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EXPORTS OF GOODS & SERVICES.

The objective of this topic is to facilitate the understanding of the exchange and trade control
guidelines that are applicable to the exporters, as also various facilities available to them –
both Credit and Non-credit facilities.

Part A: General
A.1: Introduction
In our country, export trade is regulated by Director General of Foreign Trade (DGFT), which
functions under the Ministry of Commerce, Government of India. The policies and procedures
required to be followed for export trade are announced by DGFT. But financing of export trade
and facilities granted under Foreign Exchange Management Act (FEMA) are governed by
Reserve Bank of India (RBI) regulations / guidelines.
Exchange control regulations as well as export and import trade control regulations are
applicable to all transactions related to international trade. RBI, with powers delegated under
FEMA 1999, regulates the exchange control and receipts as well as payments of foreign
exchange part through various guidelines/FEMA amendments, while the office of DGFT
regulates trade control part through the Foreign Trade Policy (FTP) with suitable / periodic
amendments, in order to facilitate external trade & payments and to develop international
business of the country.
RBI also governs the broad parameters of the guidelines in financing of exporters, to make
finance available to them at international levels of interest rates so as to enable the exporters
to compete in international markets.
There is no restriction on invoicing of export contracts in Indian rupees in terms of the Rules,
Regulations, Notifications and Directions framed under FEMA. Further, Foreign Trade Policy
(FTP) states that “All export contracts and invoices shall be denominated either in freely
convertible currency or Indian Rupees but export proceeds shall be realised in freely
convertible currency. However, export proceeds against specific exports may also be realised in
rupees provided it is through a freely convertible Vostro account of a non-resident bank
situated in any country, other than a member country of the ACU or Nepal or Bhutan”. Indian
Rupee is not a freely convertible currency, as yet.
Export Regulations (Revised) have been notified by RBI, vide Notification No. FEMA
23(R)/2015-RB dated 12th January 2016, which are as follows:
“In exercise of powers conferred by clause (a) of sub-section (1), sub-section (3) of Section 7
and sub-section (2) of Section 47 of FEMA 1999 (42 of 1999) and in super session of its
Notification of FEMA 23/2000-RB dated 3rd May, 2000 as amended from time to time, RBI
makes the following Regulations in respect of Export of Goods and Services from India, namely:
1.Short title & Commencement:
(i)These Regulations may be called the Foreign Exchange Management (Export of Goods
&Services) Regulations, 2015.
(ii)They shall come into force from the date of their publication in the Official Gazette.
2.Definitions: In these Regulations, unless the context requires otherwise-
(I)'Act' means the Foreign Exchange Management Act, 1999
(II)'Authorized Dealer' means a person authorised as an authorised dealer under sub-section
(1) of section 10 of the Act and includes a person carrying on business as a factor and
authorised as such under the said section 10
(III)'EXIM Bank' means the Export-Import bank of India established under the Export-Import
Bank of India Act 1981
(IV)'Export' includes the taking or sending out of goods by land, sea or air, on consignment or
by sale, lease, hire purchase or under any other arrangement by whatever name called, and in
the case of software, also includes transmission through any electronic media
(V)'Export value' in relation to export by way of lease or hire purchase or under any other
similar arrangement, includes the charges, by whatever name called, payable in respect of
such lease or hire purchase or any other similar arrangement
(VI) 'Form' means form annexed to these Regulations
(VII) 'Schedule' means schedule appended to these Regulations
(VIII) “Software' means any computer programs, database, drawing, design, audio/video
signals, any information by whatever name called in or any medium other than in or any
physical medium
(IX) 'Specified Authority' means the person or the authority to whom the declaration as
specified in Regulation 3 is to be furnished
(x)The words and expressions used but not defined in these Regulations shall have the same
meanings respectively assigned to them in the Act.
3. Declaration of Exports:
A) In case of exports taking place through Customs Manual ports, every exporter of goods or
software in physical form or through any other form, either directly or indirectly, to any place
outside India, other than Nepal & Bhutan, shall furnish to the specified authority a declaration
in one of the forms set out in the Schedule and supported by such evidence as may be
specified, containing true and correct material particulars including the amount representing -
(I) the full value of the goods or software or (ii) if the full value is not ascertainable at the time
of export, the value which the exporter, having regard to the prevalent market conditions
expects to receive on the sale of goods or the software in overseas market, and affirms in the
said declaration that the full export value of goods (whether ascertainable at the time of
export or not) or the software has been or well within the period be, paid in the specified
manner.
B) Declaration shall be executed in sets of such numbers as specified.
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C) For removal of doubt, it clarified that in respect of export of services to which none of the
forms in these Regulations apply, the exporter may export such services without furnishing any
declaration, but shall be liable to realise the amount of foreign exchange on account of such
export and repatriate to India in accordance with the extant norms and regulations.
D) Realization of export proceeds in respect of export of goods/software from third party
should be duly declared by the exporter in the appropriate declaration form.
(Form EDF: To be completed in duplicate for export from non EDI ports & Form SOFTEX: To be
completed in triplicate for declaration of export of software otherwise than in physical form,
such as magnetic tapes/discs and paper media).
4. Exemptions:
Notwithstanding anything contained in Regulation 3 above, exports of goods/software may be
made without furnishing the declaration in the following cases:
(A) Trade samples of goods and publicity material supplied free of payment; (B) Personal
effects of travellers, whether accompanied or unaccompanied; (C ) Ship's store, trans-shipment
cargo and goods supplied under the orders of Central Govt or of such officers as may be
appointed by the Central Govt in this behalf or of the military, naval or air force requirements;
(D) By way of gift of goods accompanied by a declaration by the exporter that they are not
more than five lakh rupees in value; (E) Air crafts or air craft engines & spare parts for
overhauling /repairs abroad subject to their re-import into India after overhauling/ repairs,
within a period of 6 months from the date of their export; (F) Goods imported free of cost on
re-export basis; (G) Following goods which are permitted by the Development Commissioner of
Special Economic Zone (SEZ), Electronic Hardware Technology Parks (EHTP), Software
Technology Parks (STP) or Free Trade Zones (FTZ) to be re-exported, namely-
(i)Imported goods found defective, for the purpose of their replacement by the foreign
suppliers/collaborators; (ii) Goods imported from foreign suppliers/collaborators on loan basis;
(iii) Goods imported from foreign suppliers/collaborators free of cost, found surplus after
production operations. However, re-export of these goods by units in SEZ shall be made under
intimation to the Development Commissioner of SEZ/concerned Assistant/Deputy
Commissioner of Customs.
(H) Replacement of goods exported free of charge in accordance with the provisions of FTP in
force; (I) Goods sent outside India for testing subject to re-import into India; (J) Defective
goods sent outside India for repair and re-import provided the goods are accompanied by a
certificate from an AD in India that the export is for repair and re-import and the export does
not involve any transaction in foreign exchange; (K) Exports permitted by RBI, on application
made to it, subject to the terms and conditions, if any, as stipulated in the permission.
5. Indication of importer-exporter code (IEC) number:
IEC number allotted by DGFT under Section 7 of Foreign Trade (Development & Regulation) Act
1992 (22 of 1992) shall be indicated on all copies of the declaration forms submitted by the
exporter to the specified authority and in all correspondences of the exporter with AD/RBI, as
the case may be.
6. Authority to whom declaration is to be furnished & the manner of dealing with the
declaration:
(A) Declaration in Form EDF: (I) Declaration in Form EDF should be submitted in duplicate to
the Commissioner of Customs; (ii) After duly verifying and authenticating the declaration form,
the Commissioner of Customs shall forward the original declaration form/data to the nearest
office of RBI and hand over the duplicate form to the exporter for submitting to the AD.
(B) Declaration in Form SOFTEX: (I) The declaration in Form SOFTEX in respect of export of
computer software and audio/video/ television software shall be submitted in triplicate to the
designated official of Ministry of Information Technology, Govt of India at the STPI or at the FTZ
or SEZ in India; (ii) After certifying all three copies of the SOFTEX Form, the said official shall
forward the
original directly to the nearest office of RBI and return the duplicate to the exporter. The
triplicate shall be retained by the designated official for record.

(C ) Duplicate Declaration Forms to be retained with Authorised Dealers: On realisation of the


export proceeds, the duplicate copies of export declaration forms viz. EDF/SOFTEX/Exchange
Control copy of the Shipping bills shall be retained by the Authorized Dealers.
7. Evidence in support of Declaration:
The commissioner of Customs or the postal authority of the official of Department of
Electronics, to whom the declaration is submitted, may, in order to satisfy themselves of due
compliance with Section 7 of the Act and these regulations, require such evidence in support of
the declaration as may establish that – (a) the exporter is a person resident in India and has a
place of business in India; (b) the destination stated on the declaration is the final place of
destination of the goods exported and (c) the value stated in the declaration represents the full
value of goods or software, or, where the full export value of the goods or software is not
ascertainable at the time of export, the value which the exporter, having regard to the
prevailing market conditions expects to receive on the sale of the goods in the overseas
market.
For the purpose of this regulation, 'final place of destination 'means a place in a country in
which the goods are ultimately imported and cleared through Customs of that country.
8. Manner of payment of export value of goods:
Unless otherwise authorized by RBI, the amount representing the full export value of the goods
exported shall be paid through an AD in the manner specified in the Foreign Exchange
Management (Manner of Receipt & Payment) Regulations, 2000 as amended from time to
time.
For the purpose of this regulation, re-import into India, within the period specified for
realisation of the export value, of the exported goods in respect of which a declaration was
made under regulation 3, shall be deemed to be realization of full export value of such goods.
