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Exchange Control Regulations Related to Imports

Understand the RBI regulations related to imports including exchange control, payment methods, advance remittances, trade credit, interest on import bills, and evidence of import submission. Learn about operational guidelines, limitations, and compliance rules for import transactions under FEMA.

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Exchange Control Regulations Related to Imports

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  1. Exchange Control Regulations Related to Imports

  2. RBI Regulations- General Guidelines • In conformity with policy and FEMA rules • Control Form • Obligation of Purchaser of Foreign Exchange • a. Sec 10(6) of FEMA – Purpose • b. Submission of Evidence of Import • i. By Sea/Air- BOE • ii. By post - Postal Appraisal Form /Custom Assessment Certificate

  3. RBI Regulations • Time limit for Settlement of Import Payments • a. Normal Imports • b. Deferred Payment- Supplier Credit / Buyer Credit • c. Import of Books • 5. Manner of Rupee Payment • Manner of Payment in Foreign Exchange • Import Licence

  4. Permitted currencies and methods of payment • ACU Group • 1. India • 2. Pakistan, • 3. Nepal, • 4. Bangladesh, • 5. Srilanka , • 6. Maldives ) • b. Others PAYMENT SHALL BE MADE IN A CURRENCY APPROPRIATE TO THE PLACE OF SHIPMENT . IN THE CASE OF NEPAL AND BHUTAN IN CAN BE IN INR

  5. RBI Regulations • Operational Guidelines • Advance Remittances- physical imports • Up to USD 1,00,000 • Above USD 1,00,000 – BG required • Up to USD 5Mn – BG requirement can be waived • PSU etc, need NOC from MOF for waiver of BG • Goods to be imported within 6 months(3 years in the case of capital goods) • In the event of non submission , the amount should be repatriated

  6. RBI Regulations • Operational Guidelines • 2. Advance Remittances- import of services • Up to USD 5,00,000 • Above USD 5,00,000 – BG required • For PSU’s/GovtDeptt limit remains USD 100,000. • Beyond USD 100,000 BG is required otherwise need NOC from MOF • In case of non performance money should be repatriated

  7. RBI Regulations • Operational Guidelines • 3. Trade Credit – Buyers’ /Suppliers Credit • Source- supplier/banks /financial institutions • Maturity < one and three years( C.goods) • Amount USD 20 mio per import transaction. • All in cost ceiling – L plus 350 bps • Guarantee /LOU/LOC/LC ( except gold, palladium, platinum,Rodium and silver)

  8. RBI Regulations • Operational Guidelines • 4. Interest on Import Bills • Interest allowed max upto a period of 3 years from the date of shipment Source- supplier/banks /financial institutions • Overdue interest allowed • Max L plus 200 bps • Pre payment of usance bills – proportionate deduction at the actual or prevailing Libor

  9. RBI Regulations…………….Contd • OPERATIONAL GUIDELINES • 5.Receipt of import Documents • Can be received directly up to USD 3,00,000 • Wholly owned Indian subsidiaries of foreign companies from their principles • All limited companies • Status holder exporters , 100 EOU, Units in SEZ , PSU • Supplier can send docts directly to the buyers bank • All above transactions > USD 300000 requires a credit report on the supplier

  10. RBI Regulations…………….Contd • OPERATIONAL GUIDELINES • 5.Evidence of Import –Physical Imports • Should be submitted within 3 months from the date of remittance • Upto USD 100,000 waived • EC (home consumption) copy of BOE or warehousing copy – 100% EOU OR Custom Assessment Certificate/Postal Apprisal Form for postal import

  11. RBI Regulations…………….Contd • OPERATIONAL GUIDELINES • 5.Evidence of Import –Physical Imports • In lieu of BOE- Certificate from CEO / Auditor provided • 1. amount < USD 1 MIO • 2. CO is listed and its net worth is > Rs 10 M • 3. Allowed also for PSU/GovtDeptt, autonomous bodies viz IIT ,Indian Institute of Science whose accounts are audited by CAG

  12. RBI Regulations…………….Contd • OPERATIONAL GUIDELINES • 6.Evidence of Import – Non - Physical Imports • In lieu of BOE- a Certificate from CA confirming receipt of software/data/ drawing/design etc by the importer • Importer to inform Custom

  13. RBI Regulations…………….Contd • 7. Import of Gold / Platinum / Silver • Import on consignment basis allowed if done through nominated agencies /banks • Import on unfixed price basis for categories as mentioned above • Direct import allowed for nominated agencies /banks /units in EOU/SEZ • For such imports LC should not exceed 90 days including usance period plus ,supplier and buyers credit

  14. RBI Regulations • 8. Non submission of evidence • 9. High Sea Sale • 10 . Merchanting Trade

  15. BUYER SELLER 2 1 goods goods LC Order Or Adv. Payment LC Order Or Adv. Payment TRADER INDIA Merchanting trade Transactions where goods are either DIRECTLY SHIPPED to the country of the buyer or TRANSHIPPED at an Indian port under customs supervision, but not the cases where goods are imported into India for re-export after processing, re-labeling etc.

  16. Contd.. 1.For genuine traders, not for financial intermediaries. 2. Import should be possible in India and the transaction should be as per Import /Export regulation except EDF and BOE. 3. Max outlay of funds should not exceed 3 months. 4. Total transaction should be completed within 6 months 5. Funds received abroad can be retained in Nostro A/c 6. Transaction should leave reasonable profit

  17. Contd.. 7. Where the payment of export leg of the transaction precedes the payment of import leg –import leg should be paid with out dealy 8. No short term credit either by way of supplier credit or buyer credit

  18. Countries under European and American trade embargoes and economic sanctions • Afghanistan • Belarus • Balkans( Bosnia , Crotia , Serbia and Montenegro) • Cuba • Democratic Republic of Congo • North Korea • Egypt • Eritrea • Iran • Iraq • Ivory Coast • Lebanon • Liberia • Libya • Mynamar • Somalia 17. Sudan 18.Syria 19. Tunisia 20 Zimbabwe

  19. Other Rules related to Imports.. 1. Import of technical drawings and designs are subject to compliance with the provisions of Research and Development Cess Act , 1986. 2. Importer to comply with the provisions of Income Tax Act , wherever applicable

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