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RBI 2013 14 13 Master Circular No 13 2013 14 July 01 2013 To All Category ndash I Authorised Dealer Banks Madam Sir Master Circular on Import of Goods and Services Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 42 of 1999 read with Notification No G S R 381 E dated May 3 2000 viz Foreign Exchange Management Current Account Rules 2000 as amended from time to time 2 This Master Circular consolidates the existing instructions on the subject of Import of Goods and Services at one place The list of underlying circulars consolidated in this Master Circular is furnished in Appendix 3 This Master Circular is being issued with a sunset clause of one year This circular will stand withdrawn on July 1 2014 and be replaced by an updated Master Circular on the subject Yours faithfully C D Srinivasan Chief General Manager INDEX Section A Introduction Section B General Guidelines for imports B 1 General Guidelines B 2 Form A 1 B 3 Import Licenses B 4 Obligation of Purchaser of Foreign Exchange B 5 Time Limit for Settlement of Import Payments B 6 Import of Foreign exchange Indian Rupees Section C Operational Guidelines for Imports C 1 Advance Remittance C 2 Interest on Import Bills C 3 Remittances against Replacement Imports C 4 Guarantee for Replacement Import C 5 Import of Equipment by Business Process Outsourcing BPO Companies for their overseas sites C 6 Receipt of Import Bills Documents C 7 Evidence of Import C 8 Issue of acknowledgement C 9 Verification and Preservation C 10 Follow up for Import Evidence C 11 Issue of Bank Guarantee C 12 Import of Gold Platinum Silver by Nominated Banks Nominated Agencies C 13 Import of gold in any form including jewellery made of gold precious metals or and studded with diamonds semi precious precious stones C 14 Import of Platinum Palladium Rhodium Silver and rough cut and polished diamonds C 15 Import factoring C 16 Merchanting Trade Annex 1 Annex ndash 2 Annex 3 Annex 4 Annex 5 Appendix List of Circulars consolidated in the Master Circular Section A Introduction i Import trade is regulated by the Directorate General of Foreign Trade DGFT under the Ministry of Commerce and Industry Department of Commerce Government of India Authorised Dealer Category ndash I AD Category ndash I banks should ensure that the imports into India are in conformity with the Foreign Trade Policy in force and Foreign Exchange Management Current Account Transactions Rules 2000 framed by the Government of India vide Notification No G S R 381 E dated May 3 2000 and the Directions issued by Reserve Bank under Foreign Exchange Management Act 1999 from time to time ii AD Category ndash I banks should follow normal banking procedures and adhere to the provisions of Uniform Customs and Practices for Documentary Credits UCPDC etc while opening letters of credit for import into India on behalf of their constituents iii Compliance with the provisions of Research and Development Cess Act 1986 may be ensured for import of drawings and designs iv AD Category ndash I banks may also advise importers to ensure compliance with the provisions of Income Tax Act wherever applicable Section B General Guidelines for imports B 1 General Guidelines Rules and regulations to be followed by the AD Category ndash I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs Where specific regulations do not exist AD Category ndash I banks may be governed by normal trade practices AD Category ndash I banks may particularly note to adhere to Know Your Customer KYC guidelines issued by Reserve Bank Department of Banking Operations and Development in all their dealings B 2 Form A 1 i Applications by persons firms and companies for making payments exceeding USD 5000 or its equivalent towards imports into India must be made in Form A 1 Annex 5 ii It is clarified that the ADs need not obtain any document including Form A 1 except a simple letter from the applicant containing the basic information viz the name and the address of the applicant name and address of the beneficiary amount to be remitted and the purpose of remittance as long as the exchange being purchased is for a current account transaction and is not included in the Schedules I and II of the Foreign Exchange Management Current Account Transactions Rules 2000 framed by Government of India vide Notification No G S R 381 E dated May 3 2000 as amended from time to time the amount does not exceed USD 5000 or its equivalent and the payment is made by a cheque drawn on the applicant s bank account or by a Demand Draft B 3 Import Licenses Except for goods included in the negative list which require licence under the Foreign Trade Policy in force AD Category I banks may freely open letters of credit and allow remittances for import While opening letters of credit the lsquo For Exchange Control purposes rsquo copy of the licence should be called for and special conditions if any attached to such licences should be adhered to After effecting remittances under the licence AD Category I banks may preserve the copies of utilised licence s till they are verified by the internal auditors or inspectors B 4 Obligation of Purchaser of Foreign Exchange i In terms of Section 10 6 of the Foreign Exchange Management Act 1999 FEMA any person acquiring