exchange control regulations - exports.ppt
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export infoTRANSCRIPT
EXPORTS
G.Mohan
AGM,FED
R.B.I.
• Exports regulations under FEMA, 1999
Notification No.FEMA 23/2000-RB dated 3.5.2000
• Notification No.FEMA 14/2000 dated 3.5.2000
• Master circular No.8 dated 1st July 2005
• Memorandum on Project & Sevices Exports (PEM)
Importance of Exports follow up
• The most dependable source of foreign exchange for any country
• RBI to ensure realisations in time to prevent leads & lags
• Necessary for preventing volatility in the forex markets – affects monetary stability
Categories of exports
• Cash Exports
• Deferred Payment Exports
• Project Exports
• Software Exports
• Services Exports
Agencies connected with Exports
Director General of Foreign Trade- Formulation of trade policy; allotment of
importer-exporter code number Customs- Valuation of goods, physical aspects of
exportsReserve Bank of India & Authorised Dealers- Monitoring receipts of payments & follow
up
Declaration of Exports
Mandatory to declare the export of goods & Services outside India (except Nepal & Bhutan) by exporter to the specified authority in the prescribed forms (Regulation 3)
- Full value of goods or software- Where value not ascertainable – the value
expected to be realized given the market conditions
Export of services – no form prescribed – however liable to repatriate the exchange so earned
Exemptions from Declaration
Trade samples, publicity material supplied free, personal effects of travellers (accompanied/unaccompanied)
Ship’s stores, transshipment cargo, Military/Naval/Air Force requirements,
Aircraft Engine Spares Goods/Software of value less than US.$.25000/-
- declaration from exporter Gifts for value upto Rs.5.00 lakh – declaration
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 Development
Commissioner- 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
Payment of Export Value of Goods
Notification No.FEMA 14/2000-RB-Manner of Receipt & Payment Regulations
For all ACU Countries except Nepal – through ACU Dollar Account
In case of export of goods to Nepal, where an importer resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism.
For the rest of the world – by debit to the Rupee Account of a bank situated in countries other than the ACU countries or in any permitted currency
For export to Myanmar – in any freely convertible currency or through ACU mechanism
Receipt of Payment
In the form of bank draft, pay order, foreign currency notes, travellers cheques from buyer during visit to India – surrender as per time limit
Debit to NRE/FCNR Accounts of the buyerIn Rupees from credit card servicing bank against charge
slip signed by buyer using a credit cardIn accordance with directions of RBI for arrangements
between Governments/Exim BankIn the form of precious metals equivalent to the value of
jewellery exported by Gems & Jewellery units in SEZRupee account of Exchange Houses - up to Rs. 2lakhs per
transaction
Export Procedure
Declaration in Form GR/SDF to be submitted in duplicate 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 of STPI/FTZ/EPZ will certify
Return duplicate to exporter – original sent to RBI directly
GR form resubmitted to Customs along with goods to be shipped
Customs certify quantity & return form to exporter
Export Procedure
Exporter submits duplicate GR to AD within 21 days of shipment with invoice, shipping documents etc.
