RBI/2024-25/XX
A.P. (DIR Series) Circular No. XX

July XX, 2024

All Authorised Dealers - Category I banks

Madam / Sir,

Export and Import of Goods and Services

Reserve Bank of India, in exercise of the powers conferred under Foreign Exchange Management Act 1999 (42 of 1999) and in supersession of Master Direction – Export of Goods and Services and Master Direction – Import of Goods and Services, hereby issues the  directions on export and import of goods and services.

2. The detailed operational instructions in this regard are given in Annex-I. A list of circulars superseded (w.e.f.  XXXX) is given in Annex-II.

3. AD banks may bring the contents of the circular to the notice of their customers/ constituents concerned.

4. The directions contained in this circular have been issued under Section 10(4) and 11(1) of the Foreign Exchange Management Act 1999 (42 of 1999) and are without prejudice to permission /approvals, if any, required under any other law.

Yours Sincerely,

(N Senthil Kumar)
General Manager

Annex-I

Directions to Authorised Dealers on Export and Import of Goods and Services

1. Introduction

Authorised Dealers Category-I banks (AD banks) may be guided by the following rules /regulations under Foreign Exchange Management Act, 1999 (FEMA) while handling transactions related to export and import of Goods and Services.

1. Notification No. G.S.R. 381(E) dated May 3, 2000 - Foreign Exchange Management (Current Account Transactions) Rules, 2000 as amended from time to time.
2. Notification No. FEMA 8 /2000-RB dated May 3, 2000 - Foreign Exchange Management (Guarantees) Regulations, 2000, as amended from time to time.
3. Notification No. FEMA 9 (R)/2015-RB dated December 29, 2015 - Foreign Exchange Management (Realisation, repatriation and surrender of foreign exchange) Regulations, 2015, as amended from time to time.
4. Notification No. FEMA 10 (R) /2015-RB dated January 21, 2016 - Foreign Exchange Management (Foreign currency accounts by a person resident in India) Regulations, 2015, as amended from time to time.
5. Notification No. FEMA 5(R)/2016-RB dated April 01, 2016 - Foreign Exchange Management (Deposit) Regulations, 2016, as amended from time to time.
6. Notification No. FEMA.3(R)/2018-RB dated December 17, 2018 - Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended from time to time.
7. Notification No. FEMA 14(R)/2023-RB dated December 21, 2023 - Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, as amended from time to time.
8. Notification No. FEMA XX/2024-RB dated July XX, 2024 - Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024.

2. General Directions

(i) AD banks shall facilitate payments for export and import of goods and services including Merchanting Trade Transactions in compliance with the provisions under FEMA and also ensure adherence to the extant Foreign Trade Policy.

(ii) AD banks shall carry out due diligence and ensure bona fides of transaction in compliance with the Know Your Customer (KYC) Directions issued by Reserve Bank.

(iii) AD banks shall report and monitor all transactions in the Export Data Processing and Monitoring System (EDPMS) and Import Data Processing and Monitoring System (IDPMS)¹.

(iv) AD banks shall, inter alia, follow up with exporters and importers for:

1. Realization and repatriation of export proceeds.
2. Submission of the relevant documentary evidence pertaining to export and import transactions.
3. Closure and reconciliation of the outstanding entries in EDPMS and IDPMS.

3. Specific Directions

3.1 Declaration of Exports

1. AD banks shall verify and ensure that exports are duly declared by exporters in terms of Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024, before crediting the payment to the exporter’s account.
2. AD banks shall enter details of service exports in EDPMS, as declared and submitted by their customer only, on the same day of receipt of documentary evidence.
3. AD banks may exercise discretion in accepting export documents as per proviso under Regulation 3 of Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024, in terms of their internal policy after satisfying themselves with the reasons and cause shown by the exporter.

3.2 Timelines for export receivables and import payments

1. AD banks shall follow up to ensure that an exporter realizes proceeds within the period specified under Regulation 5 of Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024.
2. AD banks shall follow up with an importer to ensure that payment for imports is completed within the period specified in the contract between the importer and overseas seller.
3. In case of delayed import payments, AD banks may be guided by extant instructions as contained in Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended from time to time.

