The taking or sending out of products by land, sea, or air, on consignment or by way of sale, lease, hire-purchase, or any other agreement, is referred to as “export.” When it comes to software, “export” also refers to transmission across any electronic medium.
“All export contracts and invoices must be in freely convertible currency or Indian rupees, but export proceeds must be realised in freely convertible currency.” Specific exports, on the other hand, may be realised in rupees if done through a freely convertible Vostro account held by a non-resident bank in any nation other than an Asian Clearing Union (ACU) member country, Nepal, or Bhutan.”
The rupee of India is a non-convertible currency.
Receipt and payment methods:
- In the way stated, the whole amount of the export value must be received through an AD Bank.
- When payment for goods sold to overseas buyers during their visits is received in this manner, EDF(duplicate) should be released by the AD Category-I banks only upon receipt of funds in their Nostro account or, if the AD Category-I banks concerned is not the Credit Card servicing bank, upon production of a certificate by the exporter from the Credit Card servicing bank in India stating that the equivalent amount in foreign exchange has been received.
Payments for exports made outside of India may be debited to an importer’s credit card, with reimbursement from the card issuing bank/organization in foreign currency.
- Online Payment Gateway Service Providers process export-related receipts (OPGSPs)
Authorized Dealer Category-I (AD Category-I) banks provide the option of repatriating export-related remittances by entering into standing agreements with Online Payments Gateway Service Providers (OPGSPs) under the following conditions:
- This facility is only available for exports of goods and services with a value of less than $10,000 USD (US Dollar ten thousand).
- AD Category-I banks that provide these services must open a NOSTRO collection account to receive export-related payments made possible by such arrangements. Where exporters using this service are required to open notional accounts with the OPGSP, it must be assured that no monies are held in such accounts and that all receipts are automatically swept and pooled into the AD Category-I bank’s NOSTRO collection account.
- Payments made by other parties for export/import transactions
Payments to third parties for export/import operations are permissible under the following conditions:
1. A firm irrevocable order should be in place, backed by a tripartite agreement. However, not if documentary evidence for the events leading to third-party payments/the third-name party’s being stated in the irrevocable order/invoice has been produced, subject to:
- The AD bank should be satisfied with the transactions’ and export documents’ bona fides;
- when handling such transactions, the AD bank should consider the FATF statements.
- Settlement of transactions involving exports in currencies with no fixed exchange rate
Export transactions in which the invoicing currency is a freely convertible currency and the settlement currency is a currency that, while convertible, does not have a direct exchange rate, may be settled by AD Category-I banks, subject to the following conditions:
(a) The exporter is an AD Bank customer,
(b) The signed contract/invoice is in a freely convertible currency,
(c) The beneficiary is willing to accept payment in the beneficiary’s currency rather than the original (freely convertible) currency of the invoice/contract, Letter of Credit as full and final settlement,
(d) AD bank is satisfied with the transactions’ bona-fides, and
(e) The counterparty to the AD bank’s exporter/importer is not from a freely convertible currency
Exports of projects and services
‘Project Exports’ refers to the export of engineering items with deferred payment conditions as well as the execution of turnkey projects and civil construction contracts in other countries. Before executing such contracts, Indian exporters must acquire the approval of the AD Category – I banks/Exim Bank at the post-award stage.
As a result, AD banks / Exim Banks may contemplate giving post-award approvals without a monetary restriction and allowing later adjustments in the terms of post-award approval within FEMA norms / regulations.
Various facilities have been made available to project and service exporters in order to execute international transactions in the following areas:
- Inter-project transfer of machinery
- Inter-project transfer of finances
- Deployment of temporary cash surpluses
- Repatriation of monies in On-site Software Contracts –
Export of items that are leased, rented, or rented out.
The Reserve Bank must approve the export of machinery, equipment, and other items on a lease or hire basis under an agreement with an overseas lessee in exchange for the collection of lease rentals/hire costs and ultimate re-import. Exporters should apply for essential approval to the Reserve Bank’s Regional Office concerned through an AD Category – I bank, including full details of the items to be exported.
For any export of Indian money, Reserve Bank permission is necessary, except to the extent permitted by any general licence issued under the Regulations as follows:
- Any person resident in India may take currency notes of the Government of India and the Reserve Bank of India outside India (other than to Nepal and Bhutan) up to an amount of Rs.25,000 (Rupees twenty-five thousand only); and
- Any person resident outside India who is not a citizen of Pakistan or Bangladesh and is not a traveller coming from or going to Pakistan or Bangladesh and visiting India may take currency notes of the Government of India and the Reserve Bank of India outside India up to an amount of Rs.25,000 (Rupees)
Services are exported
In the case of service exports, the exporter may do so without filing a declaration, but he or she will be responsible for realizing any foreign exchange that becomes due or accrues as a result of the export and repatriating it to India in line with the Act’s rules and regulations.
Agency commission on exports
AD Category – I banks may authorise payment of commission by remittance or deduction from invoice value if the exporter submits an application. The remittance of agency commissions may be permitted if certain conditions are met.
(ii) AD Category – I banks may allow Indian exporters to pay commissions on exports covered under counter trade agreements through Escrow Accounts in US Dollar, subject to the following conditions:
(iii) Payment of commission on exports made by Indian Partners for equity participation in an overseas joint venture / fully owned subsidiary, as well as exports through the Rupee Credit Route, is forbidden, with the exception of commission up to 10% of the invoice value of tea and tobacco exports.
Export proceeds refunded
Requests for repayment of export proceeds of items exported from India and re-imported into India due to low quality may be considered by AD Category – I banks, through whom the export proceeds were initially realized. While approving such transactions, AD Category – I banks must:
(i) Conduct due diligence on the exporter’s track record;
(ii) Verify the transactions’ bona-fides;
(iii) Obtain from the exporter a certificate issued by DGFT / Custom authorities stating that no incentives have been taken against the relevant export or that the proportionate incentives taken, if any, have been surrendered; and
(iv) Obtain an undertaken from the exporter
I have always been against Glorifying Over Work and therefore, in the year 2021, I have decided to launch this campaign “Balancing Life”and talk about this wrong practice, that we have been following since last few years. I will be talking to and interviewing around 1 lakh people in the coming 2021 and publish their interview regarding their opinion on glamourising Over Work.
If you are interested in participating in the same, do let me know.
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