EXCHANGE & TRADE EXCHANGE & TRADE CONTROL CONTROL

GUIDELINES GUIDELINES

( exports )( exports )

Exchange Control Regulations, RBI under Exchange Control Regulations, RBI under power delegated under FEMA 1999, receipt power delegated under FEMA 1999, receipt and payment of foreign exchange.and payment of foreign exchange.

Imports & Exports Trade control Imports & Exports Trade control regulations – DGFT – regulate under EXIM regulations – DGFT – regulate under EXIM policy, control.policy, control.

Ads has to ensure compliances.Ads has to ensure compliances.

1.1. Export – Import Code NumberExport – Import Code Number : - : - DGFT, IEC Number, DGFT, IEC Number, Registration NumberRegistration Number for for international Trade.international Trade.

2.2. Export Declaration FormsExport Declaration Forms : - : - All exports of goods from India to be declared in All exports of goods from India to be declared in the prescribed forms to the effect that the prescribed forms to the effect that full value full value of exportsof exports will be realized within the prescribed will be realized within the prescribed period & prescribed manner.period & prescribed manner.

i.i. GR Forms - ( Electronic Data GR Forms - ( Electronic Data Exchange, SDF – Statutory Exchange, SDF – Statutory Declaration Form ) Declaration Form )

ii.ii. P.P. FormsP.P. Formsiii.iii. SOFTX Forms-SOFTX Forms- Software non – physical formSoftware non – physical formExemptions :-Exemptions :- Trade Samples, personal effect of Trade Samples, personal effect of

travellers, software ( Rs. 25000/- ), travellers, software ( Rs. 25000/- ), gifts, goods sent out for testing, gifts, goods sent out for testing, repairs etc.repairs etc.

3.3. Prescribed Time Limits Prescribed Time Limits : - : -

i)i) For submission of Exports Documents For submission of Exports Documents : - : - Export documents along with the copy of GR / Export documents along with the copy of GR / PP / SDF form within 21 days from the date of PP / SDF form within 21 days from the date of shipment to an AD.shipment to an AD.

ii)ii) For realization of Export BillsFor realization of Export Bills : - : - - Maximum time prescribed by RBI is six - Maximum time prescribed by RBI is six months.months.

Status holder Exports like Trading house, Status holder Exports like Trading house, export house permitted within 12 months.export house permitted within 12 months.

Extension ( ETX form )Extension ( ETX form )

Overdue Bills ( XOS ) half yearly reported to Overdue Bills ( XOS ) half yearly reported to RBI through AD.RBI through AD.

4.4. Prescribed Method of PaymentPrescribed Method of Payment : - : -

Payment for export proceeds should be Payment for export proceeds should be received through the received through the medium of AD.medium of AD.

Bank Draft, pay orderBank Draft, pay order Foreign currency Notes, travellers cheques Foreign currency Notes, travellers cheques

from the buyer.from the buyer. FCNR, NRE a/c, International Credit Cards etc.FCNR, NRE a/c, International Credit Cards etc.

5.5. Facilities / Remittances Connected Facilities / Remittances Connected with Exportswith Exports : - : -

i.i. Agency commission.Agency commission.ii.ii. Reduction in invoice value.Reduction in invoice value.iii.iii. Claim against exports.Claim against exports.iv.iv. Refund of export proceeds Refund of export proceeds

6.6. Foreign Currency AccountsForeign Currency Accounts : - : -

a)a) Overseas Foreign Currency A/COverseas Foreign Currency A/C – –

RBI permission required. - To enable, payment of goods RBI permission required. - To enable, payment of goods imported. – To avoid the exchange fluctuations, operating imported. – To avoid the exchange fluctuations, operating cost and time.cost and time.

b)b) Diamond Dollar AccountDiamond Dollar Account

c)c) EEFC A/C – EEFC A/C –

50% of the inward payment received in foreign currency 50% of the inward payment received in foreign currency can be credited to this A / Ccan be credited to this A / C

7.7. Extension of Time limit : - Extension of Time limit : -

- ETX to AD – Extensions for reasons beyond the control. ( ETX to AD – Extensions for reasons beyond the control. ( six months )six months )

- AD can permit provided volume of the invoice does not AD can permit provided volume of the invoice does not exceed US$ 100,000.exceed US$ 100,000.

- Beyond 12 months for additional 3 months AD can Beyond 12 months for additional 3 months AD can permit.permit.

- RBI permission in all other cases for prior approval.RBI permission in all other cases for prior approval.

8.8. Effective Date of Realization :Effective Date of Realization :

- Date of credit in the banks Nostro account in Date of credit in the banks Nostro account in case of foreign currency bills & in case of Rupee case of foreign currency bills & in case of Rupee bills the effective date of realization is the date bills the effective date of realization is the date of debit in the ‘Vostro accounts’.of debit in the ‘Vostro accounts’.

