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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)
Categories of exports
Cash Exports Deferred Payment Exports Project Exports Software Exports Services Exports
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
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 buyer In Rupees from credit card servicing bank against charge slip signed by buyer using a credit card In accordance with directions of RBI for arrangements between Governments/Exim Bank In the form of precious metals equivalent to the value of jewellery exported by Gems & Jewellery units in SEZ Rupee 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/EPZ Customs 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
Short/Shut shipment
Short shipment- When part of the shipment declared on GR form not shipped Shut shipment no shipment made at all In 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
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
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)
Consignment Exports
Documents sent at the risk of the exporter Documents sent to correspondent to be delivered to consignee against trust receipt Repatriations within time limit for exports Agent allowed to deduct expenses incurred with the sale Account 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
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 )
Institutions involved
RESERVE BANK OF INDIA EXIM BANK ECGC AUTHORISED DEALERS
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 India At 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 India Close foreign currency accounts Wind up liaison offices Ensure performance guarantees are discharged Liquidate overdrafts abroad Obtain completion certificate
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