exchange control regulations - exports

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