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EXPORTS . G.Mohan AGM,FED R.B.I. Exports regulations under FEMA, 1999 Notification No.FEMA 23/2000-RB dated 3.5.2000 Notification No.FEMA 14/2000 dated 3.5.2000 Master circular No.8 dated 1 st July 2005 Memorandum on Project & Sevices Exports (PEM). Importance of Exports follow up.

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  • Exports regulations under FEMA, 1999

    Notification No.FEMA 23/2000-RB dated 3.5.2000

  • Notification No.FEMA 14/2000 dated 3.5.2000

  • Master circular No.8 dated 1st July 2005

  • Memorandum on Project & Sevices Exports (PEM)

Importance of exports follow up
Importance of Exports follow up

  • The most dependable source of foreign exchange for any country

  • RBI to ensure realisations in time to prevent leads & lags

  • Necessary for preventing volatility in the forex markets – affects monetary stability

Categories of exports
Categories of exports

  • Cash Exports

  • Deferred Payment Exports

  • Project Exports

  • Software Exports

  • Services Exports

Agencies connected with exports
Agencies connected with Exports

Director General of Foreign Trade

  • Formulation of trade policy; allotment of importer-exporter code number


  • Valuation of goods, physical aspects of exports

    Reserve Bank of India & Authorised Dealers

    - Monitoring receipts of payments & follow up

Declaration of exports
Declaration of Exports

Mandatory to declare the export of goods & Services outside India (except Nepal & Bhutan) by exporter to the specified authority in the prescribed forms (Regulation 3)

  • Full value of goods or software

  • Where value not ascertainable – the value expected to be realized given the market conditions

    Export of services – no form prescribed – however liable to repatriate the exchange so earned

Exemptions from declaration
Exemptions from Declaration

Trade samples, publicity material supplied free, personal effects of travellers (accompanied/unaccompanied)

Ship’s stores, transshipment cargo, Military/Naval/Air Force requirements,

Aircraft Engine Spares

Goods/Software of value less than US.$.25000/- - declaration from exporter

Gifts for value upto Rs.5.00 lakh – declaration

Exemptions from declaration contd
Exemptions from Declaration-Contd

Goods imported free of cost on re-export basis

Goods exported upto $ 1000 to Myanmar under Barter Trade Agreement

Replacement of goods free of charge as per EXIM Policy

From EPZ/FTZ after permission of Development Commissioner

  • Imported goods found defective for replacement

  • Goods imported from suppliers/collaborators on loan basis

  • Goods imported from suppliers/collaborators free of

    cost - found excess after production operations

Payment of export value of goods
Payment of Export Value of Goods

Notification No.FEMA 14/2000-RB-Manner of Receipt & Payment Regulations

For all ACU Countries except Nepal – through ACU Dollar Account

In case of export of goods to Nepal, where an importer resident in Nepal has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism.

For the rest of the world – by debit to the Rupee Account of a bank situated in countries other than the ACU countries or in any permitted currency

For export to Myanmar – in any freely convertible currency or through ACU mechanism

Receipt of payment
Receipt of Payment

In the form of bank draft, pay order, foreign currency notes, travellers cheques from buyer during visit to India – surrender as per time limit

Debit to NRE/FCNR Accounts of the buyer

In Rupees from credit card servicing bank against charge slip signed by buyer using a credit card

In accordance with directions of RBI for arrangements between Governments/Exim Bank

In the form of precious metals equivalent to the value of jewellery exported by Gems & Jewellery units in SEZ

Rupeeaccount of Exchange Houses - up to Rs. 2lakhs per transaction

Export procedure
Export Procedure

Declaration in Form GR/SDF to be submitted in duplicate to Customs along with shipping bills

SOFTEX Forms in the triplicate to STPI/FTZ/EPZ

Customs Number the form – certify value of goods & assessable value/if SOFTEX, official of STPI/FTZ/EPZ will certify

Return duplicate to exporter – original sent to RBI directly

GR form resubmitted to Customs along with goods to be shipped

Customs certify quantity & return form to exporter

Export procedure1
Export Procedure

Exporter submits duplicate GR to AD within 21 days of shipment with invoice, shipping documents etc.

AD negotiates/sends for collection – report to RBI in form ENC with R-Return

GR form endorsed for amounts credited to EEFC account

ADs no longer required to submit the duplicate export declaration form & EC copy of shipping bill to RBI after realisation of export proceeds

Softex form procedure
SOFTEXForm Procedure

  • Form to be submitted in triplicate to STPI/FTZ/EPZ

  • Designated officials of Ministry of Information Technology, GOI at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones (SEZs) have been authorised to certify exports declared on SOFTEX forms

  • Designated officials of STPIs/EPZs/SEZs also authorised to certify the Softex Form

Softex form procedure1
SOFTEX Form Procedure

  • Original Sent Directly to RBI by Certifying Agency

  • Duplicate Retuned to Exporter

  • Triplicate Retained by STPI/FTZ/EPZ

  • Duplicate form to be submitted to AD within 21 days of certification

  • Billing to be done for long term contracts on reaching "milestones" or once a month – for others within 15 days of completion and for certification by the authorities in the STP

