G.Mohan AGM,FED R.B.I.

• Exports regulations under FEMA, 1999 Notification No.FEMA 23/2000-RB dated 3.5.2000 • Notification No.FEMA 14/2000 dated 3.5.2000 • Master circular No.8 dated 1st July 2005 • Memorandum on Project & Sevices Exports (PEM)

Importance of Exports follow up
• The most dependable source of foreign exchange for any country • RBI to ensure realisations in time to prevent leads & lags • Necessary for preventing volatility in the forex markets – affects monetary stability

Categories of exports
• • • • • Cash Exports Deferred Payment Exports Project Exports Software Exports Services Exports

Agencies connected with Exports
Director General of Foreign Trade - Formulation of trade policy; allotment of importer-exporter code number Customs - Valuation of goods, physical aspects of exports Reserve Bank of India & Authorised Dealers - Monitoring receipts of payments & follow up

Full value of goods or software .Where value not ascertainable – the value expected to be realized given the market conditions Export of services – no form prescribed – however liable to repatriate the exchange so earned .Declaration of Exports Mandatory to declare the export of goods & Services outside India (except Nepal & Bhutan) by exporter to the specified authority in the prescribed forms (Regulation 3) .

personal effects of travellers (accompanied/unaccompanied) Ship’s stores.$. publicity material supplied free.declaration from exporter Gifts for value upto Rs. Military/Naval/Air Force requirements. Aircraft Engine Spares Goods/Software of value less than US.5.00 lakh – declaration . transshipment cargo.Exemptions from Declaration Trade samples.25000/.

Exemptions from DeclarationContd Goods imported free of cost on re-export basis Goods exported upto $ 1000 to Myanmar under Barter Trade Agreement Replacement of goods free of charge as per EXIM Policy From EPZ/FTZ after permission of Development Commissioner .Imported goods found defective for replacement .found excess after production operations .Goods imported from suppliers/collaborators free of cost .Goods imported from suppliers/collaborators on loan basis .

For the rest of the world – by debit to the Rupee Account of a bank situated in countries other than the ACU countries or in any permitted currency For export to Myanmar – in any freely convertible currency or through ACU mechanism .Payment of Export Value of Goods Notification No. such payments shall be routed through the ACU mechanism. where an importer resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange.FEMA 14/2000-RB-Manner of Receipt & Payment Regulations For all ACU Countries except Nepal – through ACU Dollar Account In case of export of goods to Nepal.

pay order. travellers cheques from buyer during visit to India – surrender as per time limit Debit to NRE/FCNR Accounts of the buyer In Rupees from credit card servicing bank against charge slip signed by buyer using a credit card In accordance with directions of RBI for arrangements between Governments/Exim Bank In the form of precious metals equivalent to the value of jewellery exported by Gems & Jewellery units in SEZ Rupee account of Exchange Houses .Receipt of Payment In the form of bank draft. 2lakhs per transaction .up to Rs. foreign currency notes.

Export Procedure Declaration in Form GR/SDF to be submitted in duplicate to Customs along with shipping bills SOFTEX Forms in the triplicate to STPI/FTZ/EPZ Customs Number the form – certify value of goods & assessable value/if SOFTEX. official of STPI/FTZ/EPZ will certify Return duplicate to exporter – original sent to RBI directly GR form resubmitted to Customs along with goods to be shipped Customs certify quantity & return form to exporter .

shipping documents etc.Export Procedure Exporter submits duplicate GR to AD within 21 days of shipment with invoice. AD negotiates/sends for collection – report to RBI in form ENC with R-Return GR form endorsed for amounts credited to EEFC account ADs no longer required to submit the duplicate export declaration form & EC copy of shipping bill to RBI after realisation of export proceeds .

SOFTEX Form Procedure • Form to be submitted in triplicate to STPI/FTZ/EPZ • Designated officials of Ministry of Information Technology. GOI at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones (SEZs) have been authorised to certify exports declared on SOFTEX forms • Designated officials of STPIs/EPZs/SEZs also authorised to certify the Softex Form .

SOFTEX Form Procedure • Original Sent Directly to RBI by Certifying Agency • Duplicate Retuned to Exporter • Triplicate Retained by STPI/FTZ/EPZ • Duplicate form to be submitted to AD within 21 days of certification • Billing to be done for long term contracts on reaching "milestones" or once a month – for others within 15 days of completion and for certification by the authorities in the STP .

