to be adhered and ensured by AD Bank

Such advance is not permitted to be used to liquidate Rupee Loans classified as NPA

Double financing for working capital for execution of export orders must be avoided

Receipt of such advance of USD 100 Million or more should be immediately reported to the Trade
Division, FED, RBI, Mumbai

In case AD Bank has to issue bank guarantee/SBLC for export performance, then Bank must
rigorously evaluate this as any other credit proposal keeping in view, among others, prudential
requirements based on board approved policy. Important guidelines regarding Bank Guarantee
/ Standby Letter of Credit are given below:

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.
 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 disposal of all items
exported, as well as the repatriation of proceeds to India.
(iii) Such transactions approved by the AD Category – I banks will be subject to 100 per cent audit
by their internal inspectors/auditors.
 Delay in submission of shipping documents by exporters

Within 21
Days from
Date of
Shipment
AD-I Bank

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.
 Direct Dispatch of documents to Consignee

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/letter of
credit provides for dispatch of documents direct to the consignee or his agent
resident in the country of final destination of goods.

b) The AD Category – I banks may also accede to the request of the exporter
provided the exporter is a regular customer and the AD Category – I bank is
satisfied, on the basis of standing and track record of the exporter and
arrangements have been made for realization of export proceeds.
 Direct Dispatch of documents by the Exporter

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.
Regularization of cases of Direct Dispatch of documents by the Exporter

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 realized 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 AD Category – I bank is fully compliant with
the Reserve Bank’s extant KYC / AML guidelines.
d) The AD Category – I bank is satisfied about the bonafides of the transaction.

*AP (DIR) Circular No. 08 dated 4-Dec-2020 – earlier there was a ceiling
of USD 1 Million or equivalent per export shipment
 Part Drawings / Undrawn Balances

IN CERTAIN LINES OF EXPORT TRADE IT IS PRACTICE TO LEAVE SMALL PART OF INVOICE

VALUE UNDRAWN

AMOUNT LEFT UNDRAWN MAY BE TOWARDS ADJUSTMENT DUE TO DIFFERENCE IN WEIGHT,

QUALITY ETC. TO BE ASCERTAINED AFTER INSPECTION BY BUYER

AD BANK TO ENSURE THAT THE AMOUNT OF UNDRAWN BALANCE IS CONSIDERED

NORMAL IN THE PARTICULAR LINE OF EXPORT TRADE, SUBJECT TO A MAXIMUM OF 10 PER
CENT OF FULL EXPORT VALUE

UNDERTAKING TO BE OBTAINED FROM EXPORTER THAT HE WILL ARRANGE FOR

REPATRIATION OF BALANCE PROCEEDS WITHIN THE PRESCRIBED TIME PERIOD

IN CASES WHERE EXPORTER IS NOT ABLE TO ARRANGE FOR REPATRIATION OF BALANCE

IN SPITE OF HIS BEST EFFORTS, AD BANK ON BEING SATISFIED WITH BONA FIDES OF THE
CASE, MAY WAIVE – SUBJECT TO ENSURING THAT AT LEAST AMOUNT ORIGINALLY
DRAWN OR 90 PER CENT WHICHEVER IS HIGHER HAS BEEN REALISED AND A PERIOD OF
ONE YEAR HAS ELAPSED FROM DATE OFSHIPMENT
 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 year and renewal may be considered subject to the applicant
satisfying the requirement above.
(vi) AD Category – I banks granting such permission/approvals should
maintain a proper record of the approvals granted.
 Follow-up of overdue export bills

(i) Realization of bills must be watched closely by the Bank

(ii) Where export bill remains outstanding beyond due date – matter to be taken
up promptly with the exporter
(iii) If exporter fails to arrange for realization within stipulated period or seek
extension of time beyond stipulated period, matter should be reported to
Regional Office of RBI – stating reasons for delay – wherever possible
(iv) Duplicate copy of export declaration form should continue to be held by the
Bank until full proceeds are realized (exception – undrawn balances)
(v) Banks need to follow up export outstanding with exporters systematically and
vigorously so that action against defaulting exporters does not get delayed
(vi) RBI may invoke penal provisions against AD-I Bank in case of any laxity
observed
(vii) Realization of all export transactions for shipping documents after February
28, 2014 should be reported in EDPMS
 REDUCTION IN INVOICE VALUE ON ACCOUNT OF
PREPAYMENT OF EXPORT BILLS

Importer approaches for

Prepayment of Import Bill. Can
Exporter give him discount – if
so at what rate?

Occasionally, Exporters may approach AD-I banks for reduction in

invoice value on account of cash discount to overseas buyers for
prepayment of the usance bills. AD I banks may allow cash discount to
the extent of amount of proportionate interest in the unexpired period of
usance, calculated at the rate of interest stipulated in the export contract
or at the prime rate / LIBOR of the currency of invoice where rate of
interest is not stipulated in the contract
 REDUCTION IN INVOICE VALUE IN OTHER CASES

If after a bill has been negotiated or sent for collection, its amount is to be
reduced for any reason, AD I banks may approve such reduction, if satisfied
about genuineness of the request, provided:

❖ The reduction does not exceed 25 per cent of invoice value

❖ It does not relate to export of commodities subject to floor price

stipulations

❖ The exporter is not on the exporters’ caution list of RBI, and

❖ The exporter is advised to surrender proportionate export incentives

availed of, if any

25%
 REDUCTION IN INVOICE VALUE IN OTHER CASES
– Exporters with Satisfactory Track Record