Short shut shipment
Short/Shut shipment

Short shipment- When part of the shipment declared on GR form not shipped

Shut shipment – no shipment made at all

In case of short shipment, certificate given by customs on the actual quantity/value of goods exported

In case of no shipment(shut shipment) duplicate GR form cancelled & advised to RBI by customs

Despatch of documents
Despatch of documents

Documents to be despatched as soon as possible to overseas branches/correspondents

Documents may be sent directly to consignee where L/C or advance remittance received

Can also be done for customers with good track record

Despatch of documents1
Despatch of Documents

Exporters who are “Status Holder Exporters” can despatch documents directly to consignees, subject to:

the export proceeds are repatriated through the authorised dealer named in the GR form

The duplicate copy of the GR Form is submitted to the authorised dealer for monitoring purposes by the exporters within 21 days from the date of shipment of export

Pp form procedure
PP Form Procedure

  • Original PP form to be countersigned by AD

    • AD to countersign when parcel addressed to their branch or correspondent in the country of import

    • Can be sent directly to consignee if export against LC or advance payment has been received or the AD is satisfied based on the track record of the exporter

Direct despatch of documents
Direct Despatch of Documents

Authorised Dealers may permit units in Special Economic Zones (SEZs) to despatch export documents direct to the consignees outside India subject to:

the export proceeds are repatriated through the Authorised Dealer named in the GR/SDF/PP/SOFTEX Form

the duplicate copy of the respective declaration form is submitted to the Authorised Dealer for monitoring purposes by the exporters within 21 days from the date of shipment

Reduction in value
Reduction in Value

AD allowed to reduce amount of bill upto 10% of invoice value subject to production of documentary evidence

  • Not allowed if exporter is on RBI caution list; or commodities subject to floor price

    For exporters having good track record write off allowed without any ceiling

  • Xos not>5% of average annual export realisation during preceding 3 calnder years

Write off of unrealised bills
Write off of Unrealised Bills

Powers delegated to ADs to write off outstanding bills provided:

Bill outstanding for >360 days

Aggregate write off does not exceed 10% of export realisations of previous year

Unrealised amount represents the undrawn balance of an export bill (not exceeding 10% of the invoice value)

Overseas buyer declared insolvent/buyer not traceable

Write off of unrealised bills1
Write off of Unrealised Bills

Goods destroyed by Customs/Health Authorities/sold in auction

The case is not the subject matter of any civil or criminal suit which is pending

Cost of legal action should not be disproportionate to the value of the bill

Satisfactory documentary evidence

Exporter not under investigation by CBI/ED

Exporter surrenders proportionate export incentives

Write of unrealised bills
Write of Unrealised Bills

  • Certify on the GR form “Write off permitted “ when no further amount is to be realised

    Exporters permitted to “write off” outstanding export bills upto an annual limit of 10 per cent of their export proceeds due for the export made after 1.7.2003

Time period for realisation of exports
Time period for realisation of exports

Irrespective of the tenor of the bill to be realised and repatriated within six months from the date of export

Time period for realisation of one year also for export of certain products and exporters having contracts above Rs.100 crores in one year.

Time period for realisation of exports1
Time period for realisation of Exports

For exports to warehouses established with RBI approval – date of realisation or 15 months whichever is earlier

10% EOU – 12 months

SEZ Units – No time limit for realisation of exports

Exporters with proven track record who have been certified as “Status Holder” in terms of the EXIM Policy can realise and repatriate the full value of export proceeds within a period of twelve months from the date of shipment

Extension of time for realisation of exports by ads
Extension of time for realisation of exports by ADs

Power to grant extension of time for realisation of export proceeds delegated to AD which handled the export documents for invoice value upto US.$.100,000 subject to application by exporter to AD giving the reasons for extension

AD is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control

The exporter submits a declaration that he will realise the export proceeds during the extended period

The extension may be granted upto a period of 3 months at a time

The extension beyond one year from the date of export the total export outstandings of the exporter should not be more than 10% of the average of export realisations during the preceding three financial years

Extension of time for realisation of exports by ads1
Extension of time for realisation of exports by ADs

The ceiling of US.$ 1,00,000 would not apply where the exporter has filed suits against the importer abroad – extension may be granted upto six months at a time, irrespective of the amount involved

Cases under investigation by Enforcement Directorate/CBI or any other investigating agency and beyond the limit of $ 1,00,000 to be referred to RBI for extension

To be reported in XOS statement with appropriate remarks when extension has been granted by AD

Extension of time
Extension of Time

  • All exporters allowed to

  • Write off(including reduction in invoice value)outstanding export dues


  • Extend the period of realisation beyond 180 days or further period as applicable(APDIR40/Dec5,2003)

Extension of time write off
Extension of Time & Write off

  • Aggregate value of export bills written off(including reduction in invoice value)&bills extended for realisation does not exceed 10% of exports due during the calender year


  • Export bills are not a subject of investigation by ED/CBI

Extension of time write off1
Extension of Time & Write Off

  • Available for exports made after July1,2003 & proceeds due for realisation on January 1,2004

