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Darveshi (PGP26374) Manjunath Muddaraju (PGP26373)
but very high risk y Used only in cases of established mutual trust Letter of credit y A 3-dimensional payment system y Involves the buyer. fastest and cheapest.Common Payment Methods used in foreign trade Cash in advance y Cash paid before receipt of goods/shipment y Easiest. the seller and the bank y Bank pays the role of an intermediary between buyer and seller Countertrade or barter y Seller accepts goods/services as full or partial payment of the initial trade y Very uncommon in international trade Escrow Account y Used when importer and exporter are unknown to each other y Escrow agent (3rd party) holds the payment y On receipt of goods by buyer. it releases the payment to seller .
Common Payment Methods used in foreign trade Documentary Collection Open account or credit: High risk to seller .
Other Payment Methods Consignment y Foreign distributor sells goods on behalf of exporter y Exporter retains title of the goods y After sale. RTGS and Direct Deposit . payment is sent to exporter Credit Cards y Corporate credit cards to make substantial payments Electronic Money y Involves use of internet and digital stored value systems y Examples include EFT.
Laws related to International Trade Laws Governing International Trade Indian International FEMA FTA WTO Regulations UNCITRAL .
when it replaced Foreign Exchange Regulation Act (FERA) Compatible with the policies of pro. 1999 Came into existence in June 2000.liberalization of the Indian government Criminal violations of FERA became civil in nature in FEMA Provisions and penalties defined in 49 sections FEMA deals with y Transactions y Various categories of persons y Various categories of assets y Procedural requirements .Indian Laws FEMA y y y y Foreign Exchange Management Act.
Foreign Exchange Management Act Provisions. he has to sell the market outside India and must send complete report to RBI RBI can authorize anybody who can deal in money exchange or off-shore transaction and foreign exchange 7 Export of goods and services Authorized Personnel 8 . if it is a current account transaction Capital account transactions are prohibited (except to the extent permitted). Rules and Regulations Section 3 4 5 6 Provisions Dealings in foreign exchange Holding of foreign exchange Current Account transactions Capital Account transactions Description Only authorized person under the government terms can deal in foreign exchange in India All persons who are provided authority only can hold or purchase foreign exchange in India or outside India There is no restriction regarding sale or deal of foreign exchange . one still cannot invest funds in overseas investments (unless one is an employee of a foreign company or its subsidiary and has been offered stock options in the foreign company) It is the duty of exporter to declare the true and correct detail of goods which.
10. If contravention continues. Adjunction and Appeal (Section 18) Adjudicating Authorities Special Directors Appellate Tribunal & High Court Hold enquiries related to contravention of the FEMA act Hear appeals against the order of the Adjudicating Authorities Hear appeals against orders of Adjudicating Authorities and the Special Directors Penalties (Sections 13-15) Contravention Contravention by authorized persons Penalty Rs.Foreign Exchange Management Act Administration. penalty of Rs 5000/day is imposed Contravention by others Civil imprisonment of maximum 6 months if case is with demanded value less than Rs 1 crore Civil imprisonment of 3 years.000 penalty and Rs. 2. if demanded value is more than Rs 1 crore .000 for every day during which such contravention continues 3 times of sum involved.
22/04/2002 The Supreme Court of India (M.FEMA: Important Judgments Convergence from FERA to FEMA Case No Date of Judgment Court (Bench) Case History Appeal (crl) 540 of 2002 Union of India Vs. Thus the detention cannot be continued and is not justified. The violation under FEMA should not be treated as a criminal offence as was under FERA. and his detention order was challenged in High Court of Karnataka . 2. This order was challenged by filing an appeal. Judgment Implications . The court held that the order passed by High Court to detain was based on criminal nature of violation under FERA that has ceased to be a criminal offence under FEMA 1999. Dharmadhikari) A person was detained under COFEPOSA. Shah & D. was no longer a criminal offence with the replacement of FERA by FEMA 1999. Detention under COFEPOSA is a preventive measure and the authorities have the power to detain in cases when COEFPOSA is applicable.Venkateshan S. 1.M.B.High Court quashed it on the grounds that offence which was a criminal offence under FERA.
Foreign Trade (Development and Regulation) Act 1992 (FTA) The act provides for the development & regulation of foreign trade by: 1. Augmenting exports from India 3. including formulation and implementation of the export-import policy . restrict and regulate exports and imports. by notification in the Official Gazette Government is also authorized to appoint a 'Director General of Foreign Trade' for the purpose of the Act. Facilitating imports into India 2. in all or specified cases as well as subject them to exemptions Government is authorized to formulate and announce an export and import policy and also amend the same from time to time. Adjudicate on matters related to imports and exports Provisions Government may make provisions for facilitating and controlling foreign trade Government may prohibit.
y Transparency y Safety valves .International Laws WTO Regulations y Establish a framework for trade policies y Do not define or specify outcomes y Deal with inter-governmental trade policies and laws Based on the principles of: y Non-Discrimination y Reciprocity y Binding and enforceable commitments.
provided a choice of law is agreed between the guarantor/issuer and the beneficiary. the Convention allows the law of the Contracting State where the guarantor/issuer has the place of business to be applied.UN Commission on International Trade Law (UNCITRAL) UN Convention on International Guarantees and Stand-by Letters of Credit Applicable to all member states (known as Contracting States) upon ratification Applies to guarantees and standby letters of credit as understood in the usual sense Does not include accessory and conditional guarantees as well letters of credit other than standby letters Provisional Court Measures Entitles the principal/applicant /instructing party to provisional court measures such blocking payments and freezing proceeds of an undertaking on availability of evidence of fraudulent or abusive circumstances Allows the courts of Contracting States to apply domestic laws even when the most apparent law to be applied is the Convention. In the absence of a choice of law. Conflict of Laws Rules . or is stipulated in their undertaking.
time of payment of a receiving bank and liability of a bank to its sender or to the originator when the transfer is delayed or other error occurs UN Convention on International Bills of Exchange & International Promissory Notes Adopted by the General Assembly on 9 December 1988 Addresses disparities and uncertainties that exist in relation to instruments used for international payments The Convention applies if the parties use a particular form of a negotiable instrument indicating that the instrument is subject to the UNCITRAL Convention Does not apply to cheques .UN Commission on International Trade Law (UNCITRAL) UNCITRAL Model Law on International Credit Transfers (1992) Adopted by UNCITRAL on 15 May 1992 Deals with operations beginning with an instruction by an originator to a bank to transfer to a beneficiary a specified amount of money Covers matters like the obligations of a sender of the instruction and of a receiving bank.
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