Short/Shut shipment Short shipment. certificate given by customs on the actual quantity/value of goods exported In case of no shipment(shut shipment) duplicate GR form cancelled & advised to RBI by customs .When part of the shipment declared on GR form not shipped Shut shipment – no shipment made at all In case of short shipment.

Despatch of documents Documents to be despatched as soon as possible to overseas branches/correspondents Documents may be sent directly to consignee where L/C or advance remittance received Can also be done for customers with good track record .

subject to: the export proceeds are repatriated through the authorised dealer named in the GR form The duplicate copy of the GR Form is submitted to the authorised dealer for monitoring purposes by the exporters within 21 days from the date of shipment of export .Despatch of Documents Exporters who are “Status Holder Exporters” can despatch documents directly to consignees.

PP Form Procedure • Original PP form to be countersigned by AD – AD to countersign when parcel addressed to their branch or correspondent in the country of import – Can be sent directly to consignee if export against LC or advance payment has been received or the AD is satisfied based on the track record of the exporter .

Direct Despatch of Documents Authorised Dealers may permit units in Special Economic Zones (SEZs) to despatch export documents direct to the consignees outside India subject to: the export proceeds are repatriated through the Authorised Dealer named in the GR/SDF/PP/SOFTEX Form the duplicate copy of the respective declaration form is submitted to the Authorised Dealer for monitoring purposes by the exporters within 21 days from the date of shipment .

or commodities subject to floor price For exporters having good track record write off allowed without any ceiling • Xos not>5% of average annual export realisation during preceding 3 calnder years .Reduction in Value AD allowed to reduce amount of bill upto 10% of invoice value subject to production of documentary evidence • Not allowed if exporter is on RBI caution list.

Write off of Unrealised Bills Powers delegated to ADs to write off outstanding bills provided: Bill outstanding for >360 days Aggregate write off does not exceed 10% of export realisations of previous year Unrealised amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value) Overseas buyer declared insolvent/buyer not traceable .

Write off of Unrealised Bills Goods destroyed by Customs/Health Authorities/sold in auction The case is not the subject matter of any civil or criminal suit which is pending Cost of legal action should not be disproportionate to the value of the bill Satisfactory documentary evidence Exporter not under investigation by CBI/ED Exporter surrenders proportionate export incentives .

7.2003 .Write of Unrealised Bills • Certify on the GR form “Write off permitted “ when no further amount is to be realised Exporters permitted to “write off” outstanding export bills upto an annual limit of 10 per cent of their export proceeds due for the export made after 1.

Time period for realisation of exports Irrespective of the tenor of the bill to be realised and repatriated within six months from the date of export Time period for realisation of one year also for export of certain products and exporters having contracts above Rs.100 crores in one year. .

Time period for realisation of Exports For exports to warehouses established with RBI approval – date of realisation or 15 months whichever is earlier 10% EOU – 12 months SEZ Units – No time limit for realisation of exports Exporters with proven track record who have been certified as “Status Holder” in terms of the EXIM Policy can realise and repatriate the full value of export proceeds within a period of twelve months from the date of shipment .

Extension of time for realisation of exports by ADs Power to grant extension of time for realisation of export proceeds delegated to AD which handled the export documents for invoice value upto US.000 subject to application by exporter to AD giving the reasons for extension AD is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control The exporter submits a declaration that he will realise the export proceeds during the extended period The extension may be granted upto a period of 3 months at a time The extension beyond one year from the date of export the total export outstandings of the exporter should not be more than 10% of the average of export realisations during the preceding three financial years .$.100.

irrespective of the amount involved Cases under investigation by Enforcement Directorate/CBI or any other investigating agency and beyond the limit of $ 1.$ 1.000 to be referred to RBI for extension To be reported in XOS statement with appropriate remarks when extension has been granted by AD .000 would not apply where the exporter has filed suits against the importer abroad – extension may be granted upto six months at a time.00.Extension of time for realisation of exports by ADs The ceiling of US.00.

Extension of Time • All exporters allowed to • Write off(including reduction in invoice value)outstanding export dues & • Extend the period of realisation beyond 180 days or further period as applicable(APDIR40/Dec5.2003) .

Extension of Time & Write off • Aggregate value of export bills written off(including reduction in invoice value)&bills extended for realisation does not exceed 10% of exports due during the calender year & • Export bills are not a subject of investigation by ED/CBI .

Extension of Time & Write Off • Available for exports made after July1.2004 • Exporter to submit a statement within a month from the close of the calendar year to AD .2003 & proceeds due for realisation on January 1.