3.3 Extension of time

(i) AD banks, in terms of their policy, may grant extension of time to exporter beyond the period as specified in Regulation 5 and 6 of Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024 in the following cases:

1. If the exporter has not been able to realize and repatriate export proceeds for reasons beyond its control.
2. If the exporter has not been able to fulfill the export obligations in case of export advance.

(ii) AD banks, in terms of their policy, may grant extension of time to importer beyond period as specified in the contract in the following cases:

1. Delayed settlement of import payments.
2. If the overseas supplier delays in fulfilling its obligation in case of import advance.

3.4 Set-off of export receivables against import payables

1. AD banks may allow set-off of export receivables against import payables in respect of the same counterparties, if they are satisfied that the grounds for such requests are legitimate and justifiable.
2. AD banks shall not allow set-off of export receivables for goods against import payables for services and vice versa.

3.5 Reduction in realisable value of export

1. AD banks, on request of the exporter, may permit reduction in the full export value after satisfying themselves of the bona fides of such requests.
2. AD banks shall put up all cases of reductions of more than 25% in the full export value of exports to its Board for post facto ratification.

3.6 Advance receipt for export of goods and services

AD banks shall ensure the following in respect of receipt of advance against export:

1. Advance payment and documents pertaining to export are routed through the same AD bank.
2. Rate of interest charged, if any, on the advance for export shall not exceed the all-in-cost ceiling of Trade Credit as per Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended from time to time.
3. In case the exporter is unable to meet the export obligation as per the terms of contract, the advance received shall be refunded immediately or extension of time shall be sought for the completion of the export obligation as per para 3.3 above.
4. AD bank shall follow up with the exporter so that the export takes place as per the above directions (including para 3.3. above).
5. Advances not in compliance to para 3.6(iii) above shall be subject to Regulations 3 of Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended from time to time.

3.7 Advance payment for Import of goods and services

1. AD banks may, as per their internal assessment and subject to their satisfaction with the track record of the importer, permit advance remittance for an import transaction, subject to conditions, if any, they may specify.
2. AD banks shall follow up with importers so that import takes place as per terms of contract or the advance made shall be returned immediately or extension of time shall be sought for the completion of the import as per para 3.3 above.
3. Advances not in compliance to para 3.7(ii) above shall be subject to Regulations 3 of Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended from time to time.

3.8 Export Data Processing and Monitoring System (EDPMS) / Import Data Processing and Monitoring System (IDPMS)

1. AD banks shall enter details of Shipping Bills (SB)/ Bills of Entry (BoE) as received from Non-EDI (Electronic Data Interchange) port in EDPMS/IDPMS on the same day of receipt of documents, in respect of their customers only.
2. AD banks shall enter details of service exports in EDPMS, as declared and submitted by their customer only, on the same day of receipt of documents.
3. AD banks shall enter details of service imports in IDPMS for their customers only, on the same day of receipt of documents.
4. AD banks shall ensure that, in case of export advance, outstanding entries for inward remittance shall be closed and reconciled on submission of export documents to the satisfaction of the AD banks.

3.9 Caution listing of exporters in EDPMS for non-realisation of export proceeds in terms of the Act

(i) Where an export amount is outstanding in EDPMS for a period of more than two years from the due date of realization (including extension of the period granted by AD bank, if any), AD banks shall ensure that exporter is flagged as ‘caution listed’ in the EDPMS.

(ii) AD banks shall ensure the following while the exporter is being flagged as ‘Caution listed’:

1. The exporter is duly informed before caution listing in EDPMS.
2. Exporter should be given an opportunity of being heard.

(iii) When caution listed exporters submit export documents for negotiation / purchase / discount / collection, etc., AD banks may accept export documents only if the exporter concerned produces evidence of having received advance payment or receiving the payment under an irrevocable letter of credit.

