Regulatory Alert - Easing of norms for export and import transactions

Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024

The Reserve Bank of India (RBI) has issued Draft - Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024 (Draft Regulations) to replace the existing Foreign Exchange Management (Export of Goods & Services) Regulations, 2015 (Existing Export Regulations).

The RBI has provided time until 1 September 2024 for the stakeholders to provide their feedback on the Draft Regulations.

Below is the summary of key aspects of the Draft Regulations:

• Common Declaration Form for exports:

It is now proposed to have a common Export Declaration Form which is required to be filed by exporters in relation to the export of goods, services as well as software

• Period within which full export value to be realised

It is now proposed that the full value of the export of goods and services shall be realised and repatriated to India within 9 months from the date of shipment for goods and date of invoice for services

It is now proposed to delegate the authority to extend the period of realisation solely to Authorised Dealer

Further, Authorised Dealer may now permit reduction in the full export value as per the directions issued by the RBI

• Advance payment

It is now proposed that the advance payment for export of goods and services may be received as per the export contract.

Further, it is proposed that if the exporter is unable to fulfill the export obligation within the contracted period, such advance received is to be refunded, unless extension of time to fulfill the export obligation has been granted by the Authorised Dealer

A similar provision is also applicable for advance payment made for import of goods and services.

• Project exports

It is now proposed that for the export of goods or services on deferred payment terms or in execution of a turnkey project or a civil construction contract, the exporter shall obtain prior approval from Authorised Dealer by submitting a proposal before entering into any such export arrangement

• Caution-listing of exporters

It is now proposed to delegate the authority to include the name of the exporter in caution list to the Authorised Dealer and provides that:

• The Authorised Dealer may include the name of the exporter in the caution list if the exporter does not realise the full value of export within the time specified (including extensions, if any)

• The Authorised Dealer may remove the name of the exporter from the caution-list, as per the directions issued by the RBI.

• An exporter who has been caution listed shall undertake export only against receipt of advance payment in full or against an irrecoverable letter of credit, to the satisfaction of the Authorised Dealer

BDO in India Comments:

• One of the key points of the Draft Regulations is the applicability of the said regulation on export of ‘services’ for which there was no clarity in the Existing Export Regulations
• Further, under the Existing Export Regulations, there is no filing/ reporting requirement in case of export of ‘services’, now it is proposed to introduce a common Export Declaration Form for goods, services and software
• The Draft Regulations emphasise on promoting ease of doing business for small importers and exporters by delegating the following authorities to the Authorised Dealer
  • the authority to extend the period of export realisation beyond 9 months
  • in case of advance payment the authority to extend the time to fulfill the export and import obligation
  • the authority to permit reduction in the full export value as per the directions issued by the RBI, in case the exporter is not able to realise the full value of exports
  • the authority to include as well as remove, as applicable, the name of the exporter in caution list
  • the sole authority to grant approvals in case of project export

• The time limit within which the exporter has to supply goods or services against advance received would be now governed by the export contract