Crystallization of overdue Crystallization of overdue Bills.Bills.

Export Credit in Foreign Export Credit in Foreign Currency.Currency.

Running Account Facility. Running Account Facility.

• Crystallization of overdue Bills :-Crystallization of overdue Bills :-

Sight Sight Normal Transit Period ( NTP )Normal Transit Period ( NTP )

UsuanceUsuance Notional Due Date ( NDD )Notional Due Date ( NDD )

- In case of non – realization of export bill by the In case of non – realization of export bill by the given due date, the foreign currency liability of the given due date, the foreign currency liability of the exporter would continue, till the bill is realised or exporter would continue, till the bill is realised or the liability is converted into the home currency i.e. the liability is converted into the home currency i.e. Indian Rupees & the Indian Rupees & the liability is fixedliability is fixed for the for the exporter.exporter.

- As such to As such to restrictrestrict the period of this the period of this uncertain liabilityuncertain liability, FEDAI rules provide for , FEDAI rules provide for Crystallization or conversion of Exporters Crystallization or conversion of Exporters foreign exchange liability to Rupee foreign exchange liability to Rupee liability on the 30liability on the 30thth day from expiry. day from expiry.

- Conversion on preventing TT selling rate.Conversion on preventing TT selling rate.

- Exchange loss / gain.Exchange loss / gain.

• Export Credit in Foreign CurrencyExport Credit in Foreign Currency• Pre-shipment Credit in Foreign Pre-shipment Credit in Foreign

Currency ( PCFC ) : -Currency ( PCFC ) : -

- with a view to make credit available to exporters with a view to make credit available to exporters at internationally competitive interest rate.at internationally competitive interest rate.

- PCFC can be allowed to exporter in foreign PCFC can be allowed to exporter in foreign currency as being allowed in INR, US$, pound, currency as being allowed in INR, US$, pound, sterling, Euro, Yen.sterling, Euro, Yen.

- The spread for pre-shipment credit in foreign currency is The spread for pre-shipment credit in foreign currency is related to related to international ref rateinternational ref rate such as LIBOR, EURO LIBOR + such as LIBOR, EURO LIBOR + 125 BP.125 BP.

- The amount of PCFC allowed can be The amount of PCFC allowed can be utilizedutilized for domestic for domestic inputs or for imports.inputs or for imports.

- In case of domestic inputs the foreign currency loan is In case of domestic inputs the foreign currency loan is converted converted into rupees while in other case the import amount into rupees while in other case the import amount is disbursed directly to overseas supplier by remittances. is disbursed directly to overseas supplier by remittances.

- PCFC is to be liquidated by discounting / re discounting the PCFC is to be liquidated by discounting / re discounting the foreign currency bill under EBR scheme. ( Export Bill Re- foreign currency bill under EBR scheme. ( Export Bill Re- discounted )discounted )

• Running Account FacilityRunning Account Facility : - : -

– Pre-shipment Credit to exporters is normally Pre-shipment Credit to exporters is normally provided on provided on lodgment of L / Cs or firm orders.lodgment of L / Cs or firm orders.

– Banks have been authorized to extend Banks have been authorized to extend preshipment credit – Running account in preshipment credit – Running account in respect of any commodity respect of any commodity without insistingwithout insisting on L / C or order. Depending on banks on L / C or order. Depending on banks judgment on the need for facility :- judgment on the need for facility :-

a)a) Availability of raw material Availability of raw material (seasonal).(seasonal).

b)b) More time requiredMore time required for manufacture and for manufacture and shipment to meet delivery schedule.shipment to meet delivery schedule.

c)c) Exporter to keep the export product ready Exporter to keep the export product ready in in anticipation anticipation of receiving L / Cs or orders.of receiving L / Cs or orders.

- Running account facility toRunning account facility toi.i. Exporters Exporters track recordtrack record is good is good

ii.ii. In all cases the LCs and orders should be In all cases the LCs and orders should be produced by the exporters within a produced by the exporters within a reasonable reasonable time.time.

iii.iii. Bank should Bank should mark offmark off the proceeds of export the proceeds of export bill against earliest outstanding packing credit bill against earliest outstanding packing credit loan on FIFO basis ( First in first out )loan on FIFO basis ( First in first out )

iv.iv. Exporter found to be abusing the facility, the Exporter found to be abusing the facility, the facility should be withdrawn.facility should be withdrawn.

v.v. In case exporters have not complied with In case exporters have not complied with terms and conditions, the advance will terms and conditions, the advance will attract commercial funding rate.attract commercial funding rate.