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7/27/2019 Exchange Control Regulations - Exports
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EXPORTS
G.Mohan
AGM,FEDR.B.I.
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Exports regulations under FEMA, 1999
Notification No.FEMA 23/2000-RB dated3.5.2000
Notification No.FEMA 14/2000 dated3.5.2000
Master circular No.8 dated 1st
July 2005 Memorandum on Project & Sevices
Exports (PEM)
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Importance of Exports follow up
The most dependable source of foreignexchange for any country
RBI to ensure realisations in time toprevent leads & lags
Necessary for preventing volatility in theforex markets affects monetary stability
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Categories of exports
Cash Exports
Deferred Payment Exports
Project Exports Software Exports
Services Exports
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Agencies connected with Exports
Director General of Foreign Trade
- Formulation of trade policy; allotment ofimporter-exporter code number
Customs
- Valuation of goods, physical aspects ofexports
Reserve Bank of India & Authorised Dealers- Monitoring receipts of payments & follow
up
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Declaration of Exports
Mandatory to declare the export of goods &Services outside India (except Nepal & Bhutan)by exporter to the specified authority in theprescribed forms (Regulation 3)
- Full value of goods or software- Where value not ascertainable the value
expected to be realized given the marketconditions
Export of services no form prescribedhowever liable to repatriate the exchange soearned
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Exemptions from Declaration
Trade samples, publicity material supplied free,personal effects of travellers(accompanied/unaccompanied)
Ships stores, transshipment cargo,Military/Naval/Air Force requirements,
Aircraft Engine Spares
Goods/Software of value less than US.$.25000/-
- declaration from exporterGifts for value upto Rs.5.00 lakh declaration
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Exemptions from Declaration-Contd
Goods imported free of cost on re-export basisGoods exported upto $ 1000 to Myanmar under Barter
Trade AgreementReplacement of goods free of charge as per EXIM
PolicyFrom EPZ/FTZ after permission of DevelopmentCommissioner
- Imported goods found defective for replacement- Goods imported from suppliers/collaborators on
loan basis- Goods imported from suppliers/collaborators free of
cost - found excess after production operations
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Payment of Export Value of Goods
Notification No.FEMA 14/2000-RB-Manner of Receipt &Payment Regulations
For all ACU Countries except Nepal through ACUDollar Account
In case of export of goods to Nepal, where an importerresident in Nepal has been permitted by the NepalRashtra Bank to make payment in free foreignexchange, such payments shall be routed throughthe ACU mechanism.
For the rest of the world by debit to the RupeeAccount of a bank situated in countries other thanthe ACU countries or in any permitted currency
For export to Myanmar in any freely convertiblecurrency or through ACU mechanism
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Receipt of Payment
In the form of bank draft, pay order, foreign currency notes,travellers cheques from buyer during visit to Indiasurrender as per time limit
Debit to NRE/FCNR Accounts of the buyer
In Rupees from credit card servicing bank against chargeslip signed by buyer using a credit card
In accordance with directions of RBI for arrangementsbetween Governments/Exim Bank
In the form of precious metals equivalent to the value ofjewellery exported by Gems & Jewellery units in SEZ
Rupeeaccount of Exchange Houses - up to Rs. 2lakhs pertransaction
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Export Procedure
Declaration in Form GR/SDF to be submitted induplicate to Customs along with shipping bills
SOFTEX Forms in the triplicate to STPI/FTZ/EPZCustoms Number the form certify value of goods
& assessable value/if SOFTEX, official ofSTPI/FTZ/EPZ will certify
Return duplicate to exporter original sent to RBIdirectly
GR form resubmitted to Customs along with goodsto be shipped
Customs certify quantity & return form to exporter
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Export Procedure
Exporter submits duplicate GR to AD within 21days of shipment with invoice, shippingdocuments etc.