foreign exchange is permitted to use it either for the purpose mentioned in the declaration made by him to an Authorised Dealer Category ndash I bank under Section 10 5 of the Act or to use it for any other purpose for which acquisition of foreign exchange is permissible under the said Act or Rules or Regulations framed there under ii Where foreign exchange acquired has been utilised for import of goods into India the AD Category ndash I bank should ensure that the importer furnishes evidence of import viz Exchange Control copy of the Bill of Entry Postal Appraisal Form or Customs Assessment Certificate etc and satisfy himself that goods equivalent to the value of remittance have been imported iii In addition to the permitted methods of payment for imports laid down in Notification No FEMA14 2000 RB dated 3rd May 2000 payment for import can also be made by way of credit to non resident account of the overseas exporter maintained with a bank in India In such cases also AD Category ndash I banks should ensure compliance with the instructions contained in sub paragraphs i and ii above B 5 Time Limit for Settlement of Import Payments B 5 1 Time limit for normal imports i In terms of the extant regulations remittances against imports should be completed not later than six months from the date of shipment except in cases where amounts are withheld towards guarantee of performance etc ii AD Category ndash I banks may permit settlement of import dues delayed due to disputes financial difficulties etc Interest in respect of delayed payments usance bills or overdue interest for a period of less than three years from the date of shipment may be permitted in terms of the directions in para C 2 of Part III below B 5 2 Time limit for deferred payment arrangements Deferred payment arrangements including suppliers and buyers credit providing for payments beyond a period of six months from date of shipment up to a period of less than three years are treated as trade credits for which the procedural guidelines laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed B 5 3 Time limit for import of books Remittances against import of books may be allowed without restriction as to the time limit provided interest payment if any is as per the instructions in para C 2 of Part III of this Circular B 6 Import of Foreign exchange Indian Rupees i Except as otherwise provided in the Regulations no person shall without the general or special permission of the Reserve Bank import or bring into India any foreign currency Import of foreign currency including cheques is governed by clause g of sub section 3 of Section 6 of the Foreign Exchange Management Act 1999 and the Foreign Exchange Management Export and Import of Currency Regulations 2000 made by Reserve Bank vide Notification No FEMA 6 2000 RB dated May 3 2000 as amended from time to time ii Reserve Bank may allow a person to bring into India currency notes of Government of India and or of Reserve Bank subject to such terms and conditions as the Reserve Bank may stipulate B 6 1 Import of foreign exchange into India A person may ndash i send into India without limit foreign exchange in any form other than currency notes bank notes and travellers cheques ii bring into India from any place outside India without limit foreign exchange other than unissued notes which shall be subject to the condition that such person makes on arrival in India a declaration to the Custom Authorities at the Airport in the Currency Declaration Form CDF annexed to these Regulations provided further that it shall not be necessary to make such declaration where the aggregate value of the foreign exchange in the form of currency notes bank notes or travellers cheques brought in by such person at any one time does not exceed USD10 000 US Dollars ten thousand or its equivalent and or the aggregate value of foreign currency notes cash portion alone brought in by such person at any one time does not exceed USD 5 000 US Dollars five thousand or its equivalent B 6 2 Import of Indian currency and currency notes i Any person resident in India who had gone out of India on a temporary visit may bring into India at the time of his return from any place outside India other than from Nepal and Bhutan currency notes of Government of India and Reserve Bank notes up to an amount not exceeding Rs 7 500 per person ii A person may bring into India from Nepal or Bhutan currency notes of Government of India and Reserve Bank notes other than notes of denominations of above Rs 100 in either case Section C Operational Guidelines for Imports C 1 Advance Remittance C 1 1 Advance Remittance for import of goods i AD Category ndash I bank may allow advance remittance for import of goods without any ceiling subject to the following conditions a If the amount of advance remittance exceeds USD 200 000 or its equivalent an unconditional irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category ndash I bank in India if such a guarantee is issued against the counter guarantee of an international bank of repute situated outside India is obtained b In cases where the importer other than a Public Sector Company or a Department Undertaking of the Government of India State Government s is unable to obtain bank guarantee from overseas suppliers and