9. Period within which export value of goods/software or services to be realised:
(1)The amount representing the full export value of goods/software/services exported shall be
realised and repatriated to India within 9 months from the date of export, provided (a) that
where the goods are exported to a warehouse established outside India with the permission of
RBI, the amount representing the full export value of goods exported shall be paid to the AD as
soon as it is realised and in any case within 15 months from the date of shipment of goods and
(b) further subject to the directives issued by RBI in this behalf, the AD may, for a sufficient and
reasonable cause shown, extend the period of 9 months or 15 months, as the case may be.
(2)(a) Where the export of goods/software/services has been made by units in SEZ/Status
Holder Exporter/EOUs & units in EHTPs, STPs and BTPs as defined in the FTP in force, then not
withstanding anything contained in sub-regulation (I) above, the amount representing the full
export value of goods or software shall be realised &repatriated to India within 9 months from
the date of export. Provided further that RBI or subject to the directions issued by RBI in this
behalf, the AD may for a sufficient and reasonable cause shown, extend the period of 9
months; (b) RBI may for reasonable and sufficient cause direct that the said exporter/s shall
cease to be governed by sub-regulation (2), provided no such direction shall be given unless
the unit has been given a reasonable opportunity to make a representation in the matter and
(c) On such direction, the said exporter/s shall be governed by the provisions of sub-regulation
(1) until directed otherwise by RBI. For the purpose of this regulation, the 'date of export' in
the case of export of software (other than physical form) shall be deemed to be the date of
invoice covering such export.
10.Submission of export documents:
The documents pertaining to export shall be submitted to the AD mentioned in the relevant
declaration form, within 21 days from the date of export, or from the date of certification of
the SOFTEX from., provided that, subject to the directions issued by RBI from time to time, the
AD may accept the documents pertaining to export submitted after the expiry of the specified
period of 21 days for reasons beyond the control of the exporter.
11.Transfer of documents:
Without prejudice to Regulation 3, an AD may accept for negotiation/collection the shipping
documents including invoice and bill of exchange covering exports, from his constituent (not
being a person who has signed the declaration in terms of Regulation 3 above), provided that
before accepting such documents for negotiation/collection, the AD shall -
where the value declared in the declaration does not differ from the value shown in the
documents to be negotiated or sent for collection OR where the value declared in the
declaration is less than the value shown in the documents being negotiated or sent for
collection, require the constituent concerned also to sign such declaration and thereupon such
constituent shall be bound to comply with such requisition and such constituent signing the
declaration shall be considered to the exporter for the purposes of these Regulations to the
extent of the full value shown in the documents being negotiated or sent for collection and
shall be governed by these Regulations accordingly.
12.Payment for the Export:
In respect of export of any goods or software or which a declaration is required to be furnished
under Regulation 3 above, no person shall except with the permission /direction of RBI or AD,
do or refrain from doing anything or take or refrain from taking any action which has the effect
of securing -
(i)that the payment for goods or software is made otherwise than in the specified manner or
(ii) that the payment is delayed beyond the period specified under these regulations or (iii)
that the proceeds of the sale of goods or software exported do not represent the full export
value of the goods or software subject to such deductions, if any, as may be allowed by RBI or
subject to the directions of RBI or by an AD.
Provided that no proceedings in respect of contravention of these provisions shall be instituted
unless the specified period has expired and payment for the goods or software representing
the full export value or the value after deductions allowed under clause (iii) has not been made
in the specified manner within the specified period. (iv)Export of services to which no Form
specified in these regulations apply, the exporter may export such services without furnishing
any declaration, subject to compliance of clause (I), (ii) & (iii) above.
13.Certain Exports requiring prior approval:
Exports under trade agreement/rupee credit etc.: (a) Export of goods under special
arrangement between the Central Government and Government of a foreign state, or under
rupee credits extended by the Central Government to Govt. of a foreign state shall be
governed by the terms & conditions set out in the relative public notices issued by the Trade
Control Authority in India and the instructions issued from time to time by RBI and (b) An
export under the line of credit extended to a bank or financial institution operating in a foreign
state by the EXIM Bank for financing exports from India shall be governed by the terms and
conditions advised by RBI to the AD from time to time.
14.Delay in Receipt of Payment:
Where goods or software export of which is required to be declared on the specified form and
export of services, for which no declaration form has been made applicable, are not realised
within the specified period as declared, RBI may give to any person who has sold the
goods/software or procure the sale thereof, such directions as appear to it to be expedient,
for the purpose of securing, (a) the payment therefor if the goods /software has been sold and
(b) the sale of goods and payment thereof, if goods/software has not been sold or re-import
thereof into India as the circumstances permit, within such period as RBI may specify in this
behalf, provided that omission of RBI to give directions shall not have the effect of absolving
the person committing the contravention from the consequences thereof.
15.Advance payment against exports:
(I) Where an exporter received advance payment (with or without interest) from a buyer/third
party named in the export declaration made by the exporter, outside India, the exporter shall
be under obligation to ensure that – (a) the shipment of goods is made within 1 year from the
date of receipt of advance payment; (b) the rate of interest, if any, payable on the advance
payment does not exceed the rate of interest of LIBOR+100 basis points and (c) the documents
covering the shipment are routed through the AD through whom the advance payment is
received.
In the event of the exporter's inability to make the shipment, partly or fully, within 1 year from
the date of receipt of advance payment, no remittance towards refund of unutilised portion of
advance payment or payment of interest shall be made after the period of 1 year, without
prior approval of RBI.
(II)Not withstanding anything contained in clause (I) sub-regulation (a), an exporter may receive
advance payment where the export agreement itself duly provides for shipment of goods
extending the period of 1 year from the date of receipt of advance payment.
16.Issue of Directions by RBI in certain cases:
Without prejudice to the provisions of Regulation 3 related to the export of goods/ software
which required to be declared, RBI may, for the purpose of ensuring the full value of the goods
or, as the case may be, the value which the exporter expects to receive on the prevalent
market conditions as sale proceeds of goods/software in the overseas market, is received in
proper time and without delay, by general or special order, direct from time to time that in
respect of export of goods or software to any destination or any class of export transactions or
any class of goods or software or class of exporters. The exporter shall , prior to export comply
with the conditions as may be specified in the order, namely -
(a) that the payment of goods or software is covered by an irrevocable LC or by such
arrangement or document as may be indicated in the order; (b) that any declaration to be
furnished to the specified authority shall be submitted to the AD for its prior approval, which
may, having regard to the circumstances, be given or withheld or may be given subject to such
conditions as may be specified by directions issued by RBI from time to time and (c) that a copy
of declaration to be furnished to the specified authority shall be submitted to such authority or
organisation as may be indicated in the order for certifying that the value of goods or software
specified in the declaration represents the proper value thereof.
Unless the exporter has been given a reasonable opportunity to make a representation in the
matter, no direction under sub-regulation (1) shall be given by RBI and no approval under
clause (b) of that sub-regulation shall be withheld by the AD.
17. Project Exports:
(a) Where an export of goods/services is proposed to be made on deferred payment terms or
in execution of a turnkey project/a civil construction contract, before entering into any such
export arrangement, the exporter shall seek prior approval
of the approving authority, who shall consider the proposal based on the guidelines issued by
RBI from time to time and (b) in case a guarantee is required to be given prior to post award
approval, the same may be issued by an AD bank/a person resident in India being an export
company, for performance of a project outside India or for availing of credit facilities, whether
fund based or non-fund based, from a bank/financial institution outside India in connection
with the execution of such project, provided the contract/Letter of Award stipulates such
requirements. (For the purpose of this Regulation, 'approving authority' means the EXIM Bank
of India/the AD.

The Authorised Dealer (AD) Category-I* Banks have to ensure that both DGFT and RBI
instructions/guidelines are followed meticulously by them while handling export transactions
and related payments, for which they shall refer to Foreign Trade Policy, RBI Master
Circular/Direction on Exports, FEMA and Notification under AP (DIR) series etc.. .
*AD Category-I Banks: Commercial Banks, State Co-Op Banks & Urban Co-Op Banks.
AD Category-II Banks: Upgraded FFMCs, Co-Op Banks, RRBs & Others.
AD Category III Banks: Select Financial and other institutions, Other FFMCs, Department of
Posts etc.
[ Financial year (April to March) is reckoned as the time basis for all transactions pertaining to
trade related issues].
A.2: Realization and repatriation of proceeds of export of goods/software/services
It is obligatory on the part of the exporter to realize and repatriate the full value of
goods/software/services within a stipulated time frame as under:
(a) The period of realization and repatriation of export proceeds shall be 9 months from the
date of export for all exporters including units in Special Economic Zones (SEZs), Status Holder
Exporters, Export Oriented Units (EOUs), Units in Electronic Hardware Technology Parks
(EHTPs), Software Technology Parks (STPs) & Bio-Technology Parks (BTPs) until further notice
and (b) For goods exported to a warehouse established outside India, the proceeds shall be
realized within 15 months from the date of shipment of goods.
A.3: Manner of Receipt & Payment
(a) Full value of goods exported shall be received through an AD bank in the manner specified
in Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2016, Vide
Notification No. FEMA 14(R)/2016-RB dated 02nd May 2016, which are as follows:
1.Short title and commencement:
(a)These Regulations may be called Foreign Exchange Management (Manner of Receipt &
Payment) Regulations, 2016.
(b)They shall come into effect from the date of their publication in the Official Gazette.
2.Definitions: In these Regulations unless the context requires otherwise,
(a)'Act' means the Foreign Exchange Management Act, 1999 (42 of 1999)
(b)'Authorised dealer' means a person authorised as an authorised dealer under sub-section (1)
of Section 10 of the Act
(c)'Autorised Bank' means a bank, other than an authorised dealer, authorised by RBI to accept
deposits from persons resident outside India
(d)'FCNR/NRE account' means an FCNR or NRE account opened and maintained in accordance
with the Foreign Exchange Management (Deposits) Regulations, 2016.