Remittances Connected With Exports • Export claims ADs allowed to remit – Export proceeds should have been realised & repatriated to India – Exporter is not on caution list of RBI – Exporter to be advised to surrender proportionate export incentive. if any received by him .

Consignment Exports Documents sent at the risk of the exporter Documents sent to correspondent to be delivered to consignee against trust receipt Repatriations within time limit for exports Agent allowed to deduct expenses incurred with the sale Account sales to be received along with remittance .

Consignment Exports Freight & insurance to be arranged in India Realisation period 15 months for exporters having warehouses abroad with prior RBI approval Exports to East European Countries – period upto 12 months allowed by RBI to exporters with good track record .

2004) .Caution Listing By RBI • Regulation 17 of Export Regulations • In respect of exporters who default in repatriating export proceeds • Notice issued to ADs/Customs • Ads may approve the GR/PP/SDF &Softex forms of caution listed exporters if the exporter has received Advance payment/LC in their favour .(AP DIR68/FEB11.

on the 30th day of the notional due date .on the 30th day after transit period • For usance bills .Crystallisation • The process of transferring the exchange risk liability back to the exporter • Demand bills unpaid .

provided – the constituent also signs a declaration to abide by the Regulations.Transfer Of Documents • AD can accept documents for negotiation/ collection covering exports from his constituent (other than the one who signed the declaration under Regulation 3). – such constituent shall be deemed to be the exporter .

ADs Responsibilities • Credit of export proceeds on time to exporters account • Permissible credits to EEFC a/c • Operations of escrow account as per RBI approval • Prompt & correct reporting in various statements .

ADs Responsibilities • Ensure GR form submitted in 21 days • Bills not realised within 180 days to be reported to RBI • Extension of time .with RBI approval/Ads approval/Exporter • Vigorous follow up with exporters for export realisation • Furnish consolidated statement to RBI every June & December for all bills outstanding beyond 180 days (XOS ) .

Advance Payments for Exports Goods to be exported within one year of receipt of advance payment (with or without interest) Rate of interest not to exceed LIBOR + 100 basis points Documents to be routed through AD through whom advance remittance received Refunds in case of no exports taking place – after one year needs prior RBI approval Where agreement provides for shipment after one year – prior RBI approval .

1999 Uniform period for realisation of export proceeds regardless of the tenor of the bill of exchange – concept of due date done away with Limit on agency commission on export removed – no limit provided it has been declared to the Customs on the declaration form Powers delegated to ADs to grant extension of time for realisation of exports upto US.000 .Changes under FEMA.00.$1.

000 limit on gift through exports raised to Rs.Changes under FEMA.5 lakh .25. 1999 No GR Drill for exports upto Rs.

e.Special Facilities for Units in SEZs Payment of export may also be received by the gem & jewellery units in SEZs and EOUs in form of precious metals i. gold/silver/platinum equivalent to value of jewellery exported on the condition that the sale contract provides for the same and the approximate value of the precious metal is indicated in the relevant GR/SDF/PP forms .

What are Project Exports Export of engineering goods on deferred payment terms Execution of turnkey projects/civil construction contracts abroad Export of services .


Working Group Members EXIM Bank ECGC Reserve Bank of India (ECD & IECD) Authorised Dealer & Exporter invited as special invitees .

adequacy of advance Nature of security available Facilities required by applicant Economic viability of the proposal . political conditions of the importers country Creditworthiness of importers Experience of the applicant Immediate & long term benefits in terms of forex earnings Period of deferred credit.Criteria for consideration Economic. interest rate.

Facilities Allowed Foreign Currency Accounts abroad Site Office abroad Bridge finance from India Performance guarantees Payment of agency commission Export of equipment from India on re-import .

Clearance of Proposals Turnkey Projects Authorised Dealers Rs.50 Crores Exim Bank Rs.200 Crores Working Group – above Rs.200 Crores .

Other Criteria Civil construction contracts – only MOC approved contractors Company to have good track record – adherence to time & cost schedules Satisfactory record of repatriation from previous projects Profitability of 10% to 15% Sourcing of materials from India At least 30% of contract value to be repatriated to India .

approval from appropriate authority .Export of Services No approval if services on cash basis & no facilities required Prompt repartition of earnings Software companies to repatriate at least 30% of contract value When facilities required.

Completed Projects Remit all profits/dues to India Close foreign currency accounts Wind up liaison offices Ensure performance guarantees are discharged Liquidate overdrafts abroad Obtain completion certificate .


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