  • Exporter to submit a statement within a month from the close of the calendar year to AD

Remittances connected with exports
Remittances Connected With Exports

  • Export claims ADs allowed to remit

    • Export proceeds should have been realised & repatriated to India

    • Exporter is not on caution list of RBI

    • Exporter to be advised to surrender proportionate export incentive, if any received by him

Consignment exports
Consignment Exports

Documents sent at the risk of the exporter

Documents sent to correspondent to be delivered to consignee against trust receipt

Repatriations within time limit for exports

Agent allowed to deduct expenses incurred with the sale

Account sales to be received along with remittance

Consignment exports1
Consignment Exports

Freight & insurance to be arranged in India

Realisation period 15 months for exporters having warehouses abroad with prior RBI approval

Exports to East European Countries – period upto 12 months allowed by RBI to exporters with good track record

Caution listing by rbi
Caution Listing By RBI

  • Regulation 17 of Export Regulations

  • In respect of exporters who default in repatriating export proceeds

  • Notice issued to ADs/Customs

  • Ads may approve the GR/PP/SDF &Softex forms of caution listed exporters if the exporter has received Advance payment/LC in their favour .(AP DIR68/FEB11,2004)


  • The process of transferring the exchange risk liability back to the exporter

  • Demand bills unpaid - on the 30th day after transit period

  • For usance bills - on the 30th day of the notional due date

Transfer of documents
Transfer Of Documents

  • AD can accept documents for negotiation/ collection covering exports from his constituent (other than the one who signed the declaration under Regulation 3), provided

    • the constituent also signs a declaration to abide by the Regulations;

    • such constituent shall be deemed to be the exporter

Ads responsibilities
ADs Responsibilities

  • Credit of export proceeds on time to exporters account

  • Permissible credits to EEFC a/c

  • Operations of escrow account as per RBI approval

  • Prompt & correct reporting in various statements

Ads responsibilities1
ADs Responsibilities

  • Ensure GR form submitted in 21 days

  • Bills not realised within 180 days to be reported to RBI

  • Extension of time - with RBI approval/Ads approval/Exporter

  • Vigorous follow up with exporters for export realisation

  • Furnish consolidated statement to RBI every June & December for all bills outstanding beyond 180 days (XOS )

Advance payments for exports
Advance Payments for Exports

Goods to be exported within one year of receipt of advance payment (with or without interest)

Rate of interest not to exceed LIBOR + 100 basis points

Documents to be routed through AD through whom advance remittance received

Refunds in case of no exports taking place – after one year needs prior RBI approval

Where agreement provides for shipment after one year – prior RBI approval

Changes under fema 1999
Changes under FEMA, 1999

Uniform period for realisation of export proceeds regardless of the tenor of the bill of exchange – concept of due date done away with

Limit on agency commission on export removed – no limit provided it has been declared to the Customs on the declaration form

Powers delegated to ADs to grant extension of time for realisation of exports upto US.$1,00,000

Changes under fema 19991
Changes under FEMA, 1999

No GR Drill for exports upto Rs.25,000 limit on gift through exports raised to Rs.5 lakh

Special facilities for units in sezs
Special Facilities for Units in SEZs

Payment of export may also be received by the gem & jewellery units in SEZs and EOUs in form of precious metals i.e. gold/silver/platinum equivalent to value of jewellery exported on the condition that the sale contract provides for the same and the approximate value of the precious metal is indicated in the relevant GR/SDF/PP forms

What are project exports
What are Project Exports

Export of engineering goods on deferred payment terms

Execution of turnkey projects/civil construction contracts abroad

Export of services

Institutions involved
Institutions involved





Working group members
Working Group Members



Reserve Bank of India (ECD & IECD)

Authorised Dealer & Exporter invited as special invitees

Criteria for consideration
Criteria for consideration

Economic, political conditions of the importers country

Creditworthiness of importers

Experience of the applicant

Immediate & long term benefits in terms of forex earnings

Period of deferred credit, interest rate, adequacy of advance

Nature of security available

Facilities required by applicant

Economic viability of the proposal

Facilities allowed
Facilities Allowed

Foreign Currency Accounts abroad

Site Office abroad

Bridge finance from India

Performance guarantees

Payment of agency commission

Export of equipment from India on re-import

Clearance of proposals
Clearance of Proposals

Turnkey Projects

Authorised Dealers Rs.50 Crores

Exim Bank Rs.200 Crores

Working Group – above Rs.200 Crores

Other criteria
Other Criteria

Civil construction contracts – only MOC approved contractors

Company to have good track record – adherence to time & cost schedules

Satisfactory record of repatriation from previous projects

Profitability of 10% to 15%

Sourcing of materials from India

At least 30% of contract value to be repatriated to India

Export of services
Export of Services

No approval if services on cash basis & no facilities required

Prompt repartition of earnings

Software companies to repatriate at least 30% of contract value

When facilities required, approval from appropriate authority

Completed projects
Completed Projects

Remit all profits/dues to India

Close foreign currency accounts

Wind up liaison offices

Ensure performance guarantees are discharged

Liquidate overdrafts abroad

Obtain completion certificate