The words and expressions used but not defined in these Regulations shall have the same
meaning respectively assigned to them in the Act.
3.Manner of Receipt in Foreign Exchange:
(I)Every receipt in forex by an AD, whether by way of remittance from a foreign country or by
way of reimbursement from his branch/correspondent outside India against payment for
export from India, or against any other payment, shall be as follows --
A)Members of Asian Clearing Union (ACU):
(i)Bangladesh, Myanmar, Pakistan, Sri Lanka & Republic of Maldives – (a) Receipt for export of
eligible goods & services by debit to ACU Dollar account/ACU Euro account and/or ACU Euro
account of the AD maintained with correspondent bank in that member country; (b) Receipt
may also be made in any freely convertible currency in all other cases and (c) In respect of
exports from India to Myanmar, payment may be received in any freely convertible currency or
through ACU mechanism from Myanmar.
(ii)Nepal & Bhutan – (a) Receipt may be in Rupees and (b) Receipt of export of goods to Nepal
may be made in free foreign exchange, provided the importer in Nepal has been permitted by
the Nepal Rashtra Bank to make payment in free foreign exchange. Such receipts, however,
shall not be routed through the ACU mechanism.
(iii)Islamic Republic of Iran – (a) Receipt for export of eligible goods & services, in any freely
convertible currency and/ or in accordance with the directions issued by RBI to the AD from
time to time and (b) Receipt in any freely convertible currency and/ or in accordance with the
directions issued by RBI from time to time in all other cases.
B) All countries other than those mentioned in (A) above:
(i)Receipt in rupees from the account of a bank situated in any country other than a member
country of ACU.
(ii)Receipt in any freely convertible currency.
(II)Manner of receipt of export proceeds:
(a)In respect of an export from India, receipt shall be made in a currency appropriate to the
place of destination as mentioned in the declaration form irrespective of the country of
residence of the buyer.
(b)Any other mode of receipt of export proceeds for an export from India in accordance with
the directions issued by RBI to AD from time to time.
(III)ADs have been permitted to allow receipt of goods/software to be received from a third
party (a party other than the buyer) as per the guidelines issued by RBI.
4.Manner of Receipts in certain cases: Notwithstanding anything contained in Regulation 3
above, receipt for export may also be made by the exporter as under -
(i)in the form of a bank draft/pay order/cheque/foreign currency notes/travellers cheques
from a buyer during his visit to India, provided the foreign currency so received is surrendered
within the specified period to AD of which the exporter is a customer
(ii)by debit to FCNR/NRE account maintained by the buyer with an AD or Auhorised Bank in
India.
(iii)in rupees from the credit card servicing bank in India against the charge slip signed by the
buyer where such payment is made by the buyer through a credit card
(iv)from a rupee account held in the name of an Exchange House with an AD if the amount
does not exceed 15 lakh rupees per export transaction or an amount prescribed by RBI in
consultation with Govt of India in this regard, provided they are satisfied with the bona fide of
the transaction and also subject to compliance of the conditions stipulated in the Master
Direction No.2/2015-16 dated 01st January 2016 on 'Opening and Maintenance of
Rupee/Foreign Currency Vostro Accounts of Non-resident Exchange Houses' and subsequent
amendments.
(v) in accordance with the directions issued by RBI to ADs, where the export is covered by the
arrangement between the Central Govt and the Govt of a foreign country or by the credit
arrangement entered into by the EXIM Bank with a financial institution in a foreign state
(vi)in the form of precious metals , that is gold/silver/platinum equivalent to value of jewellery
exported by Gem & Jewellery Units in SEZ and EOUs on the condition the condition that the
sale contract provides for the same and the value is declared in the relevant EDF.
In addition to clause (I) & (iii) above, any person resident in India may also receive any payment
for other than exports by means of postal order issued by a post office outside India or by a
postal money order issued by such post office.
5.Manner of Payment in foreign exchange:
(I)A payment in forex by an AD, whether by way of remittance from India or by way of
reimbursement to his branch or correspondent outside India against payment for imports into
India or against any other payment, shall be made as under:
(A)Members of ACU:
(i)Bangladesh, Myanmar, Pakistan, Sri Lanka & Maldives: (a) Payment for import of eligible
goods/services by credit to ACU Dollar/ACU Euro account in India of a bank of the member
country in which the other party to the transaction is resident or by debit to the ACU
Dollar/ACU Euro account of the AD maintained with the correspondent bank in that member
country; (b) Payment may also be made in any freely convertible currency in all other cases and
(c) For imports into India from Myanmar, payment may be in any freely convertible currency or
through ACU mechanism from Myanmar.
(ii)Nepal & Bhutan: Payment in rupees.
(iii)Islamic Republic of Iran:
(a)Payment for import of eligible goods/services, in any freely convertible currency and/ or in
accordance with the directions issued by RBI to the AD from time to time (b) Payment in any
freely convertible currency and/ or in accordance with the directions issued by RBI to the AD
from time to time in all other cases.
(B)All other countries other than those mentioned in (A) above:
(i)Payment in rupees from the account of a bank situated in any country other than a member
country of ACU or (ii) Payment in any freely convertible currency.
(II)In respect of import into India –
(a)Where the goods are shipped from a member country of ACU (other than Nepal & Bhutan)
but the supplier is a resident of a country other than a member country of ACU, payment may
be made in a manner specified for countries in clause (B) above; (b) In all other cases payment
shall be made in a currency appropriate to the country of shipment of goods; (c) Any other
mode of payment in accordance with the directions issued by RBI to AD from time to time.
Authorised dealers have been permitted to allow payments for import of goods/software to be
made to a third party (a party other than the supplier) as per guidelines issued by RBI.
6.Manner of payment in certain cases:
(I)Not withstanding anything contained in Regulation (5) above, a person resident in India may
make payment for import of goods in foreign exchange through an international credit card
held by him/in rupees from international credit/debit card through the credit/debit card
servicing bank in India against the charge slip signed by the importer/as prescribed by RBI from
time to time. Provided that (a) the transaction for which the payment is so made in conformity
with the provisions of the Act, Rules & Regulations and (b) the import is also in conformity
with the provisions of FTP in force.
(II)Any person resident in India may also make payment as under -
(I)in rupees for meeting expenses on account of boarding, lodging and services related thereto
or travel to and from and within India of a person resident outside India who is on a visit to
India; (ii) by means of a crossed cheque/draft as consideration of purchase of gold/silver in any
form imported by such person in accordance with the extant norms of Central Govt under the
Foreign Trade (Development & Regulation) Act 1992, or under the rules/regulations in force
and (iii) a company or resident in India may make payment in rupees to its non-whole time
director who is resident outside India and is on a visit to India for the company's work and is
entitled to payment of sitting fees/commission/remuneration and travel expenses to and from
and within India, in accordance with the provisions contained in the Memorandum & Articles
of Association of the Company or as per the agreement or as approved by the Board, provided
the requirement of any law/rules/regulations/directions applicable for making such payments
are duly complied with.
(b)When payment for goods sold to overseas buyers is received during their visit in the manner
mentioned above, EDF (duplicate) shall be released by AD only on receipt of funds in their
Nostro account or if the AD bank is not the Credit Card servicing bank, on production of a
certificate by the exporter from the credit card servicing bank in India to the effect that it has
received the equivalent amount in foreign exchange. AD banks may also receive payment for
exports by debit to the credit card of an importer where the reimbursement from the card
issuing bank will be received in foreign exchange.
(c)Processing of export related receipts through Online Payment Gateway Service Providers
(OPGSPs): AD banks have been allowed to offer the facility of repatriation of export related
remittances by entering into standing arrangements with OPGSPs, subject to the following
conditions:
(a)AD banks offering this facility shall carry out the due diligence of the OPGSP; (b) This facility
shall be extended only for export of goods/services of value not exceeding USD 10,000; (c) A
separate Nostro collection account for receipt of the export related payments facilitated
through such arrangements shall be opened by the AD bank. Exporters availing of this facility
shall have to open notional account with the concerned OPGSP and all receipts shall be
automatically swept and pooled into the Nostro account of the AD bank, without retaining any
funds in the notional account; (d) Separate Nostro collection account may be maintained for
each OPGSP or the bank should be able to delineate the transactions in the Nostro account of
each OPGSP; (e) Under this arrangement, the permissible debits to the Nostro collection
account are fore repatriation of funds representing export proceeds to India for credit to the
exporter's account, payment of fee / commission to the OPGSP as per the predetermined
rates/frequency/ arrangement and charge back to the importer where the exporter has failed
in discharging his obligations under the sale contract; (f) Balances held in the Nostro collection
account shall be repatriated and credited to the respective exporter's account with a bank in
India immediately on receipt of confirmation from the importer and , in no case, not later than
7 days from the date of credit to the Nostro collection account; (g) AD banks shall satisfy
themselves the bona fides of the transactions and ensure that the purpose codes reported to
RBI in the online payment gateways are appropriate; (h) AD banks shall submit all the relevant
information relating to any transaction under this arrangement to RBI as and when advised to
do so; (i)Each Nostro collection account should be subject to reconciliation and audit on a
quarterly basis; (j) Resolution of all payment related complaints of exporters in India shall
remain the responsibility of the OPGSP concerned ; (k) AD banks desirous of entering into such
an arrangement/s should report details of each such arrangement as and when entered to the
Foreign Exchange Dept; Central Office, RBI, Mumbai and (l) A start-up can realise the
receivables of its overseas subsidiary and repatriate them through OPGSPs.