the AD Category ndash I bank is satisfied about the track record and bonafides of the importer the requirement of the bank guarantee standby Letter of Credit may not be insisted upon for advance remittances up to USD 5 000 000 US Dollar five million AD Category ndash I banks may frame their own internal guidelines to deal with such cases as per a suitable policy framed by the bank s Board of Directors c A Public Sector Company or a Department Undertaking of the Government of India State Government s which is not in a position to obtain a guarantee from an international bank of repute against an advance payment is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance Government of India before making advance remittance exceeding USD 100 000 ii All payments towards advance remittance for imports shall be subject to the specified conditions C 1 2 Advance Remittance for Import of Rough Diamonds i AD Category ndash I bank are permitted to allow advance remittance without any limit and without bank guarantee or standby Letter of Credit by an importer other than a Public Sector Company or a Department Undertaking of the Government of India State Government s for import of rough diamonds into India from the under noted mining companies viz a De Beers UK Ltd b RIO TINTO UK c BHP Billiton Australia d ENDIAMA E P Angola e ALROSA Russia f GOKHARAN Russia g Rio Tinto Belgium h BHP Billiton Belgium and i Namibia Diamond Trading Company PTY Ltd NDTC ii While allowing the advance remittance AD bank may ensure the following a The importer should be a recognized processor of rough diamonds as per the list to be approved by Gems and Jewellery Export Promotion Council GJEPC in this regard and should have a good track record of export realisation b AD Category ndash I bank should undertake the transaction based on their commercial judgment and after being satisfied about the bonafides of the transaction c Advance payments should be made strictly as per the terms of the sale contract and should be made directly to the account of the company concerned that is to the ultimate beneficiary and not through numbered accounts or otherwise Further due caution may be exercised to ensure that remittance is not permitted for import of conflict diamonds d KYC and due diligence exercise should be done by the AD Category ndash I bank for the Indian importer entity and the overseas company and e AD Category ndash I bank should follow up submission of the Bill of Entry documents evidencing import of rough diamonds into the country by the importer in terms of FEMA Rules Regulations Directions issued in this regard iii In case of an importer entity in the Public Sector or a Department Undertaking of the Government of India State Government s AD Category ndash I bank may permit advance remittance subject to the above conditions and a specific waiver of bank guarantee from the Ministry of Finance Government of India where the advance payments is equivalent to or exceeds USD 100 000 iv AD Category ndash I banks are required to submit a report in the format annexed Annex 2 of all such advance remittances made without a bank guarantee or Standby Letter of Credit where the amount of advance payment is equivalent to or exceeds USD 5 000 000 to the Chief General Manager Reserve Bank of India Foreign Exchange Department Trade Division Central Office Amar Building Sir P M Road Fort Mumbai ndash 400 001 on a half yearly basis as at the end of September and March every year The report should be submitted within 15 days from the close of the respective half year C 1 3 Advance Remittance for Import of Aircrafts Helicopters and other Aviation Related purchases As a sector specific measure airline companies which have been permitted by the Directorate General of Civil Aviation to operate as a schedule air transport service can make advance remittance without bank guarantee up to USD 50 million Accordingly AD Category ndash I banks may allow advance remittance without obtaining a bank guarantee or an unconditional irrevocable Standby Letter of Credit up to USD 50 million for direct import of each aircraft helicopter and other aviation related purchases The remittances for the above transactions shall be subject to the following conditions The AD Category I banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafide of the transactions KYC and due diligence exercise should be done by the AD Category I banks for the Indian importer entity and the overseas manufacturer company as well Advance payments should be made strictly as per the terms of the sale contract and are made directly to the account of the manufacturer supplier concerned AD Category I bank may frame their own internal guidelines to deal with such cases with the approval of their Board of Directors In the case of a Public Sector Company or a Department Undertaking of Central State Governments the AD Category I bank shall ensure that the requirement of bank guaranteehas been specifically waived by the Ministry of Finance Government of India for advance remittances exceeding USD 100 000 Physical import of goods into India is made within six months three years in case of capital goods from the date of remittance and the importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period It is clarified