RBI issues consolidated export realisation rules

Arun Goyal The Reserve Bank has issued a master circular to consolidate the instructions on exchange control of goods and services export. The master circular covers all instructions till 1 July 2002. Export of Indian currency till Rs 5,000 is free without exchange control. In other words, travellers can carry this amount with them while going abroad without fear of the customs officer or the security officer, who often doubles as exchange control officer while frisking travellers leaving India. Exports to Russia under the debt repayment scheme are governed by special rules. In the Romania case, the counter trade export proceeds must be retired by corresponding import within six months. The Reserve Bank directions are the operative part of FEMA but the main rules are framed by the department of economic affairs in the Central government. Special mechanisms to check the import of services such as insurance, investment, medical, telecom, shipping services and intellectual property are in place to protect the domestic service industry. Generally speaking, transaction above $5,000 ($25,000 for business travel or medical treatment) require the permission of the Reserve Bank. Exporters can get past these restrictions when the payment is through the Exchange Earners Foreign Currency (EEFC) Account. (The good news for the consultancy sector is that the Reserve Bank has allowed it to keep the entire forex earnings in the EEFC account. This will save the conversion cost on bringing dollars against rupee balances on import of goods and services). Direct despatch of documents is allowed in the case of status holders. However, duplicate copy of the GR form must be submitted to the authorised dealer within 21 days of export. (The Reserve Bank exchange control department has allowed units set up in the SEZs to despatch documents directly to the buyer, in other words, all SEZ units are treated as status holders for extension in the normal six months period. Extension in the period of export realisation from six months to one year is allowed to status holders and SEZ units. The provision is now a part of the main circular itself which gives a permanent character to the relaxation which originally started as a measure during the export slow down. Form XOS, which serves as a black list for the customs to check exporters in drawback matters, must be sent to the Reserve Bank by the forex dealer every six months. Even status holders and SEZ units figure in the XOS form for outstandings beyond six months, perhaps the customs will hold their hand for 12 months after seeing the status in the XOS statement. The statement does not have a provision for developments which may take place subsequently. Perhaps putting up the latest statement of outstanding beyond the stipulated period on the internet with password-based restricted access is a better way of avoiding the problem at the field level. Once a name is on the XOS, the exporter faces hell at the customs. Other provisions in the master circular relate to export claims, change in the names of the buyer, lost shipments, ECGC claims and writing off of the unrealised bills, remittance of agency commission and refund of export proceeds. Given the large $60 billion foreign exchange reserve and the high cost of keeping up the value in terms of risk management, there is little since in maintaining detailed exchange control. Simple recording of the export transaction with intervention only in the case of criminal case is adequate into these circumstances. Exporting is a complex subject and realisation will always dampen the growth rate. A substantial part of trade transactions are driven underground as the business man is unable to fulfil legalities. China: A four member strong high-level delegation led by Mr. Wang Hejun, the head of the Chinese anti-dumping and safeguard division visited India on August 9. The Chinese are not too happy with the implementation of the anti-dumping law in India. They say that the scope for discretion on the part of the anti-dumping authority is enormous. The Chinese law on the other hand comprises of a detailed set of 19 rules which leave little room to discriminate in favour of domestic producers. Ms Wang Wei said that the Chinese producers of raw silk have taken up the challenge thrown by the Central Silk Board. The dumping charge will be countered with full facts and figures to show that India is being charged a price than that charged to domestic industry. Anti-dumping: After a brief lull, the department of revenue has confirmed the findings of the designated authority in the department of commerce by the issue of a notification to slap the anti-dumping. Final duty on biaxially-oriented poly-propylene (BoPP) firm. The reduction in duty is a source of considerable relief to users. The incidence on Indonesia is down from 82 units per kg to just 52 cents, Singapore too is down to 60 cents from 88 cents. The relief to Thailand (79 cents) and Oman (47 cents) is marginal while Taiwan (70 cents) and Hong Kong (63 cents) continue in the final findings notification at the old rate. Al Kheleej, Oman has given an undertaking stating that they will not export below $1.63 per kg (cif). It is a moot point whether those who have paid higher provisional duty will get a refund, the customs are not in the habit of returning money under any circumstances. The large difference between provisional and final findings too is a matter of further investigation. Appointments: Mr L Mansingh, an IAS officer of the 1970 batch from the Gujarat cadre has taken over as the DGFT from Mr N L Lakhanpal. Mr Mansingh has just become additional secretary and should be in the DGFT post for at least three years, this is good news from the viewpoint of continuity in policy. Mr Lakhanpal has moved to the home ministry as secretary of the inter-state council after promotion to secretary. His contribution to the Exim policy during the record five years stint was noteworthy in terms of the problem solving approach. FIEO is going through another periodic volcanic out burst. The director-general, Mr Ranjit Lal has been served the marching orders. Mr. Ashok Kumar, an old timer risen from the ranks, has been promoted as additional director-general and holds the fort for the time being. Academy of Business Studies

RBI issues consolidated export realisation rules

The Reserve Bank has issued a master circular to consolidate the instructions on exchange control of goods and services export. The master circular covers all instructions till 1 July 2002.

More from our Partners

Popular Categories

Hot on Web

In Case you missed it

Top Searched Companies

Latest News

Download ET APP

Follow us on

become a member