(d)Settlement System under ACU mechanism:
(a) In order to facilitate transactions/settlements, effective from01st January 2009, participants
in ACU will have the options to settle their transactions either in ACU dollar or in ACU Euro.
Accordingly the Asian Monetary Unit (AMU) shall be denominated as 'ACU Dollar' and 'ACU
Euro' which shall be equivalent value to one US Dollar & one Euro respectively; (b) Further, AD
banks are allowed to open and maintain ACU Dollar and ACU Euro accounts with their
correspondent bank in other participating countries . All eligible payments are to be settled by
the concerned banks through these accounts; (c) Indo-Myanmar trade transactions can be
settled in any freely convertible currency in addition to the ACU mechanism ; (d) In view of the
difficulties being experienced by importers/exporters in payments to/receipts from Iran, it has
th
been decided that with effect from 27 December 2010, all eligible current account
transactions, including trade transactions with Iran should be settled in any permitted currency
outside ACU mechanism, until further notice and (e) Based on the ACU Board meeting in June
2015, it has
been decided to permit the use of the Nostro accounts of the commercial banks of the ACU
member countries (ACU Dollar & ACU Euro accounts) for settling the payments of both exports
and imports of goods and services among the ACU countries.
(e)Third party payment for export/import transactions: Taking into account the evolving
international trade practices, it has been decided to permit third party payments for
export/import transactions, subject to the following conditions:
(a) firm irrevocable order/tripartite agreement should be in place, which need not be insisted
upon where documentary evidence for circumstances leading to third party payments /name
of third party being mentioned in the irrevocable order/invoice has been produced, provided
the AD bank is satisfied with the bona fides of the transaction and export documents, such as
invoice/FIRC and AD bank has considered the FATF statements while handling such
transactions; (b) Third party payment should be routed through the banking channel only; (c)
The exporter should declare the third party payment in EDF and it would be the responsibility
of the exporter to realise and repatriate the export proceeds from such third party name in
the EDF; (d) Reporting of outstanding, if any, in the XOS would be continuing to be shown
against the name of the exporter. However instead of the name of the overseas buyer from
where the proceeds have to be realised, the name of the declared third party shall be shown in
the XOS; (e) For shipments made to Restricted cover countries in Group II (Sudan, Somalia
etc..), payments for the same may be received from an open cover country and (f) In the case
of imports, the invoice should contain a narration that the related payment has to be made to
the related third party, Bill of Entry should show the name of the shipper as well as the name
of the third party and the importer has to comply with the extant norms relating to imports
including effecting advance payment against imports, if any.
(f)Settlement of export transactions in currencies not having a direct exchange rate: To
further liberalize the procedure and facilitate settlements of export transactions, where
invoicing is in a freely convertible currency and settlement takes place in the currency of the
beneficiary which does not have a direct exchange rate, though convertible, AD banks are
allowed to permit settlement of such export transactions (excluding those put through ACU
mechanism) subject to the conditions that -
(a) Exporter shall be a customer of the AD bank; (b) Signed contracts/invoices is in a freely
convertible currency; (c) The beneficiary is willing to to receive the payment in the currency of
the beneficiary instead of the original freely convertible currency of the invoice/contract/LC as
full and final settlement; (d) AD bank is satisfied with the bona fides of the transactions and (e)
The counter party to the exporter/importer of the AD bank is not from a country or jurisdiction
in the updated FATF statement on High Risk and Non Co-operative jurisdictions on which FATF
has called for counter measures.
A.4: Foreign Currency Account: (a) Participants in international exhibition/trade fair have been
granted general permission by RBI for opening a temporary foreign currency account abroad,
to which the exporters can deposit the foreign exchange obtained by sale of goods at the
international exhibition/trade fair and operate the account during their stay outside India
provided the balance in the account is repatriated to India through normal banking channels
within a period of one month from the date of closure of the exhibition/trade fair and full
details are submitted to the concerned AD bank.
(b) RBI will consider applications in Form EFC (submitted through the bank branch where the
account is to be maintained) from exporters having good track record for opening a foreign
currency account with banks in India and outside India subject to certain terms & conditions. If
the account is to be maintained abroad the application should be made by the exporter giving
details of the bank with which the account will be maintained.
(c) An Indian entity can also open, hold & maintain a foreign currency account with a bank
outside India, in the name of its overseas branch/office, by making remittance for the purpose
of normal business operations of the said office/branch or representative subject to
compliance of extant norms under FEMA.
(d)A unit located in SEZ can open, hold & maintain a Foreign currency account with an AD bank
in India, subject to compliance of the extant norms under FEMA.
(e)A person resident in India being a project/service exporter may open, hold and maintain
foreign currency account with a bank outside or in India, subject to standard terms and
conditions in the Memorandum PEM.
A.5: Diamond Dollar account (DDA): Firms/Companies dealing in purchase/sale of rough or cut
or polished diamonds or other
stones /studded jewelry /plain jewelry/studded with /without diamond/other stones, with a
track record of at least 2 years in
the relevant field and having an annual turnover of Rs 3crores or above during the preceding
three licensing years (April-March) are permitted to transact their business through DD
accounts. At a time they can open not more than five Diamond Dollar Accounts. However, the
sum total of the accruals in the account during a calendar month should be converted into
Rupees on or before the last day of succeeding calendar month after adjusting for utilisation of
the balances for approved purposes or forward commitments.
The facility of DDA scheme is intended to enable exchange earners to save on conversion or
transaction costs while undertaking forex transactions and is not intended to maintain assets
in foreign currency by the exchange earners, as India is not fully convertible on Capital
Account yet.
A.6: Exchange Earners’ Foreign Currency (EEFC) Account: A person resident in India may open
with an AD bank in India, an account in foreign currency called Exchange Earners' Foreign
Currency (EEFC) Account in terms of Regulation 4 (D) of Foreign Exchange Management
(Foreign Currency Accounts by a Person Resident in India) Regulations, 2015, dated 21st
January 2016. Resident individuals are permitted to include resident close relatives as defined
in the Companies Act 2013 as joint holders in their EEFC bank accounts on 'F or S' basis. These
EEFC accounts are to be maintained in the form of non-interest bearing current account. All
foreign exchange earners' are allowed to credit 100% of their forex earnings to their EEFC
accounts, sibject to the condition that the sum total of accruals in this account shall be
converted to INR on or before the last day of succeeding month, after utilising funds for any
permitted payments or forward commitments. The facility of EEFC scheme is intended to
enable the exchange earners to save on conversion or transaction costs while undertaking
forex transactions. Other guidelines on EEFC account are-
a)SEZ units cannot open EEFC account. However, they are permitted to open a Foreign
Currency Account. But SEZ Developers can open EEFC account.
b) Payment received in foreign exchange by a unit in Domestic Tariff Area (DTA) for supply of
goods to a unit in SEZ can be credited to EEFC account.
c) Where the export proceeds (part/full) are credited to an EEFC account, the export
declaration form has to be certified to this effect.
d) No credit facilities, either fund-based or non-fund based, shall be permitted against the
security of balances held in EEFC accounts.
e) Resident individuals are permitted to include resident close relative(s) as defined in the
Companies Act 2013 as joint holder in their EEFC bank account on F or S basis. However such
resident close relative, being made eligible to become joint account holder, shall not be eligible
to operate the account during the life time of the resident account holder.
f) Exporters are allowed to repay packing credit advances, availed in INR/foreign currency, from
balances in their EEFC account and/ or Rupee resources to the extent exports have actually
taken place.
A.7 Counter-Trade Arrangement: Counter-Trade proposals involving adjustment of value of
goods imported into India in terms of an arrangement voluntarily entered into between the
Indian party and the overseas party through an Escrow account opened in India in USD will be
considered by RBI, subject to the conditions stipulated in RBI Master Direction No.16/2015-16
dated 01st January 2016.
A.8 Exports to neighboring countries by road/rail/river: The procedure as mentioned in the
RBI Master Direction No. 16/2015- 16 dated 01st January 2016 shall be adopted by exporters
for filing original copies of EDF where exports are made to neighboring countries by road/rail/
river transport.
A.9 Border Trade with Myanmar: All trade transactions with Myanmar, including those at the
Indo-Myanmar border with effect from 01st December 2015 shall be settled in any permitted
currency in addition to the ACU mechanism.
A.10 Counter-Trade arrangements with Romania: RBI will consider counter trade proposals
from Indian exporters with Romania involving adjustment of value of exports from India
against value of imports made into India in terms of a voluntarily entered arrangements
between the concerned parties, subject to the condition among others that the Indian
exporter should utilize the funds for import of goods from Romania into India within 6 months
from the date of credit to Escrow accounts allowed to be opened.
A.11 Repayment of State credits: Export of goods and services against repayment of State
credits granted by erstwhile USSR will continue to be governed by the extant directions issued
by RBI from time to time.
A.12 Forfaiting: EXIM Bank and AD category-I banks have been permitted to undertake
forfaiting, for financing of export receivables. Remittance of commitment charges/service
charges etc. payable by the exporter as approved by EXIM Bank/AD bank concerned may be
done through an AD bank. Such remittances may be made in advance in one lump sum or at
monthly intervals as approved by the authority concerned.
A.13 Export factoring on non-recourse basis: Subject to the conditions stipulated in the RBI
Master Direction No. 16/2015-16 dated 01st January 2016, AD banks have been permitted to
factor the export receivables on a non-recourse basis, so as to enable the exporters to improve
their cash flow ad meet their working capital requirements.
