In the Indian context, when a transaction involves the shipment of goods from one foreign country to another foreign country through an Indian Intermediary it is called merchanting trade or Intermediary trade. Goods involved in the merchanting trade transactions would be the ones that are permitted for exports/imports under the prevailing Foreign Trade Policy (FTP) of India, as on the date of shipment and all the rules, regulations and directions applicable to exports (except Export Declaration Form) and imports (except Bill of Entry), are complied with for the export leg and import leg respectively. As per the existing rules for a trade to be classified as merchanting trade, goods acquired shall not enter the Domestic Tariff Area and the state of the goods should not undergo any transformation.
Reserve Bank of India on 24.01.2020 (Friday) revised the existing directions relating to merchanting trade transactions with a view to further facilitate merchanting trade transactions. The RBI notification said the revised guidelines as under are being issued in supersession of the A.P. (DIR Series) Circular ibid.