AD negotiates/sends for collection report to RBIin form ENC with R-Return
GR form endorsed for amounts credited to EEFCaccount
ADs no longer required to submit the duplicateexport declaration form & EC copy of shippingbill to RBI after realisation of export proceeds
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SOFTEXForm Procedure
Form to be submitted in triplicate toSTPI/FTZ/EPZ
Designated officials of Ministry of InformationTechnology, GOI at the Software TechnologyParks of India (STPIs) or at Free Trade Zones(FTZs) or Export Processing Zones (EPZs) orSpecial Economic Zones (SEZs) have been
authorised to certify exports declared onSOFTEX forms
Designated officials of STPIs/EPZs/SEZs alsoauthorised to certify the Softex Form
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SOFTEX Form Procedure
Original Sent Directly to RBI by CertifyingAgency
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 onreaching "milestones" or once a month forothers within 15 days of completion and for
certification by the authorities in the STP
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Short/Shut shipment
Short shipment- When part of the shipmentdeclared on GR form not shipped
Shut shipment no shipment made at all
In case of short shipment, certificate givenby customs on the actual quantity/value ofgoods exported
In case of no shipment(shut shipment)duplicate GR form cancelled & advised toRBI by customs
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Despatch of documents
Documents to be despatched as soon aspossible to overseasbranches/correspondents
Documents may be sent directly toconsignee where L/C or advanceremittance received
Can also be done for customers with goodtrack record
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Despatch of Documents
Exporters who are Status Holder Exporters can
despatch documents directly to consignees,subject to:
the export proceeds are repatriated through theauthorised dealer named in the GR form
The duplicate copy of the GR Form is submitted tothe authorised dealer for monitoring purposes bythe exporters within 21 days from the date ofshipment of export
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PP Form Procedu re
Original PP form to be countersigned by AD
AD to countersign when parcel addressed to theirbranch or correspondent in the country of import
Can be sent directly to consignee if export against
LC or advance payment has been received or theAD is satisfied based on the track record of theexporter
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Direct Despatch of Documents
Authorised Dealers may permit units in SpecialEconomic Zones (SEZs) to despatch exportdocuments direct to the consignees outsideIndia subject to:
the export proceeds are repatriated through theAuthorised Dealer named in theGR/SDF/PP/SOFTEX Form
the duplicate copy of the respective declarationform is submitted to the Authorised Dealer formonitoring purposes by the exporters within 21days from the date of shipment
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Reduction in Value
AD allowed to reduce amount of bill upto 10% ofinvoice value subject to production ofdocumentary evidence
Not allowed if exporter is on RBI caution list; orcommodities subject to floor price
For exporters having good track record write offallowed without any ceiling
Xos not>5% of average annual export realisationduring preceding 3 calnder years
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Write off of Unrealised Bills
Powers delegated to ADs to write off outstandingbills provided:
Bill outstanding for >360 days
Aggregate write off does not exceed 10% of exportrealisations of previous year
Unrealised amount represents the undrawnbalance of an export bill (not exceeding 10% of
the invoice value)Overseas buyer declared insolvent/buyer not
traceable
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Write off of Unrealised Bills
Goods destroyed by Customs/HealthAuthorities/sold in auction
The case is not the subject matter of any civil or
criminal suit which is pendingCost of legal action should not be disproportionateto the value of the bill
Satisfactory documentary evidence
Exporter not under investigation by CBI/EDExporter surrenders proportionate export
incentives
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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 percent of their export proceeds due for the
export made after 1.7.2003
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Time period for realisation ofexports
Irrespective of the tenor of the bill to berealised and repatriated within six monthsfrom the date of export
Time period for realisation of one year alsofor export of certain products andexporters having contracts above Rs.100crores in one year.
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Time period for realisation ofExports
For exports to warehouses established with RBIapproval date of realisation or 15 monthswhichever is earlier
10% EOU 12 monthsSEZ Units No time limit for realisation of exports
Exporters with proven track record who have beencertified as Status Holder in terms of the EXIM
Policy can realise and repatriate the full value ofexport proceeds within a period of twelvemonths from the date of shipment
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Extension of time for realisation ofexports by ADs
Power to grant extension of time for realisation of export proceedsdelegated to AD which handled the export documents forinvoice value upto US.$.100,000 subject to application byexporter to AD giving the reasons for extension
AD is satisfied that the exporter has not been able to realiseexport proceeds for reasons beyond his control
The exporter submits a declaration that he will realise the exportproceeds during the extended period
The extension may be granted upto a period of 3 months at a timeThe extension beyond one year from the date of export the total
export outstandings of the exporter should not be more than10% of the average of export realisations during the precedingthree financial years
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Extension of time for realisation ofexports by ADs
The ceiling of US.$ 1,00,000 would not applywhere the exporter has filed suits against theimporter abroad extension may be grantedupto six months at a time, irrespective of the
amount involvedCases under investigation by EnforcementDirectorate/CBI or any other investigatingagency and beyond the limit of $ 1,00,000 to bereferred to RBI for extension
To be reported in XOS statement with appropriateremarks when extension has been granted by
AD
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Extension of Time
All exporters allowed to
