RBI notifies Draft – Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024

The RBI on July 2 proposed rationalising regulations that cover export and import transactions to promote ease of doing business and empower banks to provide more efficient service to their foreign exchange customers.

“The proposed regulations are intended to promote ease of doing business, especially for small exporters and importers, while sharing the Statement on Developmental and Regulatory Policies of June 2024,” said RBI.

The Reserve Bank makes the following regulations in suppression of the Foreign Exchange Management (Export of Goods & Services) Regulations 2015 (Notification No. FEMA 23(R)/2015-RB dated January 12, 2016), except concerning things done or omitted to be done before such supersession.

According to proposed regulations notified today, every exporter shall furnish to the specified authority, an export declaration form containing the details of the Type of export Goods/service/software shipping bill no. & date, date of invoice for service/software and mode of transport, mode of realisation, exporter category, customs security no. exporter’s name and address, consignee’s name and address, total FOB/services/software value in words, etc.  The amount representing the full export value of goods and services shall be realised and repatriated to India within nine months from the date of shipment for goods and the date of invoice for services.

The exporter shall submit to the Authorised Dealer the export documents, within twenty-one calendar days from the date of shipment in case of goods or from the date of invoice in case of services; Provided that the Authorized Dealer may accept the documents after the expiry of the above period subject to directions issued by Reserve Bank.

The amount representing the full export value of goods and services shall be realised and repatriated to India within nine months from the date of shipment for goods and the date of invoice for services. However,  Authorised Dealer may extend the specified period for reasonable and sufficient cause shown by the exporter, and on being satisfied that such cause is justifiable. Further, the Authorised Dealer may permit a reduction in the full export value, as per the directions issued by the Reserve Bank.

Advance payment:

Advance payment for the export of goods and services may be received as per the export contract.

Interest payable on such advance payment shall not exceed the all-in-cost ceiling of trade credit in terms of Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 as amended from time to time.

Where an exporter is unable to fulfill the export obligation within the contracted period, the advance received shall be refunded unless an extension of time to fulfill the export obligation has been granted by the Authorised Dealer.

Advance payment for import of goods and services shall be repatriated by the importer and surrendered to the Authorised Dealer in case of non-import within the contract period or the extended period granted by the Authorised Dealer.

Advance payment made or received for import or export of goods and services which do not result in any import or export even within the extended time granted by the Authorised Dealer and when the advance is not refunded thereafter would be subject to Regulations 3 of the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018 as amended from time to time.

Project exports:

For the export of goods or services on deferred payment terms or in execution of a turnkey project or a civil construction contract, the exporter shall, before entering into any such export arrangement submit the proposal for prior approval of the Authorised Dealer, which shall consider the proposal by the rules/regulations/directions under FEMA.

Caution-listing of exporters:

The draft also proposes that an exporter who has not realized the full value of export within the time specified (including extensions, if any) under Regulation 5 may be caution listed by the Authorised Dealer subject to the directions issued by the Reserve Bank; provided;

The exporter has been given a reasonable opportunity of being heard by the Authorised Dealer, before such caution-listing. The Authorised Dealer may remove the name of the exporter from the caution list, as per the directions issued by the Reserve Bank. An exporter who has been caution listed shall undertake export only against receipt of advance payment in full or against an irrecoverable letter of credit, to the satisfaction of the Authorised Dealer.

According to the draft, no advance remittance for the import of gold and silver should be permitted unless specifically approved by the Reserve Bank of India.

The RBI has sought comments on the draft regulations under FEMA and directions to authorised dealer banks by September 1.