AD negotiates/sends for collection – report to RBI in form ENC with R-Return
GR form endorsed for amounts credited to EEFC account
ADs no longer required to submit the duplicate export declaration form & EC copy of shipping bill to RBI after realisation of export proceeds
SOFTEX Form Procedure
• Form to be submitted in triplicate to STPI/FTZ/EPZ
• Designated officials of Ministry of Information Technology, GOI at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones (SEZs) have been authorised to certify exports declared on SOFTEX forms
• Designated officials of STPIs/EPZs/SEZs also authorised to certify the Softex Form
SOFTEX Form Procedure
• Original Sent Directly to RBI by Certifying Agency
• 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 on
reaching "milestones" or once a month – for others within 15 days of completion and for certification by the authorities in the STP
Short/Shut shipment
Short shipment- When part of the shipment declared on GR form not shipped
Shut shipment – no shipment made at allIn case of short shipment, certificate given
by customs on the actual quantity/value of goods exported
In case of no shipment(shut shipment) duplicate GR form cancelled & advised to RBI by customs
Despatch of documents
Documents to be despatched as soon as possible to overseas branches/correspondents
Documents may be sent directly to consignee where L/C or advance remittance received
Can also be done for customers with good track record
Despatch of Documents
Exporters who are “Status Holder Exporters” can despatch documents directly to consignees, subject to:
the export proceeds are repatriated through the authorised dealer named in the GR form
The duplicate copy of the GR Form is submitted to the authorised dealer for monitoring purposes by the exporters within 21 days from the date of shipment of export
PP Form Procedure
• Original PP form to be countersigned by AD– AD to countersign when parcel addressed to their
branch or correspondent in the country of import– Can be sent directly to consignee if export against
LC or advance payment has been received or the AD is satisfied based on the track record of the exporter
Direct Despatch of Documents
Authorised Dealers may permit units in Special Economic Zones (SEZs) to despatch export documents direct to the consignees outside India subject to:
the export proceeds are repatriated through the Authorised Dealer named in the GR/SDF/PP/SOFTEX Form
the duplicate copy of the respective declaration form is submitted to the Authorised Dealer for monitoring purposes by the exporters within 21 days from the date of shipment
Reduction in Value
AD allowed to reduce amount of bill upto 10% of invoice value subject to production of documentary evidence
• Not allowed if exporter is on RBI caution list; or commodities subject to floor price
For exporters having good track record write off allowed without any ceiling
• Xos not>5% of average annual export realisation during preceding 3 calnder years
Write off of Unrealised Bills
Powers delegated to ADs to write off outstanding bills provided:
Bill outstanding for >360 daysAggregate write off does not exceed 10% of export
realisations of previous yearUnrealised amount represents the undrawn
balance of an export bill (not exceeding 10% of the invoice value)
Overseas buyer declared insolvent/buyer not traceable
Write off of Unrealised Bills
Goods destroyed by Customs/Health Authorities/sold in auction
The case is not the subject matter of any civil or criminal suit which is pending
Cost of legal action should not be disproportionate to the value of the bill
Satisfactory documentary evidenceExporter not under investigation by CBI/EDExporter surrenders proportionate export
incentives
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 per cent of their export proceeds due for the export made after 1.7.2003
Time period for realisation of exports
Irrespective of the tenor of the bill to be realised and repatriated within six months from the date of export
Time period for realisation of one year also for export of certain products and exporters having contracts above Rs.100 crores in one year.
Time period for realisation of Exports
For exports to warehouses established with RBI approval – date of realisation or 15 months whichever is earlier
10% EOU – 12 monthsSEZ Units – No time limit for realisation of exportsExporters with proven track record who have been
certified as “Status Holder” in terms of the EXIM Policy can realise and repatriate the full value of export proceeds within a period of twelve months from the date of shipment
Extension of time for realisation of exports by ADs
Power to grant extension of time for realisation of export proceeds delegated to AD which handled the export documents for invoice value upto US.$.100,000 subject to application by exporter to AD giving the reasons for extension
AD is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control
The exporter submits a declaration that he will realise the export proceeds during the extended period
The extension may be granted upto a period of 3 months at a timeThe extension beyond one year from the date of export the total
export outstandings of the exporter should not be more than 10% of the average of export realisations during the preceding three financial years
Extension of time for realisation of exports by ADs
The ceiling of US.$ 1,00,000 would not apply where the exporter has filed suits against the importer abroad – extension may be granted upto six months at a time, irrespective of the amount involved
Cases under investigation by Enforcement Directorate/CBI or any other investigating agency and beyond the limit of $ 1,00,000 to be referred to RBI for extension