A.14 Project Exports & Service Exports: Please refer to RBI Master Direction No. 16/2015-16
dated 01st January 2016 on the instructions on this subject. Regulations relating to 'Project
Exports' and 'Service Exports' are laid down in the Memorandum of Instructions on Project and
Service Exports (PEM-2014).
A.15 Export of goods on lease, hire etc. & Export on elongated terms requires prior approval
of Reserve Bank of India as laid down in the RBI Master Direction No. 16/2015-16 dated 01st
January 2016.
A.16 Export of Currency: In terms of FEM (Export and Import of Currency) Regulations, 2000
notified vide Notification No. FEMA 6(R)/2015-RB dated 29th December 2015 as amended from
time, export of Indian currency is allowed within the following limits.
(a)Any person resident in India may take outside India (other than to Nepal and Bhutan)
currency notes of Government of India and Reserve Bank of India up to an amount not
exceeding Rs 25,000 and
(b)Any person resident outside India, not being a citizen of Pakistan and Bangladesh, and also
not a traveller coming from and going to Pakistan or Bangladesh, and visiting India may take
outside India currency notes of Government of India and RBI notes up to an amount not
exceeding Rs 25,000 while exiting through an airport only.
Part B – EDF/SOFTEX Procedure:
B.1 Exports of goods through Customs Port(Non-electronic Data Interchange Ports):
(a) Customs will verify the declared value and give running serial number on the two copies of
EDF submitted by the exporter at the Non-EDI port. (b) Customs will retain the original EDF for
transmission to RBI and return the duplicate copy to the exporter. (c) At the time of shipment
the exporter shall again submit the duplicate copy of EDF to customs and after examining the
goods will certify the quantity in the form and return it to the exporter for submission to the
AD for negotiation/collection of the export bills. (d) Within 21 days from the date of export, the
exporter shall lodge the duplicate copy of EDF together with the shipping documents and an
extra invoice copy to the AD named in EDF. (f) In case of exports made under deferred
payment arrangements/to joint ventures abroad against equity participation or under rupee
credit arrangement, the number and date of RBI approval or the number and date of the
relevant RBI circular shall be recorded in the EDF. (g) Where duplicate copy of EDF is lost or
misplaced, AD may accept another copy of EDF duly certified by Customs.
B.2 Exports of goods/software through EDI Ports:
(a) The shipping bill in duplicate shall be submitted to the concerned Commissioner of
Customs. (b) After verifying and authenticating, the Commissioner will hand over to the
exporter one copy of the shipping bill marked 'Exchange Control Copy' to be submitted to the
AD within 21 days from the date of export for collection/negotiation of the shipping
documents. (c) The manner of disposal of EC copy of shipping bill shall be the same as that of
EDF.AD shall retain the duplicate of the shipping bill and a copy of voice, which need not be
submitted to RBI.
In cases where ECGC/private insurance companies regulated by IRDA initially settle the claims
of exporters and the export proceeds are subsequently received from the buyer or his country,
exporter's share in the amount so received is disbursed through the AD which had handled the
shipping documents. In this respect the certificate issued by ECGC/private insurance companies
will indicate the number of declaration form, name of the exporter & AD, date of negotiation,
bill number, invoice value and the amount actually received by ECGC/private insurance
company.
B.3 Exports of goods through post: Postal authorities shall allow export of goods by post only if
the original copy has been countersigned by an AD. Procedure in such case is as under:
(a)AD shall countersign EDF after ensuring that the parcel has been addressed to their branch
or their correspondent bank in the country of import and return the original copy to the
exporter, who shall submit the same with the parcel to the post office. (b) The duplicate copy
of EDF shall be retained by the AD to whom the exporter shall submit relevant documents
together with an extra copy of invoice for negotiation/collection, within the prescribed period
of 21 days. (c) The concerned overseas branch or correspondent shall be instructed to deliver
the parcel to the consignee against payment or acceptance of relative bill. (d) AD may however
countersign the EDF covering parcels addressed direct to the consignee, provided (i) an
irrevocable LC for the full value of export has been opened in favour of the exporter and has
been advised through the AD concerned or (ii) the full value of shipment has been received in
advance by the exporter through an AD or (iii) the AD is satisfied on the basis of the standing
and track record of the exporter and arrangements made for realization of the export
proceeds.
B.4 Mid-sea trans-shipment of catch by deep sea fishing vessels: Regarding handling of export
documents related to mid-sea trans-shipment of catch, AD banks have to comply with the
Regulations laid down in FEMA Notification No. 23(R)/2015-RB dated 12th January 2016 and RBI
Master Direction No. 16/2015-16 dated 01st January 2016 on 'Export of goods and services'.
B.5 SOFTEX Forms: (a) All software exporters can now file single as well as bulk SOFTEX from in
the form of a statement in excel format to the competent authority for certification. Since the
SOFTEX data from STPI/SEZ are being transmitted in electronic format to RBI, the exporters
now have to submit the SOFTEX form in duplicate as per the revised procedure. STPI/SEZ will
retain one copy and hand over the duplicate to the exporters after due certification. As
hitherto, the exporters have to provide information about all the invoices including the ones
lesser than USD 25,000, in the bulk statement in excel format.
(b)A common 'SOFTEX” form has been devised to declare a single as well as bulk software
exports.
(c)RBI has extended the facility for online generation of the EDF form number and the SOFTEX
Form number (single as well as bulk for use in off-site software exports). The facility for manual
allotment of single as well as bulk SOFTEX form number by RO of RBI has been dispensed with
accordingly.
Invoicing of software exports: (a) For long duration contracts involving series of transmissions,
the exporters should bill their overseas clients periodically, at least once in a month or on
reaching the 'milestone' as provided in the contract entered into with the overseas client and
the last invoice/bill should be raised not later than 15 days from the date of completion of the
contract. The exporters can submit a combined SOFTEX form for all the invoices raised on a
particular overseas client, including advance remittance received in a month. (b) Contracts
involving only 'one- shot operation', the invoice or bill shall be raised within 15 days from the
date of transmission. (c) The exporter should submit a declaration in Form SOFTEX in
quadruplicate in respect of export of computer software and audio/video/television software
to the designated official concerned of Government of India at STPI/EPZ/FTZ/SEZ for
valuation/certification not later than 30 days from the date of invoice /the date of last invoice
raised in a month, as indicated above. The designated officials may also certify the SOFTEX
forms of EOUs, which are registered with them. (d) The invoices raised on overseas clients as at
(a) to (c) above will be subject to valuation of export declared on SOFTEX form by the
designated official and consequent amendments made in the invoice value, if necessary.
B.6 Citing of specific identification numbers: In all applications/correspondents with RBI, the
specific identification number as available on the EDF/SOFTEX forms should be cited.
B.7 Export of services: In respect of export of services to which none of the Forms specified in
these Regulations shall apply and the exporter can export such services without furnishing any
declaration, but shall be liable to realise the amount of foreign exchange which becomes due
or accrues on account of such export, and to repatriate the same to India in accordance with
the provisions of the Act/Rules/Regulations made under the Act.
B.8 Third party export proceeds: Realization of export proceeds in respect of export of
goods/software from third party should be duly declared by the exporter in the appropriate
declaration form.
B.9 Random verification: In the above procedures, AD banks should ensure by random check
of the relevant duplicate forms by their internal/concurrent auditors, that non-
realization/short realization allowed, if any, is within the powers delegated to them or has
been duly approved by RBI, where ever necessary.
B.10 Short shipments & Shut out shipments:
(a)When part of a shipment covered by an EDF already filed with Customs is short-shipped, the
exporter must give notice of short-shipment to the Customs in the form and manner
prescribed. If there is delay to obtain certified short-shipment notice from the Customs, the
exporter should give an undertaking to the AD banks to the effect that he has filed the short-
shipment notice with the Customs and that he will furnish it as soon as it is obtained.
(b)Where a shipment has been entirely shut out and there is delay in making arrangements to
re-ship, then the exporter will have to give notice in duplicate to the Customs in the form and
manner prescribed, attaching thereto the unused duplicate copy of the EDF and the shipping
bill. The Customs will ensure that the shipment was actually shut out, certify the copy of the
notice as correct and forward to RBI together with the unused copy of EDF. In this case, the
original EDF received earlier from Customs will be cancelled and if the shipment is made
subsequently, a fresh set of EDF should be completed.
B.10 Consolidation of Air cargo/Sea cargo:
(a)Consolidation of air cargo: Where air cargo is shipped under consolidation, the airline
company's Master Airway Bill will be issued to the Consolidating Cargo Agent. The cargo agent
in turn will issue his own House Airway Bills (HAWB) to individual shippers. AD banks may
negotiate HAWBs only if the relative LC specifically provides for negotiation of these
documents in lieu of Airway Bills issued by the airline company.
(b)Consolidation of sea cargo: AD banks may accept Forwarder's Cargo Receipts (FCR) issued by
IATA approved agents, in lieu of BL for negotiation/collection of export documents, in respect
of export transactions backed by LC that specifically provides for negotiation of such
document, in lieu of BL even if the sale contract with the overseas buyer does not provide to
accept FCR as a shipping document in lieu of BL. However, AD may at their discretion also
accept FCR (in lieu of BL)issued by shipping companies of reputed/ IATA approved agents for
purchase/collection of shipping documents even in cases, where export transactions are not
backed by LC, provided the relative sale contract with overseas buyer provides for acceptance
of FCR as a shipping document in lieu of BL. Since FCR is not a negotiable document, before
permitting such facility to the exporter, the AD bank has to ensure the bonafides of the
transaction and the track record of the parties involved. It would be advisable for the exporters
to ensure due diligence in such cases on the overseas buyer.
