RBI and DGFT RBI controls Foreign Exchange and DGFT (Directorate General of Foreign Trade) controls Foreign Trade. Exim Policy as framed in accordance with FEMA is implemented by DGFT. DGFT functions under direct control of Ministry of Commerce and Industry. It regulates Imports and Exports through EXIM Policy.
On the other hand, RBI keeps Forex Reserves, Finances Export trade and Regulates exchange control. Receipts and Payments of Forex are also handled by RBI.
IEC – Importer Exporter Code
One has to apply for IEC to become eligible for Imports and Exports. DGFT allots IEC to Exporters and Importers in accordance with RBI guidelines and FEMA regulations. EXIM Policy is also considered before allotting IEC.
Export Declaration Form
All exports (physically or otherwise) shall be declared in the following Form.
GR form--- meant for exports made otherwise than by post.
PP Form---meant for exports by post parcel.
Softex form---meant for export of software.
SDF (Statutory Declaration Form)----replaced GR form in order to submit declaration electronically.
SDF is submitted in duplicate with Custom Commissioned who puts its stamp and hands over the same to exporter marked “Exchange Control Copy” for submission thereof to AD.
Trade Samples, Personal effects and Central Govt. goods.
Up to USD 25000 (value) – Goods or services as declared by exporter.
Gift items having value up to Rs. 5.00 lac.
Goods with value not exceeding USD 1000 value to Mynmar.
Goods imported free of cost for re-export.
Goods sent for testing.
Prescribed Time limits
The time norms for export trade are as under:
Submission of documents with “Exchange Control Copy” to AD within 21 days from date of shipment.
Time period for realisation of Export proceeds is 12 M or 365 days from date of shipment.
No time limit for SEZ (Special economic zones) and SHE(Status Holder Exporters) and 100 EOUs.
After expiry of time lime limit, extension is sought by Exporter on ETX Form.
The AD can extend the period by 6M. However, reporting will be made to RBI on XOS Form on half yearly basis in respect of all overdue bills.
Direct Dispatch of Shipping Documents
AD banks may handle direct dispatch of shipping documents provided export proceeds are up to USD 1 Million and the exporter is regular customer of at least 6 months.
Prescribed Method of payment and Reduction in export proceeds
Exporter will receive payment though any of the following mode:
Bank Drafts, TC, Currency, FCNR/NRE deposits, International Credit Card. But the proceeds can be in Indian Rupees from Nepal.
Export proceeds from ACU countries (Bangladesh, Burma, Mynmar, Iran, Pak, Srilanka, Nepal and Maldivis can be settled in ACUEURO or USD. A separate Dollar/Euro account is maintained.
Exports may be allowed to reduce the export proceeds with the following:
Reduction in Invoice value on account of discount for pre-payment of Usance bills (maximum 25%)
Agency commission on exports.
Claims against exports.
Write off the unrecoverable export dues up to maximum limit of 10% of export value.
The proceeds of exports can be got deposited by exporter in any of the following account:
Overseas Foreign Currency account.
Diamond Dollar account.
EEFC (Exchange Earners Foreign Currency account)
DDA _ diamond Dollar accounts
Diamond Dollar account can be opened by traders dealing in Rough and Polished diamond or Diamond studded Jewellary with the following conditions:
With track record of 2 years.
Average Export turnover of 3 crore or above during preceding 3 licensing years.
DDA account can be opened by the exporter for transacting business in Foreign Exchange. An exporter can have maximum 5 Diamond Dollar accounts.
EEFC Exchange Earners Foreign Currency accounts can be opened by exporters. 100% export proceeds can be credited in the account which do not earn interest but this amount is repatriable outside India for imports (Current Account transactions).
Pre-shipment Finance or Packing Credit
Packing credit has the following features:
Calculation of FOB value of order/LC amount or Domestic cost of production (whichever is lower).
IEC allotted by DGFT.
Exporter should not be on the “Caution List” of RBI.
He should not be under “Specific Approval list” of ECGC.
There must be valid Export order or LC.
Account should be KYC compliance.
Liquidation of Pre-shipment credit
Out of proceeds of the bill.
Out of negotiation of export documents.
Out of balances held in EEFC account
Out of proceeds of Post Shipment credit.
Concessional rate of interest is allowed on Packing Credit up to 270 days. Previously, the period was 180 days. Running facility can also be allowed to good customers.