Export Regulations

Group No. 7

Submitted By:
Abhishek Agarwal(02)
Jasdeep Singh(13)
Nitesh Khosla(32)
Chetan Raman(44)
Ratnesh Pathak(45)
Shivanshu Pandey(51)
 Importer/ Exporter Code
(IEC)
An IEC is a 10 digit number which is
mandatory for undertaking export/ import.
Application for obtaining IEC Number can
be submitted to Regional authority of DGFT
in form ANF 2A along with the documents
listed therein.
Applicants can also apply for e-IEC on the
DGFT website (http://dgft.gov.in/). Only one
IEC can be obtained against a single PAN.
 RCMC-Registration Cum
Membership Certificate
For availing authorization to import/
export or any other benefit or
concession under FTP 2015-20, as
also to avail the services or
guidance, exporters are required to
obtain RCMC granted by the
concerned Export Promotion
Councils/ FIEO/Commodity Boards/
Authorities.
 The exporter can be registered under two
categories -Merchant exporter and
Manufacturing Exporter.
While applying for RCMC, an exporter has to
declare his main line of business. Further, the
RCMC should be obtained from the Export
Promotional Council, based on the line of
business. e.g. In case you are dealing in
coconut, then you will fall under Coconut
Development Board.
In case you are not coveredbyany mentioned
export promotional council, then you may
apply at FIEO (Federation of Indian Exporters
Organisation).
 PACKING CREDIT

Pre-shipment / Packing Credit' means any loan or

advance granted or any other credit provided by a
bank to an exporter for financing the purchase,
processing, manufacturing or packing of goods prior
to shipment / working capital expenses towards
rendering of services on the basis of letter of credit
opened in his favor or in favor of some other person,
by an overseas buyer or a confirmed and irrevocable
order for the export of goods / services from India or
any other evidence of an order for export from India
having been placed on the exporter or some other
person, unless lodgment of export orders or letter of
credit with the bank has been waived.
 CREDIT PERIOD

1Period of Advance
(i) The period for which a packing credit advance may be
given by a bank will depend upon the circumstances of the
individual case, such as the time required for procuring,
manufacturing or processing (where necessary) and
shipping the relative goods / rendering of services. It is
primarily for the banks to decide the period for which a
packing credit advance may be given, having regard to the
various relevant factors so that the period is sufficient to
enable the exporter to ship the goods / render the services.
(ii) If pre-shipment advances are not adjusted by submission
of export documents within 360 days from the date of
advance, the advances will cease to qualify for prescribed
rate of interest for export credit to the exporter ab initio
 DISBURSEMENT OF CREDIT

(i) Ordinarily, each packing credit sanctioned should be maintained

as separate account for the purpose of monitoring the period of
sanction and end-use of funds.
(ii) Banks may release the packing credit in one lump sum or in
stages as per the requirement for executing the orders / LC.
(iii) Banks may also maintain different accounts at various stages
of processing, manufacturing etc. depending on the types of goods
/ services to be exported e.g. hypothecation, pledge, etc., accounts
and may ensure that the outstanding balance in accounts are
adjusted by transfer from one account to the other and finally by
proceeds of relative export documents on purchase, discount, etc.
(iv) Banks should continue to keep a close watch on the end-use of
the funds and ensure that credit at lower rates of interest is used
for genuine requirements of exports. Banks should also monitor the
progress made by the exporters in timely fulfillment of export
orders.
 RUNNING ACCOUNT