Part-C Obligations of Authorized Dealers
C.1 Grant of EDF waiver: AD banks can consider requests for grant of EDF waiver from
exporters for export of goods free of cost, for export promotion up to 2% of the average
annual exports of the applicant during the preceding three financial years, subject to a
maximum of Rs 5 lakhs. For Status Holder Exporters, this limit as per the current FTP is Rs 10
lakhs or 2% of the average export realization during the preceding three financial years,
whichever is lower.
Exports of goods not involving any foreign exchange transaction directly or indirectly requires
the waiver of EDF procedure from RBI.
C.2 Advance payment against exports:
a)In terms of Regulation 15 of FEMA Notification No. 23(R)2015-RB dated 12th January 2016,
where an exporter receives advance payment, with or without interest, from an overseas
buyer, he will be under obligation that –
i) The shipment of goods is made within one year from the date of receipt of advance payment.
ii) The rate of interest, if any is payable on the advance payment does not exceed LIBOR+100
bps.
iii) The documents covering the shipment shall be routed through the AD Category-1 bank
through whom the advance payment is received.
In the event of the exporter’s inability to effect shipment, fully/partially, within one year
from the date of receipt of advance payment, no refund (with or without interest) shall be
allowed without prior approval of RBI.
EDPMS will capture the details of advance remittances received for exports and henceforth AD
banks will have to report all the inward remittances including advances as well as old
outstanding inward remittances received for export of goods/software to EDPMS. Further, AD
banks have to report the electronic FIRC to EDPMS, where ever such FIRCs are issued against
inward remittances.
b) AD banks can also permit exporters having a minimum three years’ satisfactory track record
to receive long term export advance up to 10 years, which shall be utilised for execution of
long term supply contracts for exporting goods, subject to the conditions that-
i) Firm irrevocable supply orders/contracts shall be received and the pricing of the product
should be in consonance with the prevalent international price. The contract with the overseas
buyer should be vetted and the same shall clearly specify the nature, amount and delivery
timelines of the products over the years and penalty in case of non-performance or contract
cancellation.
ii) Exporters should have adequate capacity, systems and process in place to ensure that the
orders over the duration of the said tenure can be executed.
iii) Such facilities can be extended only to those entities, which have not come under the
adverse notice of Enforcement Directorate/any regulatory agency or have not been caution
listed.
iv) Such advances shall be adjusted through future exports.
v) Rate of interest, if any payable, should not exceed LIBOR + 200 bps.
vi) Related documents shall be handled /routed through one AD bank only. AD banks have to
ensure compliance of KYC / AML guidelines.
vii) Such export advances are not allowed to be used to liquidate loans in INR classified as NPA.
Viii) There should not be double financing for working capital for executing export orders.
ix) If receipt of such advance payments exceeds USD 100 million or more, a report to the Trade
division, Forex dept of RBI Central Office shall be submitted immediately.
X) Subject to evaluation of credit proposal and based on a policy approved by bank’s board,
ADs can issue a BG or Standby LC for export performance. BG/SBLC shall be issued for a period
of two years at a time and can be rolled over for two years again at a time, subject to the
condition that it shall cover only the advance on reducing balance basis.
c)If the ‘export agreement’ provides shipment of goods extending beyond the period of one
year (time consumed for manufacturing and shipping) ADs can allow exporters to receive such
advance payment, subject to the conditions that -
i)Due diligence exercise, KYC and AML standards have been complied with.
ii)The transaction is a bona-fide one
iii)Interest element if any, does not exceed LIBOR+100 bps.
iv)No instance of refund exceeding 10% of the advance payment received is made in the last
three years.
v)Documents covering the shipment shall be routed through the bank through whom the
advance payment is received.
In the event of the exporter’s inability to effect shipment, fully/partially, no refund (with or
without interest) shall be made without RBI approval.
C.3 EDF Approval for Trade Fair/Exhibitions abroad or for Export of Goods for re-imports:
Firms/companies and other organizations participating in Trade Fair/Exhibition abroad can take
or export goods for exhibition and sale outside India without prior approval of RBI. Unsold
exhibit items may be sold outside exhibition/trade fair in the same country or third country.
While offering such sales, discounted values can be permitted. It is also allowed to ‘gift’ unsold
goods up to USD 5000 per exporter, per exhibition/trade fair. AD banks can approve EDF of
export items for display or display-cum-sale in trade fair/exhibitions outside India, subject to
the conditions that - (a) the exporter shall produce relative bill of entry within one month of re-
import of unsold items into India, (b) The sale proceeds of the items sold are repatriated to
India in accordance with FEMA Rules, (c) the exporter shall report to the AD Category-I bank
the method of disposal of all items exported, as well as repatriation of proceeds to India and
(d) such transactions approved by AD Category-I bank will be subject to 100% audit by their
internal inspectors /auditors.
AD Category-I banks may consider request from exporters for granting EDF approval in cases
where goods are being exported for re-import after repairs/maintenance/testing/calibration
etc. subject to the condition that the exporter shall produce relative bill of entry within one
month of re-import of the exported item from India. Where the goods being exported for
testing are destroyed during testing, AD Category-I bank may obtain a certificate issued by the
testing agency that the goods have been destroyed during testing, in lieu of Bill of Entry for
import.
C.4: Re-export of unsold rough diamonds from Special Notified Zone of Customs without EDF
formality: In order to facilitate re-export of unsold rough diamonds imported on free of cost
basis at Special Notified Zone (SNZ) of customs, it is clarified that the unsold rough diamonds,
when re-exported from the SNZ (being an area within the Customs) without entering Domestic
Tariff Area (DTA) do not require any EDF formality. Entry of consignment containing different
lots of rough diamonds into SNZ should be accompanied by a declaration of notional value by
way of an invoice & packing list indicating the free cost nature of the consignment. Under no
circumstances such rough diamonds shall enter into DTA. For lots cleared at the Precious Cargo
Customs Clearance Center, Mumbai, the Bill of Entry shall be filed by the buyer. After satisfying
with the bona fides of the transactions, AD banks can allow related import payments. AD banks
shall maintain a record of such transactions.
C.5: Setting up of offices abroad and acquisition of immovable property for overseas offices:
At the time of setting up of the office, AD bank may allow remittances towards initial expenses
up to 15% of the annual sales/income or turnover during the last two financial years or up to
25% of net worth, whichever is higher. For recurring expenses, remittances up to 10%of the
annual sales/income/turnover during the last two financial years may be sent for the purpose
of normal business operations of the office (trading/non-trading) or branch/representative
office outside India subject to the following terms and conditions:
(a)The overseas branch/office has been set up or representative is posted overseas for
conducting normal business activity of the Indian entity; (b) The overseas
branch/office/representative shall not enter into any contract or agreement in contravention
of the Act, Rules or Regulations made there under; (c) The overseas
office/branch/representative should not create any financial liabilities, contingent or
otherwise, for the HO in India and also not invest surplus funds abroad without prior approval
of RBI.
Details of bank accounts opened in the overseas country should be promptly reported to the
AD bank.
AD banks may also allow remittances by a company incorporated in India having overseas
offices, within the above limits for initial and recurring expenses, to acquire immovable
property outside India for its business and for residential purpose of its staff.
C.5The overseas branch/office of software exporter company/firm may repatriate 100% of the
contract value of each 'off-site' contract.
C.6In case of companies taking up of 'on-site' contracts, they should repatriate the profits of
such contracts after completion of the same.
C.7An audited yearly statement showing receipts under off-site' and 'on-site' contracts
undertaken by the overseas office, expenses and repatriation thereon may be submitted to the
AD bank.
C.8.Delay in submission of shipping documents by exporters after the prescribed period of 21
days from the date of export may be handled by the AD banks without prior approval of RBI,
provided they are satisfied with the reasons for the delay.
C.9.Return of documents to exporters: The duplicate copies of EDF and shipping documents,
once submitted to AD banks for negotiation/collection should not ordinarily be returned to
exporters, except for rectification of errors and re-submission.
C.10.Landlocked countries: AD banks may deliver one negotiable copy of BL to the Master of
the carrying vessel or trade representative for exports to certain land locked countries if the
shipment is covered by an irrevocable LC and the documents conform strictly to the terms of
LC which, inter alia, provides for such delivery.
C.11.Direct dispatch of the documents by the exporter: ADs should normally dispatch shipping
documents to their overseas branch/correspondents expeditiously. However, in the following
cases, they may dispatch the documents direct to the consignee/their agent resident in the
country of final destination of goods.
a) Advance payment or an irrevocable LC has been received for the full value of the export
shipment & underlying sale contract /LC provides for dispatch of documents direct to the
consignee or his agent resident in the country of final destination of goods.
b) If the exporter is a regular customer of the bank and AD is satisfied on the standing and track
record of the exporter and arrangements have been made for realisation of export proceeds.
Status Holder Exporters (as defined in the FTP) and units in SEZs can be allowed to dispatch
shipping documents direct to the consignees, subject to the condition that the export proceeds
are repatriated through the AD bank named in the declaration form and the duplicate copy of
the EDF/ SDF is submitted to the AD bank for monitoring purpose by the exporter within 21
days from the date of shipment.
ADs can regularise cases of direct dispatch of shipping documents to the consignee or his agent
resident in the country of final destination of goods, up to USD 1 million or its equivalent per
export shipment, subject to the conditions that the export proceeds have been realised in full,
the exporter is a regular customer of the bank at least for a period of 6 months, the transaction
is a bona fide one and KYC/AML standards are complied with.
