EXPORTS

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EXPORTS

• G.Mohan
• AGM,FED
• R.B.I.

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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)

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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

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Categories of exports

• Cash Exports
• Deferred Payment Exports
• Project Exports
• Software Exports
• Services Exports

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Agencies connected with Exports

• Director General of Foreign Trade
• Formulation of trade policy allotment of
  importer-exporter code number
• Customs
• Valuation of goods, physical aspects of exports
• Reserve Bank of India Authorised Dealers
• - Monitoring receipts of payments follow up

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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

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Exemptions from Declaration

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

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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

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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

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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
• Rupee account of Exchange Houses - up to Rs.
  2lakhs per transaction

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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

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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

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SOFTEX Form 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

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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

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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

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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

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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

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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

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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

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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 notgt5 of average annual export realisation
  during preceding 3 calnder years

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Write off of Unrealised Bills

• Powers delegated to ADs to write off outstanding
  bills provided
• Bill outstanding for gt360 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

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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

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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

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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.

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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

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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

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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

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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)

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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

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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

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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

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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

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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

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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)

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Crystallisation

• 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

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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

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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

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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 )

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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

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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

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Changes under FEMA, 1999

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

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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

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What are Project Exports

• Export of engineering goods on deferred payment
  terms
• Execution of turnkey projects/civil construction
  contracts abroad
• Export of services

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Institutions involved

• RESERVE BANK OF INDIA
• EXIM BANK
• ECGC
• AUTHORISED DEALERS

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Working Group Members

• EXIM Bank
• ECGC
• Reserve Bank of India (ECD IECD)
• Authorised Dealer Exporter invited as special
  invitees

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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

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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

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Clearance of Proposals

• Turnkey Projects
• Authorised Dealers Rs.50 Crores
• Exim Bank Rs.200 Crores
• Working Group above Rs.200 Crores

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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

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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

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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

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• THANK YOU