Quality issues / Other matters

100%
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 three conditions in the previous slide (see below) as well as
after satisfying about satisfactory track record of exporter [export outstanding
should not exceed 5 per cent of the average annual export realization during the
preceding three financial years]
 Change of Buyer/Consignee

In the event of default by Importer

Goods to be transferred to new buyer

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 not exceed 25 per cent of the
invoice value and the realization of export proceeds is not delayed beyond the period of
9 months from the date of export. Where the reduction in value exceeds 25%, all other
relevant conditions as below to be satisfied
 EXTENSION IN TIME
(i) AD-I Bank can allow extension in the period of realization of export proceeds beyond
stipulated period of realization (from date of export) up to a period of 6 months at a
time without any ceiling of amount, subject to the following conditions:
Export transactions for which extension is sought are not under investigation by
Directorate of Enforcement/CBI or other investigating agencies

AD-I Bank is satisfied that exporter has not been able to realize export proceeds
for reasons beyond his control

Exporter submits declaration that export proceeds will be realized during the
extended period

When extended date of export realization is beyond 12 months from date of

export, AD-I Bank can approve extension only when Overdue outstanding of
exporter does not exceed USD One Million or 10 per cent of the Average Export
Realization during preceding three financial years, whichever is higher

In cases where the exporter has filed suits abroad against the buyer, extension
may be granted irrespective of the amount involved / outstanding

(ii) Cases, not covered by the above – Approval from Regional Office, RBI required
(iii) Reporting should be done in EDPMS.
 SHIPMENT LOST IN TRANSIT

(i) When shipments from India for which payment has not been received are lost in
transit, the AD-I bank to ensure lodge of insurance claim as soon as the loss is known.

(ii) When claim is payable abroad, AD Bank must arrange to collect full amount of claim
through overseas branch/correspondent – EDF to be released only after amount is
collected

(iii) Certificate on EDF to be furnished regarding receipt of claim

(iv) Any partial settlement of claim by shipping companies / airlines is also to be

repatriated to India by exporters
 WRITE OFF OF UNREALIZED EXPORT BILLS
An exporter who has not been able to realize the outstanding export dues despite best
efforts, may either self-write off or approach the AD Category – I banks, who had
handled the relevant shipping documents, with appropriate supporting documentary
evidence. The limits prescribed for write-offs of unrealized export bills are as under:

The above limits of self-write-off and write off by the AD I bank shall be
reckoned cumulatively and shall be available subject to conditions given in
the next slide:
 Conditions for Write-off

1 The relevant amount has remained

outstanding for more than one year

2 Satisfactory documentary evidence is

furnished indicating that exporter had
made all efforts to realise the export
proceeds

The exporter is a regular customer of the

3 Bank for a period of at least 6 months, is fully
compliant with KYC/ALM guidelines and
bank is satisfied with the bonafides of the
transaction

4 The case falls in any of the categories

given in the next slide:::>>>>
 WRITE OFF OF UNREALIZED EXPORT BILLS
Important aspects
Buyer Not Traceable

Undrawn balance remaining

unrealized Auction / Destruction of
Goods

Cost of Legal Action may be Balance amount after

disproportionately high settlement through
Embassy etc

Bill for difference – where Export

Value in excess of LC amount –
no prospect of recovery Insolvency of Buyer

See description of above 7 1 2 3

cases on next slide
The AD bank may, on request of the exporter,
write-off unrealised export bills without any limit
As per AP (DIR)
in respect of these three cases provided AD I
Circular No. 08 dated
4-Dec-2020 Bank is satisfied with the documentary
evidence produced
 WRITE OFF OF UNREALIZED EXPORT BILLS
Important aspects - Details

a) The overseas buyer has been declared insolvent and a certificate from the official
liquidator indicating that there is no possibility of recovery of export proceeds has
been produced.
b) The unrealized amount represents the balance due in a case settled through the
intervention of the Indian Embassy, Foreign Chamber of Commerce or similar
Organization;
c) The goods exported have been auctioned or destroyed by the Port / Customs /
Health authorities in the importing country.
d) The overseas buyer is not traceable over a reasonably long period of time.
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 exporter even after winning the Court case
against the overseas buyer could not execute the Court decree due to reasons
beyond his control;
g) 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 unrealized consequent on dishonour of the bills by the
overseas buyer and there are no prospects of realization.
 WRITE OFF OF UNREALIZED EXPORT BILLS
Conditions
It is to be ensure that the exporter has surrendered proportionate export incentives if 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.

In case of self-write-off, the exporter should submit to the concerned AD bank, a

Chartered Accountant’s certificate, indicating the following:

Export realization in the preceding Calendar Year

Amount of Write-off already availed during the current calendar year

Details of the relevant Export Declaration Form to be written off

Bill No. Invoice Value Commodity Exported Country of Export

The CA certificate may also indicate that the export benefits, if any, availed of
by the exporter have been surrendered.
 -WRITE OFF OF UNREALIZED EXPORT BILLS – other points

However, the following would not qualify for the write off facility:

❖ Exports made to countries with externalization problem i.e. where the overseas
buyer has deposited the value of export in local currency but the amount has
not been allowed to be repatriated by the central banking authorities of the
country.

❖ EDF/Softex 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.
 -WRITE OFF OF UNREALIZED EXPORT BILLS – other points …..

❖ AD banks should report write off of export bills through

EDPMS to the Reserve Bank.

❖ AD banks are advised to put in place a system under

which their internal inspectors or auditors (including
external auditors) should carry out random sample
check / percentage check of export bills written-off
outstanding export bills.

❖ Cases not covered by instructions / beyond the

mentioned limits, may be referred to the concerned
Regional Office of Reserve Bank of India.