C.10.Part drawings/undrawn balances: it is a practice in certain lines of export trade, to leave
a small part of the invoice value undrawn for payment after adjustment due to weight/quality
etc. which will be ascertained after arrival and inspection/analysis of goods. AD banks can
negotiate such bills, provided, the amount of undrawn balance is considered normal in the
particular line of export trade, subject to a maximum of 10% of the full export value and an
undertaking is obtained from the exporter on the duplicate of the EDF forms that he will
surrender / account for the balance proceeds of the shipment within the period prescribed for
realization.
In cases where the exporter has not been able to arrange for repatriation of the undrawn
balance in spite of best efforts, AD banks, if satisfied with the bona fides of the case, should
ensure that the exporter has realised at least the value for which the bill was initially drawn
(excluding undrawn balances) or 90% of the value declared on EDF form, whichever is more
and a period of one year has elapsed from the date of shipment.
C.11.Consignment exports: When goods have been exported on consignment basis, AD bank,
while forwarding the export documents to his overseas branch/correspondent, should instruct
the latter to deliver them only against trust receipt/ under-taking to deliver sale proceeds by a
specified date within the period prescribed for realization of proceeds of the export. This
procedure should be followed, even if, according to the practice in certain trades, a bill for the
part of the estimated value is drawn in advance against the exports. The agents/consignees
may deduct from sale proceeds of the goods, the expenses normally incurred towards receipt,
storage and sale of the goods such as, landing charges/warehouse charges/handling charges
etc. and remit the net amount to the exporter. AD shall verify the sales account statement
received from the agent/consignee. Deductions shown in the account sales should be
supported by bills/receipts in original except for petty expenses such as postage, stamp duty,
cable charges etc. In case the goods are exported on consignment basis, freight and insurance
must be arranged in India. AD banks can allow the exporters to abandon the books, which
remain unsold at the expiry of the period of the sale contract. Accordingly, the exporters may
show value of the unsold books as deduction from the export proceeds in the account sales.
C.12.Opening/hiring warehouses abroad: AD banks can consider the applications received
from exporters and grant permission for opening/hiring warehouses abroad, subject to the
conditions that – (a) the applicant's export outstanding does not exceed 5% of exports made
during the previous financial year; (b) applicant should have a minimum export turnover of
USD 1,00,000 during the last financial year; (c) period of realization should be as applicable; (d)
all transactions should be routed through the designated branch of the AD banks; (e) The
permission granted to the exporters shall initially be for a period of one year and renewal may
be considered subject to the applicant satisfying the above conditions and (f) AD banks have to
maintain proper records of the approvals so granted.
C.13.Export bills register should be maintained by the AD banks in physical and electronic form
aligned with EDPMS and bill number should be given to all type of export transactions on a
financial year basis, which should be reported in EDPMS.
C.14.Follow up of overdue bills: ADs should closely watch realisation of bills and in cases
where bills remain outstanding, beyond the due date for payment, the matter should be
promptly taken up with the concerned exporter. If still no steps are seen taken by the exporter,
either for realisation or seek for further extension of time beyond the stipulated period, the
matter should be reported to the Regional Office of RBI, stating the reasons. The duplicate
copy of EDF/SOFYEX form should continue to be held until the full proceeds are realized,
except in case of undrawn balances.
AD banks should follow up export outstanding with exporters systematically and vigorously so
that action against defaulting exporters does not get delayed. Any laxity in the follow up of
realization of export proceeds by AD banks will be viewed seriously by RBI, leading to the
invocation of penal provisions under FEMA 1999.
With operationalization of EDPMS effective from 01st March 2014, realization of all export
transaction for shipping documents after 28t February 2014 should be reported in EDPMS.
It may be noted that with effect from 01 st March 2014, details of all outstanding export bills
can be obtained from the EDPMS. AD banks were however required to report the old
outstanding bills prior to 01st March 2014 in XOS on half yearly basis as at the end of June and
December every year. To reduce the reporting burden of AD banks, it id decided to migrate the
export bill outstanding (XOS) data reported by the AD banks for half-year ended December
2015 onward to EDPMS and discontinue separate reporting of XOS for the subsequent periods.
AD banks shall mark off / close the XOS data pertaining to pre-March 01st, 2014 as and when
the amount is realised. (Ref: AP (DIR) Series Circular No. 74 dated 26 th May 2016).
C.15. Reduction in Invoice Value: (i) Exporters may approach AD banks for reduction in invoice
value on account of cash discount to overseas buyers for prepayment of the usance bills. Banks
may allow such cash discount to the overseas buyers to the extent of amount of proportionate
interest on the unexpired period of usance, calculated at the rate of interest stipulated in the
export contract/at the prime rate/LIBOR of the currency of invoice where rate of interest is not
stipulated in the contract.
(ii) If after a bill has been negotiated or sent for collection, its amount is to be reduced for any
other reason, ADs may allow such reduction, if satisfied about the genuineness of the request,
provided the reduction does not exceed 25% of invoice value; export does not relate to
commodities subject to floor price stipulations and exporter is not in the caution list of RBI. The
exporter shall be advised to surrender proportionate incentives, if any, availed of. Exporters
who have been in the export business for more than three years with a proven track record,
reduction may be allowed without any percentage ceiling, subject to the above conditions and
also provided their export outstanding does not exceed 5% of the average annual export
realisation during the preceding three financial years.
C.16.Change of Buyer or Consignee: RBI approval is not required to change buyer/consignee
after shipment of goods, due to default by the original buyer, provided the reduction in value
does not exceed 25% of the invoice value and the realisation of export proceeds is not delayed
beyond the period of 9 months from the date of export. Where the reduction in invoice value
exceeds 25%, all other relevant conditions stipulated in clause C.15 above shall be complied
with.
C.17.Export of goods by SEZs: Units in SEZ are permitted to undertake job works abroad and
export goods from that country itself, subject to the conditions that (a)
processing/manufacturing expenses are suitably loaded in the export price and are borne by
the ultimate buyer and (b) the exporter has made satisfactory arrangements for realization of
full export proceeds subject to the usual EDF procedure.
AD banks may permit units in DTAs to purchase forex for making payment for goods supplied
to them/services rendered to them by units in SEZs. In this respect it shall be ensured that the
Letter of Approval (LOA) issued to the SEZ unit by the Development Commissioner of SEZ, a
provision to supply goods/services to a unit in DTA and make payment in forex is mentioned.
C.18.Extension of time: RBI has permitted AD banks to extend the period of realisation of
export proceeds beyond stipulated period of realisation from the date of export, up to 6
months at a time, irrespective of the value of invoice subject to the following conditions:
a) The export transactions covered by the invoices are not under investigation by CBI /
Enforcement/other investigating agencies.
b) The AD bank is satisfied that the exporter has not been able to realise export proceeds for
reasons beyond his control.
c) The exporter submits a declaration that the export proceeds will be realised during the
extended period.
d) While considering extension beyond 1 year from the date of export, the total outstanding of
the exporter does not exceed USD One Million or 10% of the average export realization during
the preceding three financial years, whichever is higher.
e) Where the exporter has filed suits abroad against the buyer, extension may be granted
irrespective of the amount involved/outstanding.
Where an exporter is not able to realise export proceeds within the extended period for
reasons beyond his control, but expects to realise the same if further extension of period is
allowed, and cases not covered as above, shall submit necessary application in Form ETX in
duplicate to the concerned Regional Office of RBI with appropriate documentary evidence.
Reporting should be done in EDPMS.
(An exporter would be caution-listed if any shipping bill against him remains open for more
than two years in EDPMS provided no extension is granted by AD bank/RBI. Date of shipment
will be considered for reckoning the realization period. Once related bills are realised and
closed or extension for realization is granted, the exporter will be automatically de-caution-
listed. Please refer to AP (DIR) Series Circular No. 74 dated 26 th May 2016 for the relevant
instructions)..
C.19.Shipments lost in transit: When shipments from India for which payment has not been
received are lost in transit, AD banks must ensure that insurance claim is made as soon as the
loss is known. If the claim is payable abroad, AD banks must arrange to collect the full amount
of claim lost on the lost shipment through their overseas branch/correspondent and release
the duplicate copy of EDF only after the amount has been collected. The receipt of such
amount should be certified on the reverse of the duplicate copy. AD banks also have to ensure
that the claim amount on shipments lost in transit are partially settled by shipping
companies/airlines under carrier's liability abroad are repatriated to India by the exporters.
C.22.Export claims: AD banks can remit export claims on application, provided the relative
export proceeds have already been realized and repatriated to India and the exporter is not in
the caution list of RBI. It may be noted that in all such cases of remittances, the exporter has to
surrender the proportionate export incentives, if any, received by him.
C.23.Write-off by AD Category-I banks: Subject to compliance of the Rules and regulations
stipulated in the Master Direction dated 01 st January 2016 on ‘Exports of Goods & services’,
the following Limits are prescribed for ‘Write-offs’ of unrealised export bills, that are
outstanding for more than one year.
a) Write-off by Authorised Dealer Bank: 10% *
b) Write-off by Status Holder Exporters: 10% *
c) Self write-off by an Exporter : 5% * [other than Status Holder Exporters]
*of the total export proceeds realised during the previous calendar year and will be
cumulatively available in a year.
Before allowing write-off, AD banks should obtain documentary evidence of having
surrendered export incentives, if any, availed of by the exporter. In this respect, a certificate
issued by Chartered Accountant is to be produced in the case of self-write-off.
The respective AD banks have to report write off of export bills through EDPMS to RBI.
[Write-off in cases of payment of claims by ECGC and private insurance companies regulated by
IRDA will not be restricted to the limit of 10% indicated above. Also, the claims settled by them
in Rupees shall not be construed as export realisation in foreign exchange.]
Cases which are not covered by the above and those under investigations by agencies shall
require prior approval from RBI.