that where advance is paid as milestone payments the date of last remittance made in terms of the contract will be reckoned for the purpose of submission of documentary evidence of import Prior to making the remittance the AD Category ndash I bank may ensure that the requisite approval of the Ministry of Civil Aviation DGCA other agencies in terms of the extant Foreign Trade Policy has been obtained by the company for import In the event of non import of aircraft and aviation sector related products AD Category I bank should ensure that the amount of advance remittance is immediately repatriated to India Prior approval of the Regional Office concerned of the Reserve Bank will be required in case of any deviation from the above stipulations C 1 4 Advance Remittance for the import of services AD Category ndash I bank may allow advance remittance for import of services without any ceiling subject to the following conditions a Where the amount of advance exceeds USD 500 000 or its equivalent a guarantee from a bank of international repute situated outside India or a guarantee from an AD Category ndash I bank in India if such a guarantee is issued against the counter guarantee of a bank of international repute situated outside India should be obtained from the overseas beneficiary b In the case of a Public Sector Company or a Department Undertaking of the Government of India State Governments approval from the Ministry of Finance Government of India for advance remittance for import of services without bank guarantee for an amount exceeding USD 100 000 USD One hundred thousand or its equivalent would be required c AD Category ndash I banks should also follow up to ensure that the beneficiary of the advance remittance fulfils his obligation under the contract or agreement with the remitter in India failing which the amount should be repatriated to India C 2 Interest on Import Bills i AD ndash Category ndash I bank may allow payment of interest on usance bills or overdue interest for a period of less than three years from the date of shipment at the rate prescribed for trade credit from time to time ii In case of pre payment of usance import bills remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR of the currency in which the goods have been invoiced whichever is applicable Where interest is not separately claimed or expressly indicated remittances may beallowed after deducting the proportionate interest for the unexpired portion of usance at the prevailing LIBOR of the currency of invoice C 3 Remittances against Replacement Imports Where goods are short supplied damaged short landed or lost in transit and the Exchange Control copy of the import licence has already been utilised to cover the opening of a letter of credit against the original goods which have been lost the original endorsement to the extent of the value of the lost goods may be cancelled by the AD Category ndash I bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank provided the insurance claim relating to the lost goods has been settled in favour of the importer It may be ensured that the consignment being replaced is shipped within the validity period of the license C 4 Guarantee for Replacement Import In case replacement goods for defective import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India AD Category I banks may issue guarantees at the request of importer client for dispatch return of the defective goods according to their commercial judgment C 5 Import of Equipment by Business Process Outsourcing BPO Companies for their overseas sites AD Category ndash I bank may allow BPO companies in India to make remittances towards the cost of equipment to be imported and installed at their overseas sites in connection with the setting up of their International Call Centres ICCs subject to the following conditions i The BPO company should have obtained necessary approval from the Ministry of Communications and Information Technology Government of India and other authorities concerned for setting up of the ICC ii The remittance should be allowed based on the AD Category I banks rsquo commercial judgment the bonafides of the transactions and strictly in terms of the contract iii The remittance is made directly to the account of the overseas supplier iv The AD Category ndash I banks should also obtain a certificate as evidence of import from the Chief Executive Officer CEO or auditor of the importer company that the goods for which remittance was made have actually been imported and installed at overseas sites C 6 Receipt of Import Bills Documents C 6 1 Receipt of import documents by the importer directly from overseas suppliers Import bills and documents should be received from the banker of the supplier by the banker of the importer in India AD Category ndash I bank should not therefore make remittances where import bills have been received directly by the importers from the overseas supplier except in the following cases i Where the value of import bill does not exceed USD 300 000 ii Import bills received by wholly owned Indian subsidiaries of foreign companies from their principals iii Import bills received by Status Holder Exporters as defined in the Foreign Trade Policy 100 Export Oriented Units Units in Special Economic Zones