(iv) Once all outstanding export proceeds are realized (including by way of setoff or reduction in realizable value), AD banks shall remove the exporter from the caution list and update the status/remove the flag from EDPMS.

3.10 Export of goods and services against repayment of state credits

For the implementation of the provisions of the Inter banking arrangement, AD banks may adhere to instructions of A.D. (G.P.) Circular No. 4 dated May 19, 1999 and A.P. (DIR Series) Circular No.13 dated September 06, 2002 on Export of goods and services against repayment of state credits granted by erstwhile Soviet Union.

3.11 Import of gold and silver

1. No advance remittance for the import of gold and silver shall be permitted unless specifically approved by the Reserve Bank of India.
2. For import of gold and silver through India International Bullion Exchange IFSC Ltd., AD banks may be guided by A.P. (DIR Series) Circular No.04 dated May 25, 2022 and A.P. (DIR Series) Circular No. 07 dated November 10, 2023.

3.12 Trade credit in case of import in specified sectors

AD banks shall ensure that Trade Credit (suppliers’ and buyers’ credit) in respect of import of gold in any form and platinum/palladium/ rhodium/silver/diamonds, shall be subject to Foreign Exchange Management (Borrowing and Lending) Regulations, 2018, as amended from time to time.

3.13 Project Export

1. AD banks shall monitor the progress of work in such projects till their completion by seeking regular progress reports from the exporters in order to facilitate the corresponding payments.
2. AD banks shall verify consistency of export contracts with rules/regulations/directions under FEMA.

3.14 Merchanting Trade

1. AD banks shall allow merchanting trade payments only for goods permitted under the extant Foreign Trade Policy.
2. AD banks shall ensure the genuineness of a merchanting trade transaction before effecting any payment.
3. AD banks shall allow payments for a merchanting trade only if all payments are routed through the same AD bank.
4. AD banks shall not allow payments if the period between the outward remittance and inward remittance of a merchanting trade exceeds six months.
5. AD banks shall ensure that outward remittances sent are to the overseas seller and inward remittances received are from the overseas buyer and no payments   are made to/received from any other counterparty.
6. In case inward remittance is received before making outward remittance for a merchanting trade, AD banks shall ensure that the receipts are deposited and held in EEFC (Exchange Earners Foreign Currency) account of the merchanting trader.

3.15 International Trade Settlement in Indian Rupees (INR)

AD banks may be guided by the extant guidelines on the broad framework for cross border trade transactions in INR under Foreign Exchange Management Act, 1999 (FEMA) issued vide A.P. (DIR Series) Circular No.10 dated July 11, 2022, on International Trade Settlement in Indian Rupees (INR).

3.16 Payment transactions for Export and import of goods and services in online mode

AD banks may be guided by the directions on Regulation of Payment Aggregator – Cross Border (PA - Cross Border) dated October 31, 2023, issued by Reserve Bank.

3.17 Reporting

1. AD banks shall report all foreign trade transactions in the Foreign Exchange Transaction Electronic Reporting System (FETERS) in terms of extant guidelines on FETERS.
2. AD banks shall report all payment transactions related to export and import of goods and services, including Merchanting trade transactions, in EDPMS/IDPMS.

4. Board approved Policy

4.1 AD banks shall put in place a comprehensive, well-documented policy as approved by their Board of Directors within six months of issuance of this circular for handling payment transactions related to export/import of goods and services and merchanting trade.

4.2 The policy shall ensure that the procedures applied are in a manner conducive to international trade and are not discriminatory. The policy should be comprehensive enough to include all aspects relevant to foreign trade at that time.       

4.3 While laying down their internal policy and processes, AD banks shall ensure that the responsibility for approving transactions is clearly demarcated and the different internal levels at which different types of transactions can be approved are delineated.

Annex-II

A. List of Circulars superseded – Export of Goods and Services

B. List of the circulars superseded – Import of Goods and Services

¹ EDPMS/IDPMS shall also refer to any other system specified by RBI, for the purpose.