The Reserve Bank of India (RBI) has introduced the Foreign Exchange Management (Export and Import of Goods and Services) Regulations, 2024, under the powers granted by the Foreign Exchange Management Act (FEMA), 1999. These new regulations replace the Foreign Exchange Management (Export of Goods & Services) Regulations, 2015, aiming to streamline and update the procedures governing the export and import of goods and services in India.
Key Provisions and Implications
Declaration of Exports
Every exporter must submit a declaration in the prescribed Form to the specified authority, detailing the full export value of goods or services. Additionally, exporters must provide relevant documents to the Authorised Dealer within 21 calendar days from the date of shipment (for goods) or invoice (for services). The Authorized Dealer has the discretion to accept documents beyond this period as per RBI guidelines.
Manner of Receipt of Payment
Payments for exports must be received as specified in the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, unless otherwise authorized by the RBI. This ensures a standardized procedure for the receipt of export payments.
Realization of Export Value
Exporters are required to realize and repatriate the full export value within nine months from the date of shipment (goods) or invoice (services). The Authorised Dealer may extend this period for valid reasons and may permit reductions in export value per RBI directions. This provision balances regulatory compliance with operational flexibility.
Advance Payment
Exporters can receive advance payments as per the export contract, with interest payable on such advances not exceeding the all-in-cost ceiling of trade credit under the Foreign Exchange Management (Borrowing and Lending) Regulations, 2018. If the export obligation is not met within the contracted period, the advance payment must be refunded unless an extension is granted by the Authorised Dealer. Similarly, advance payments for imports must be repatriated and surrendered in case of non-import within the contract period.
Project Exports
For exports involving deferred payment terms or the execution of turnkey projects/civil construction contracts, exporters must obtain prior approval from the Authorised Dealer. This ensures that complex export arrangements are thoroughly vetted for compliance with FEMA regulations.
Caution-listing of Exporters
Exporters who fail to realize the full export value within the specified time (including extensions) may be caution-listed by the Authorised Dealer. This measure is subject to providing the exporter a reasonable opportunity to be heard. Caution-listed exporters must undertake future exports only against full advance payment or an irrevocable letter of credit.