Write-off – Relaxation: As announced in the FTP 2015-20, realization of export proceeds shall
not be insisted upon under any of the Export Promotion schemes under the said FTP, subject
to the following conditions:
(i) The write-off on the basis of merits is allowed by RBI or AD Category-I bank on behalf of RBI
as per extant guidelines, (ii) The exporter produces a certificate from the Foreign Mission of
India concerned about the fact of non-recovery of export proceeds from the buyer and (iii) This
would not be applicable in self-write-off cases.
C.24. ‘Netting Off’ of export receivables against import payments – Units in SEZ: The ‘netting-
off’ of export receivables against import payments (except ACU countries) can be allowed by
AD bank only in respect of the same Indian entity and the overseas buyer/supplier (bilateral
netting) and the netting may be done as on the date of balance sheet of the unit in SEZ. All
other exchange and trade control regulations, as applicable, inclusive of reporting in R Return
(sale & purchase), shall be complied with.
C.25.‘Set-off’ of export receivables against import payables: AD banks can allow set-off of
export receivables against import payables (except ACU countries), subject to the rules
st
stipulated in the Master circular dated 01 January 2016 on ‘Exports of Goods and Services’
and compliance of exchange and trade control regulations as applicable to the transactions.
C.26.Exporters' caution list: Caution listing/de-caution listing of exporters is automated in
EDPMS. Up-dated list of caution listed exporters can be assessed through EDPMS on a daily
basis. Criteria for cautioning/de-cautioning of exporters in EDPMS are as under:
a)The exporters would be caution-listed if any shipping bills against them remains open for
more than two years from the date of shipment in EDPMS provided no extension is granted by
AD bank/RBI; (b) Once related bills are realized and closed or extension for realization is
granted, then the exporter will automatically be de-caution listed; (c) The exporters can also be
caution-listed even before the expiry of two years period based on the recommendation of AD
banks. The recommendation may be based on cases where the exporter has come to adverse
notice of Enforcement Directorate (ED)/CBI/DRI/any other such law enforcement agencies or
where the exporter is not traceable or not making any serious efforts for realization of export
proceeds. In such cases AD has to forward its findings to the concerned RO of RBI
recommending inclusion of the name of the exporter in the caution list and (d) RBI will
caution/de-caution the exporters in such cases based on the recommendation of the AD bank.
While handling shipping documents in respect of caution-listed exporters, AD banks should
follow the procedure mentioned below:
(a) They will intimate the exporters about their caution-listing, giving details of outstanding
shipping bills and when caution-listed exporters submit shipping bills for
negotiation/purchase/discount/collection, AD bank can accept the bills , subject to the
conditions that – (i)the exporters concerned should produce evidence of having received
advance payment or irrevocable LC in their favour covering the full value of the proposed
exports; (ii) in case of usance bills, the relative LC should cover full export value and also permit
such drawings. Besides, the usance bill should mature within the prescribed realization period
reckoned from the date of shipment and (iii) except under the aforesaid two conditions, AD
banks should not handle the shipping documents of caution-listed exporters.
(b)AD banks should seek prior approval from RBI for issuing guarantees for caution-listed
exporters.
C.29.Issue of guarantees by an AD: (i)AD can give guarantees in respect of any debt, obligation
or other liability incurred by a person resident in India and owned to a person resident outside
India, where the debt/obligation/other liability is incurred by the person resident in India as an
exporter on account of exports from India. (ii) An AD can give a guarantee in respect of any
debt/obligation/other liability incurred by a person resident outside India – (a) where such
debt/obligation/liability is owned to a person resident in India in connection with a bona fide
trade transaction., provided the guarantee given under this clause is covered by a counter
guarantee of an international repute resident abroad . (b) as a counter guarantee to cover
guarantee issued by his branch or correspondent outside India, on behalf of Indian exporter in
cases where guarantees of only resident banks are acceptable to overseas buyer.
Part-D Remittances connected with Export
D.1.Agency Commission on Exports: (i)AD banks may allow payment of agency commission,
either by deduction from the invoice value or by remittance upon receipt of application from
the exporter, subject to the following conditions:
a) Amount of commission has been declared on the export declaration form and accepted by
Customs/EPZ authorities/GOI. In cases where the same is not declared, a valid agreement /
written understanding between the exporter and the beneficiary shall be produced.
b) The relative shipment has already been made.
(ii)AD banks may allow payment of commission by Indian exporters, in respect of their exports
covered under counter trade arrangement through Escrow accounts designated in USD, subject
to the conditions that – (a) the payment of commission satisfies the conditions mentioned in
(a) and (b) above; (b) the commission is not payable to Escrow Account holders themselves and
(c) the commission should not be allowed by deduction from invoice value.
Payment of commission is prohibited on exports made by Indian partners towards equity
participation in an overseas joint venture / wholly owned subsidiary as also exports under
Rupee Credit Route, except commission up to 10% of invoice value of exports of tea and
tobacco.
D.2. Refund of export proceeds: AD banks through whom the export proceeds were originally
realised may consider request for refund of export proceeds of goods exported from India and
being re-imported into India on account of poor quality after (a) exercising due diligence
regarding the track record of the exporter and verifying the bona fides of the transaction, (b)
obtaining from the exporter a certificate issued by DGFT/Customs Authorities that no
incentives have been availed of by the exporter against the relevant export or the
proportionate incentives availed of, if any, have been surrendered, (c) obtaining an
undertaking from the exporter that the goods will be re-imported within three months from
the date of remittance and (d) ensuring that all procedures as applicable to normal imports are
adhered to.

Export Finance
Like any other trade, credit facilities are available for export segment also– both fund based
[working capital and term loan] and Non-fund based (BG, LC etc..). Gist of various facilities
extended to exporters by banks is furnished below.
1.Term Loan
This facility can be extended for setting up an industrial unit or expanding or buying a
running unit. To set up new units, it is mandatory to have the required licenses/approvals from
the concerned authorities.
Limit is fixed based on the project report. Financial parameters are analysed for assessing
the repayment capacity and accordingly repayment period is fixed. From the banker’s point of
view due diligence study, market inquiry of the promoters etc,, are to be conducted before
taking a decision on the proposal.
The party can avail of credit facility either in Indian Rupees or in Foreign currency. Rate of
interest will be based on the ‘rating’ of the customer and is linked to MCLR for rupee term loan
and for loans in foreign currency, it is linked to LIBOR rate of the respective currency.
For importing machinery (for expanding existing unit/to set up new unit), bank can extend
Import Letter of Credit facility/Buyers credit facility also.
2. Working Capital
Exporters can avail of working capital limit at two stages – before shipment and after
shipment, either in Indian Rupees or in Foreign currency.
Finance extended by banks to exporters to procure raw materials, process it, pack and export
the finished goods (till shipment stage) is termed as Pre-shipment Credit facility or Packing
Credit limit (PCL). This facility, extended in foreign currency is termed as Pre-shipment or
Packing Credit in Foreign Currency (PCFC).
Finance availed of by exporters after shipment of the goods, by
negotiating/purchasing/discounting the export bill, is termed as Post-shipment Limit (PSL).
Here banks extend bill discounting / purchasing /discounting facility. This facility, when
extended in foreign currency is termed as Export Bills Re-discounted (EBRD).
Interest on Rupee Export Credit: The MCLR system is applicable with effect from 1st April
2016. As such, interest applicable to all tenors of rupee export credit advances are at or above
MCLR effective from that date.
Rate of interest on Rupee export credit is fixed on the basis of customer ‘rating’, which as of
now is linked to MCLR. As per RBI rules, It shall not be fixed below the MCLR of each bank.
Interest on Export Credit in Foreign currency: With effect from 5th May 2012, banks are free to
determine the interest rates on export credit in foreign currency. Rate of interest on export
credit in foreign currency is fixed on the basis of customer 'rating', which as of now is linked to
the LIBOR of the respective currency for the respective maturity period.
Period of advance of PCL/PCFC: The period for which packing credit advance given by a bank
will depend upon the circumstances of individual case, such as the time required for procuring,
manufacturing or processing and shipping the relative goods/services. Banks have to decide
the period of advances, case to case basis on the above line.
If the pre-shipment advance is not adjusted by submission of export documents within 360
days from the date of advance, such advances will cease to qualify for concessional rate of
interest for export credit ab initio.
The PCFC will be available for a maximum period of 360 days. Any extension of the credit will
be subject to the same terms and conditions as applicable for extension of rupee packing credit
and also will have additional 200 bps above the rate for the initial period of 180 days prevailing
at the time of extension.
Period of advance of PSL/EBRD: In the case of demand bills, the period of advance shall be the
Normal Transit Period (NTP) as specified by FEDAI. In the case of usance bills in INR, credit can
be granted for a maximum period of 365 days from the date of shipment inclusive of NTP &
grace period, if any and in foreign currency it shall be 360 days from the date of shipment.
Exporters are also eligible to avail of Post shipment facility against Duty Drawback and
Advances against Undrawn balance, subject to certain conditions.
3. Non-fund based limits
Exporters are also extended non-fund based facilities like Letter of Credit (LC) for importing
inputs for export purpose, Bank Guarantee (BG), Forward Contract (FC), Trade Credit etc.. in
connection with their export business. Based on exporters’ past performance, projections and
purpose, these non-fund limits are sanctioned.

For further clarifications on Export credit and Export of Goods and Services, please refer to
Federal Digest, RBI Master Circular dated 01st July 2015 on 'Rupee / Foreign currency export
credit'; Master Direction dated 01st January 2016 on 'Exports of Goods and Services' &
subsequent AP (DIR) Series Circulars.

[ Compiled by Sri. A Madhavan - Ref: RBI Circulars, FTP, FEMA etc...]