Public Sector Undertakings and Limited Companies iv Import bills received by all limited companies viz public limited deemed public limited and private limited companies C 6 2 Receipt of import documents by the importer directly from overseas suppliers in case of specified sectors As a sector specific measure AD Category I banks are permitted to allow remittance for imports up to USD 300 000 where the importer of rough diamonds rough precious and semi precious stones has received the import bills documents directly from the overseas supplier and the documentary evidence for import is submitted by the importer at the time of remittance AD Category I banks may undertake such transactions subject to the following conditions i The import would be subject to the prevailing Foreign Trade Policy ii The transactions are based on their commercial judgment and they are satisfied about the bonafides of the transactions iii AD Category I banks should do the KYC and due diligence exercise and should be fully satisfied about the financial standing status and track record of the importer customer Before extending the facility they should also obtain a report on each individual overseas supplier from the overseas banker or reputed overseas credit rating agency C 6 3 Receipt of import documents by the AD Category ndash I bank directly from overseas suppliers i At the request of importer clients AD Category ndash I bank may receive bills directly from the overseas supplier as above provided the AD Category ndash I bank is fully satisfied about the financial standing status and track record of the importer customer ii Before extending the facility the AD Category ndash I bank should obtain a report on each individual overseas supplier from the overseas banker or a reputed overseas credit agency However such credit report on the overseas supplier need not be obtained in cases where the invoice value does not exceed USD 300 000 provided the AD Category ndash I bank is satisfied about the bonafides of the transaction and track record of the importer constituent C 7 Evidence of Import C 7 1 Physical Imports i In case of all imports where value of foreign exchange remitted paid for import into India exceeds USD 100 000 or its equivalent it is obligatory on the part of the AD Category ndash I bank through whom the relative remittance was made to ensure that the importer submits a The Exchange Control copy of the Bill of Entry for home consumption or b The Exchange Control copy of the Bill of Entry for warehousing in case of 100 Export Oriented Units or c Customs Assessment Certificate or Postal Appraisal Form as declared by the importer to the Customs Authorities where import has been made by post as evidence that the goods for which the payment was made have actually been imported into India ii In respect of imports on D A basis AD Category ndash I bank should insist on production of evidence of import at the time of effecting remittance of import bill However if importers fail to produce documentary evidence due to genuine reasons such as non arrival of consignment delay in delivery customs clearance of consignment etc AD bank may if satisfied with the genuineness of request allow reasonable time not exceeding three months from the date of remittance to the importer to submit the evidence of import C 7 2 Evidence of import in lieu of Bill of Entry i AD Category ndash I bank may accept in lieu of Exchange Control copy of Bill of Entry for home consumption a certificate from the Chief Executive Officer CEO or auditor of the company that the goods for which remittance was made have actually been imported into India provided a the amount of foreign exchange remitted is less than USD 1 000 000 or its equivalent b the importer is a company listed on a stock exchange in India and whose net worth is not less than Rs 100 crore as on the date of its last audited balance sheet or the importer is a public sector company or an undertaking of the Government of India or its departments ii The above facility may also be extended to autonomous bodies including scientific bodies academic institutions such as Indian Institute of Science Indian Institute of Technology etc whose accounts are audited by the Comptroller and Auditor General of India CAG AD Category ndash I bank may insist on a declaration from the auditor CEO of such institutions that their accounts are audited by CAG C 7 3 Non Physical Imports i Where imports are made in non physical form i e software or data through internet datacom channels and drawings and designs through e mail fax a certificate from a Chartered Accountant that the software data drawing design has been received by the importer may be obtained ii AD Category ndash I bank should advise importers to keep Customs Authorities informed of the imports made by them under this clause C 8 Issue of acknowledgement AD Category ndash I bank should acknowledge receipt of evidence of import e g Exchange Control copy of the Bill of Entry Postal Appraisal Form or Customs Assessment Certificate etc from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions C 9 Verification and Preservation i Internal inspectors or auditors including external auditors appointed by....................

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