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Exchange Control - Export of Goods and Services (Contd)
[Source: Master Circular No. / 8 /2004-05 by RBI Dated July 1st, 2004]

Counter-trade Arrangement (Paragraph A7)

  1. Counter trade proposals involving adjustment of value of goods imported into India against value of goods exported from India in terms of an arrangement voluntarily entered into between the Indian party and the overseas party through an Escrow Account opened in India in U.S. dollar will be considered by the Reserve Bank. All imports and exports under the arrangement should be at international prices in conformity with the Exim Policy and Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder. No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year (i.e., in a block of 12 months) and the banks may pay interest at the applicable rate. No fund based/or non-fund based facilities would be permitted against the balances in the Escrow Account.

  2. Application for permission for opening an Escrow Account may be made by the overseas exporter/organisation through the authorised dealer with whom the account is proposed to be opened, to the office of Reserve Bank under whose jurisdiction the authorised dealer is functioning.

Export of goods on lease, hire, etc.(Paragraph A8)

Export of machinery, equipment, etc., on lease, hire, etc., basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import require prior approval of the Reserve Bank. Exporters should apply for necessary permission, through an authorised dealer, to the concerned Regional Office of the Reserve Bank, giving full particulars of the goods to be exported.

Participation in Trade Fairs abroad (Paragraph A9)

  1. Participants in international exhibition/trade fair have been granted general permission vide Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB, dated 3rd May, 2000 for opening temporary foreign currency account abroad. Exporters may deposit the foreign exchange obtained, by sale of goods, at the international exhibition/trade fair and operate the account during their stay outside India provided that the balance in the account is repatriated to India within a period of one month from the date of closure of the exhibition/trade fair and full details are submitted to the concerned authorised dealer.

  2. Firms/Companies and other organisations participating in Trade Fair/Exhibition abroad are now permitted to take/export goods for exhibition and sale outside India without the prior approval of the Reserve Bank of India. Unsold exhibit items may be sold outside the exhibition/trade fair in the same country or in another third country. Such sales at discounted value are also permissible. It would also be permissible to `gift' unsold goods upto the value of US $ 5000 per exporter, per exhibition/trade fair.

Authorised Dealers may approve GR Form of export items for display or display-cum-sale in trade fairs/exhibitions outside India subject to the following;

  1. The exporter shall produce relative Bill of Entry within one month of re-import into India of the unsold items.

  2. he sale proceeds of the items sold are repatriated to India in accordance with Foreign Exchange Management (Realisation, Repatriation, and Surrender of Foreign Exchange) Regulations, 2000.

  3. The exporter shall report to the Authorised Dealer the method of disposal of all items exported, as well as the repatriation of proceeds to India.

Such transactions approved by the Authorised Dealers will be subject to 100% audit by the internal inspectors/auditors of the Authorised Dealer concerned.

Project Exports and Service Exports(Paragraph A10)

Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as ‘Project Exports’. Indian exporters offering deferred payment terms to overseas buyers and those participating in global tenders for undertaking turnkey/civil construction contracts abroad are required to obtain approval of Authorised Dealer/Exim Bank/Working Group at post-award stage before undertaking execution of such contracts. Regulations relating to ‘Project Exports’ and ‘Service Exports’ are laid down in the revised Memorandum on Project Exports (PEM).

Export on Elongated Credit Terms(Paragraph A11)

Exporters intending to export goods on elongated credit terms may submit their proposals giving full particulars through their banks to the concerned Regional Office of Reserve Bank for consideration.

In the case of export of books on consignment basis, ADs may approve such proposals allowing for realisation of export proceeds upto 360 days from the date of shipment. The exporters may be allowed to abandon the books which remain unsold at the expiry of the period of the sale contract. Accordingly, the value of the unsold books may be shown by the exporters as deduction from the export proceeds in the Account Sales .

Export of goods by Special Economic Zone - Job work abroad (Paragraph A12)

Units in SEZs are permitted to undertake job work abroad and export goods from that country itself subject to the conditions that -

  1. i. Processing / manufacturing charges are suitably loaded in the export price and are borne by the ultimate buyer.

  2. ii. The exporter has made satisfactory arrangements for realisation of full export proceeds subject to the usual GR procedure.

Forfaiting (Paragraph A13)

Export-Import Bank of India (Exim Bank) and authorised dealers have been permitted to undertake forfaiting, for financing of export receivables. It would be in order for authorised dealers to allow remittance of commitment fee/service charges, etc., payable by the exporter as approved by the Exim Bank/the concerned authorised dealer. Such remittance may be permitted in advance in one lump sum or at monthly intervals as approved by the concerned agency.


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