Write off(including reduction in invoicevalue)outstanding export dues
& Extend the period of realisation beyond
180 days or further period as
applicable(APDIR40/Dec5,2003)
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Extension of Time & Write off
Aggregate value of export bills writtenoff(including reduction in invoice value)&billsextended for realisation does not exceed 10% ofexports due during the calender year
&
Export bills are not a subject of investigation byED/CBI
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Extension of Time & Write Off
Available for exports made afterJuly1,2003 & proceeds due for realisationon January 1,2004
Exporter to submit a statement within amonth from the close of the calendar yearto AD
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Rem it tances Connec ted
With Expor ts
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 surrenderproportionate export incentive, if any receivedby him
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Consignment Exports
Documents sent at the risk of the exporter
Documents sent to correspondent to bedelivered to consignee against trust
receiptRepatriations within time limit for exports
Agent allowed to deduct expenses incurred
with the saleAccount sales to be received along with
remittance
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Consignment Exports
Freight & insurance to be arranged in India
Realisation period 15 months for exportershaving warehouses abroad with prior RBIapproval
Exports to East European Countriesperiod upto 12 months allowed by RBI toexporters with good track record
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Caut ion L is ting 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 exporterhas received Advance payment/LC in theirfavour .(AP DIR68/FEB11,2004)
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Crystal l isat ion
The process of transferring theexchange risk liability back to the
exporter Demand bills unpaid - on the 30th day
after transit period
For usance bills - on the 30th day of thenotional due date
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Transfer Of Documents
AD can accept documents for negotiation/collection covering exports from hisconstituent (other than the one who signed
the declaration under Regulation 3), provided the constituent also signs a declaration to abide
by the Regulations;
such constituent shall be deemed to be theexporter
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ADs Responsib i li t ies
Credit of export proceeds on time toexporters account
Permissible credits to EEFC a/c
Operations of escrow account as per RBIapproval
Prompt & correct reporting in various
statements
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ADs Responsib i li t ies
Ensure GR form submitted in 21 days
Bills not realised within 180 days to be reportedto RBI
Extension of time - with RBI approval/Adsapproval/Exporter
Vigorous follow up with exporters for export
realisation
Furnish consolidated statement to RBI everyJune & December for all bills outstanding
beyond 180 days (XOS )
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Advance Payments for Exports
Goods to be exported within one year of receipt ofadvance payment (with or without interest)
Rate of interest not to exceed LIBOR + 100 basispoints
Documents to be routed through AD throughwhom advance remittance received
Refunds in case of no exports taking place after
one year needs prior RBI approvalWhere agreement provides for shipment after one
year prior RBI approval
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Changes under FEMA, 1999
Uniform period for realisation of export proceedsregardless of the tenor of the bill of exchangeconcept of due date done away with
Limit on agency commission on export removedno limit provided it has been declared to theCustoms on the declaration form
Powers delegated to ADs to grant extension of
time for realisation of exports upto US.$1,00,000
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Special Facilities for Units in SEZs
Payment of export may also be received bythe gem & jewellery units in SEZs andEOUs in form of precious metals i.e.
gold/silver/platinum equivalent to value ofjewellery exported on the condition thatthe sale contract provides for the same
and the approximate value of the preciousmetal is indicated in the relevantGR/SDF/PP forms
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What are Project Exports
Export of engineering goods on deferredpayment terms
Execution of turnkey projects/civilconstruction contracts abroad
Export of services
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Institutions involved
RESERVE BANK OF INDIA
EXIM BANKECGC
AUTHORISED DEALERS
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Working Group Members
EXIM Bank
ECGCReserve Bank of India (ECD & IECD)
Authorised Dealer & Exporter invited as
special invitees
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Criteria for consideration
Economic, political conditions of the importerscountry
Creditworthiness of importersExperience of the applicant
Immediate & long term benefits in terms of forexearnings
Period of deferred credit, interest rate, adequacy ofadvance
Nature of security availableFacilities required by applicantEconomic viability of the proposal
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Facilities Allowed
Foreign Currency Accounts abroad
Site Office abroad
Bridge finance from India
Performance guarantees
Payment of agency commissionExport of equipment from India on re-import
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Clearance of Proposals
Turnkey Projects
Authorised Dealers Rs.50 Crores
Exim Bank Rs.200 Crores
Working Group above Rs.200 Crores
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Other Criteria
Civil construction contracts only MOC approvedcontractors
Company to have good track record adherenceto time & cost schedules
Satisfactory record of repatriation from previousprojects
Profitability of 10% to 15%
Sourcing of materials from IndiaAt least 30% of contract value to be repatriated to
India
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Export of Services
No approval if services on cash basis & nofacilities required
Prompt repartition of earnings
Software companies to repatriate at least30% of contract value
When facilities required, approval fromappropriate authority
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Completed Projects
Remit all profits/dues to India
Close foreign currency accounts
Wind up liaison offices
Ensure performance guarantees aredischarged
Liquidate overdrafts abroadObtain completion certificate
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THANK YOU
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