As stated earlier, pre-shipment credit to exporters is normally

provided on lodgment of LCs or firm export orders. It is
observed that the availability of raw materials is seasonal in
some cases. In some other cases, the time taken for
manufacture and shipment of goods is more than the delivery
schedule as per export contracts. In many cases, the
exporters have to procure raw material, manufacture the
export product and keep the same ready for shipment, in
anticipation of receipt of letters of credit / firm export orders
from the overseas buyers. Having regard to difficulties being
faced by the exporters in availing of adequate pre-shipment
credit in such cases, banks have been authorised to extend
Pre-shipment Credit Running Account facility in respect of
any commodity, without insisting on prior lodgement of
letters of credit / firm export orders, depending on the banks
judgement regarding the need to extend such a facility.
 CONDITIONS FOR RUNNING
ACCOUNT
Banks may extend the Running Account facility only to those
exporters whose track record has been good as also to Export
Oriented Units (EOUs)/ Units in Free Trade Zones / Export
Processing Zones (EPZs) and Special Economic Zones (SEZs)
In all cases where Pre-shipment Credit Running Account facility
has been extended, letters of credit / firm orders should be
produced within a reasonable period of time to be decided by
the banks.
Banks should mark off individual export bills, as and when they
are received for negotiation / collection, against the earliest
outstanding pre-shipment credit on 'First In First Out' (FIFO)
basis. Needless to add that, while marking off the pre-shipment
credit in the manner indicated above, banks should ensure that
export credit available in respect of individual pre-shipment
credit does not go beyond the period of sanction or 360 days
from the date of advance, whichever is earlier.
 Packing Credit
It is also known as pre shipment.
This credit can be of 3 forms:
1) Loan given
2) Advance granted
3) Any other Credit provided
) All the above 3 are provided by bank to an exporter for
various uses like financing of purchases, processing,
manufacturing or packing of goods prior to shipment.
) This is done because of rendering the services of letter of
credit opened in the exporters favor by an overseas
buyer
where the order is irrevocable.
 Packing Credit
It is available only for cash exports,
in foreign currency.
There is a cap on interest rate a bank
can charge over and above the
LIBOR.
PCFCs are maintained as running
accounts.
They are self liquidating in nature is
and are liquidated by purchasing or
discounting of bills.
 Example
Suppose RBI fixes a cap that interest rate
should not exceed by 1 % above 6 months.
LIBOR is for the initial period of 180 days.
So if Rupee depreciates against USD
subsequently to availing of PCFC, say 43 to
48, the exporter will not get the benefit of
such depreciation.
The exporter will only get benefit in this
case if he would have availed FC in
U.S.dollars rather than in Indian Rupees.
 Prescribed period for
Payment
For lending in PCFC banks use Exchange Earners
Foreign Currency accounts.
The prescribed period is 12 months or 360 days.
It has been decided to keep the ceiling rate on
export credit in foreign currency by banks
toLIBOR plus 175 basispoints. Here 1 year
is to be counted as 360 days. So if it is upto 180
days then not exceeding 175 basis points.
If 180-360 days then above rate plus 100 basis
points.
 CONSIGNMENT EXPORTS
i. The AD bank while forwarding shipping documents
to his overseas branch should deliver them only
against trust receipt.
ii. Agents may deduct from sale proceeds of the
goods expenses normally incurred towards receipt,
storage and sale of the goods & remit the net
proceeds to the exporter.
iii. The account sales received from the Consignee
should be verified by the AD banks. Deductions
should be supported by receipts in original except
postage charges, stamp duty, etc.
iv. In case the goods are exported on consignment
basis, freight and marine insurance must be
arranged in India.
v. AD banks may allow exporters to abandon the
 MANNER OF RECEIPT &
PAYMENT
i. Amount representing full export value of
the goods exported shall be received
through an AD Bank in the manner
specified in the Foreign Exchange
Management (Manner of Receipt &
Payment) Regulations, 2000
. Bank draft, pay order, banker's or personal
cheques.
. Foreign currency notes/foreign currency
travellers cheques from the buyer during his visit
to India.
. Payment out of funds held in the FCNR/NRE
account maintained by the buyer
 MANNER OF RECEIPT &
PAYMENT
ii. Processing of export related receipts through
Online Payment Gateway Service Providers
(OPGSPs)
. AD banks offering this facility shall carry out the due
diligence of the OPGSP.
. This facility shall only be available for export of G&S of
value not exceeding USD 3000.
. AD banks shall open a NOSTRO collection account for
receipt of the export related payments facilitated through
such arrangements.
. AD banks should ensure that the purpose codes reported to
the Reserve Bank in the online payment gateways are
appropriate.
. AD banks shall submit all the relevant information relating
to any transaction when asked by Reserve Bank
. Each NOSTRO collection account should be subject to
reconciliation and audit on a quarterly basis.
NOSTRO and VOSTRO
Accounts
Nostro Account
ANostroaccount will be in foreign currency (it is a record
of funds held by a bank in another country in the
currency of that country) i.e. a bank in country A keeping
a record of money held by a bank in country B, in the
currency of country B.
Vostro Account
Avostroaccount will be in the local currency of the bank
where the money is being held i.e. it is the bank in
Country B's record of the money kept by the bank from
country A with it.
Export Proceeds can be realised by
the way of Credit to Nostro account
SWITZERLA
INDIA
ND
Currency:
Currency:
INR
Swiss Franc
Contract of
Exporter Sale Importer
Goods
Sent
Gives
Paymen
Instructio
t
ns
Receive
d Credits Nostro
Bank A Bank B
Account
Nostro Account Importers
(Current Account
Account)
 In case of Rupees invoicing
exports can be realised by the
way of debit to Vostro account
SWITZERLA
INDIA
ND
Currency:
Currency:
INR
Swiss Franc
Contract of
Exporter Sale Importer
Goods
Sent
Paymen Deposits
t in Swiss
Receive Franc
d in INR Debits Bank B
Bank A
Exporters Vostro Account Vostro Account
Account (Current
Account)
Payment from Asian
Clearing Union
Countries
Asian Clearing Union

Established on December 9, 1974 at the initiative of the

United Nations Economic and Social Commission for
Asia and Pacific (ESCAP), for promoting regional co-
operation
Head quartered at Tehran, Iran
Members- The Central Banks and the Monetary
Authorities of Bangladesh, Bhutan, India, Iran, Maldives,
Myanmar, Nepal, Pakistan and Sri Lanka

Source:- https://www.rbi.org.in
ACU Transactions

Export / import transaction between ACU member

countries on deferred payment terms
All transactions to be settled through the ACU will be
handled by AD Category-I banks in the same manner as
other normal foreign exchange transactions, through
correspondent arrangements

Source:- https://www.rbi.org.in
Unit of settlement of ACU
Transaction
The Asian Monetary Units (AMUs) is the common unit of
account of ACU and is denominated as ACU Dollar and
ACU Euro, which is equivalent in value to one US
Dollar and one Euro respectively
All instruments of payments under ACU have to be
denominated in AMUs
Settlement of such instruments may be made by AD
Category-I banks through the ACU Dollar Accounts and
ACU Euro Accounts, which should be distinct from the
other US Dollar and Euro accounts respectively
maintained for non ACU transactions
Source:- https://www.rbi.org.in
Reduction in Invoice

Reduction in Invoice Value on Account of Prepayment of Usance

Bills
Reduction in Invoice Value in other cases
If, after a bill has been negotiated or sent for collection, its amount
is to be reduced for any reason, AD Category I banks may
approve such reduction, if satisfied about genuineness of the
request, provided:
1. The reduction does not exceed 25 per cent of invoice value
2. It does not relate to export of commodities subject to floor price
stipulations
3. The exporter is not on the exporters caution list of the Reserve
Bank
4. The exporter is advised to surrender proportionate export
incentives availed of, if any