To be reported in XOS statement with appropriate remarks when extension has been granted by AD
Extension of Time
• All exporters allowed to• Write off(including reduction in invoice
value)outstanding export dues &• Extend the period of realisation beyond
180 days or further period as applicable(APDIR40/Dec5,2003)
Extension of Time & Write off
• Aggregate value of export bills written off(including reduction in invoice value)&bills extended for realisation does not exceed 10% of exports due during the calender year
&• Export bills are not a subject of investigation by
ED/CBI
Extension of Time & Write Off
• Available for exports made after July1,2003 & proceeds due for realisation on January 1,2004
• Exporter to submit a statement within a month from the close of the calendar year to AD
Remittances Connected With Exports
• 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 surrender proportionate export incentive, if any received by him
Consignment Exports
Documents sent at the risk of the exporterDocuments sent to correspondent to be
delivered to consignee against trust receipt
Repatriations within time limit for exportsAgent allowed to deduct expenses incurred
with the saleAccount sales to be received along with
remittance
Consignment Exports
Freight & insurance to be arranged in India
Realisation period 15 months for exporters having warehouses abroad with prior RBI approval
Exports to East European Countries – period upto 12 months allowed by RBI to exporters with good track record
Caution Listing 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 exporter has received Advance payment/LC in their favour .(AP DIR68/FEB11,2004)
Crystallisation
• The process of transferring the exchange risk liability back to the exporter
• Demand bills unpaid - on the 30th day after transit period
• For usance bills - on the 30th day of the notional due date
Transfer Of Documents• AD can accept documents for negotiation/
collection covering exports from his constituent (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 the
exporter
ADs Responsibilities
• Credit of export proceeds on time to exporters account
• Permissible credits to EEFC a/c
• Operations of escrow account as per RBI approval
• Prompt & correct reporting in various statements
ADs Responsibilities
• Ensure GR form submitted in 21 days
• Bills not realised within 180 days to be reported to RBI
• Extension of time - with RBI approval/Ads approval/Exporter
• Vigorous follow up with exporters for export realisation
• Furnish consolidated statement to RBI every June & December for all bills outstanding beyond 180 days (XOS )
Advance Payments for Exports
Goods to be exported within one year of receipt of advance payment (with or without interest)
Rate of interest not to exceed LIBOR + 100 basis points
Documents to be routed through AD through whom advance remittance received
Refunds in case of no exports taking place – after one year needs prior RBI approval
Where agreement provides for shipment after one year – prior RBI approval
Changes under FEMA, 1999
Uniform period for realisation of export proceeds regardless of the tenor of the bill of exchange – concept of due date done away with
Limit on agency commission on export removed – no limit provided it has been declared to the Customs on the declaration form
Powers delegated to ADs to grant extension of time for realisation of exports upto US.$1,00,000
Changes under FEMA, 1999
No GR Drill for exports upto Rs.25,000 limit on gift through exports raised to Rs.5 lakh
Special Facilities for Units in SEZs
Payment of export may also be received by the gem & jewellery units in SEZs and EOUs in form of precious metals i.e. gold/silver/platinum equivalent to value of jewellery exported on the condition that the sale contract provides for the same and the approximate value of the precious metal is indicated in the relevant GR/SDF/PP forms
What are Project Exports
Export of engineering goods on deferred payment terms
Execution of turnkey projects/civil construction contracts abroad
Export of services
Institutions involved
RESERVE BANK OF INDIA
EXIM BANK
ECGC
AUTHORISED DEALERS
Working Group Members
EXIM Bank
ECGC
Reserve Bank of India (ECD & IECD)
Authorised Dealer & Exporter invited as special invitees
Criteria for consideration
Economic, political conditions of the importers country
Creditworthiness of importersExperience of the applicantImmediate & long term benefits in terms of forex
earningsPeriod of deferred credit, interest rate, adequacy of
advanceNature of security availableFacilities required by applicantEconomic viability of the proposal
Facilities Allowed
Foreign Currency Accounts abroad
Site Office abroad
Bridge finance from India
Performance guarantees
Payment of agency commission
Export of equipment from India on re-import
Clearance of Proposals
Turnkey Projects
Authorised Dealers Rs.50 Crores
Exim Bank Rs.200 Crores
Working Group – above Rs.200 Crores
Other Criteria
Civil construction contracts – only MOC approved contractors
Company to have good track record – adherence to time & cost schedules
Satisfactory record of repatriation from previous projects
Profitability of 10% to 15%Sourcing of materials from IndiaAt least 30% of contract value to be repatriated to
India
Export of Services
No approval if services on cash basis & no facilities required
Prompt repartition of earnings
Software companies to repatriate at least 30% of contract value
When facilities required, approval from appropriate authority
Completed Projects
Remit all profits/dues to IndiaClose foreign currency accountsWind up liaison officesEnsure performance guarantees are
dischargedLiquidate overdrafts abroadObtain completion certificate
THANK YOU