Compliance Requirements under the Circular

1. Realization of Export Proceeds within stipulated time period (Section B.3, Regulation 9)

The exporter is required to realise and repatriate the full value of goods / software / services to India within 15 months or stipulated period from the date of export, as under:

(i) All exporters including Units in SEZs, Status Holder Exporters, EOUs, Units in EHTPs, STPs & BTPs: 15 months from the date of export.

(ii) Goods exported to a warehouse established outside India: As soon as it is realised and in any case within fifteen months or period sepcified by RBI from the date of shipment of goods.

2. Receipt of Advance Payments against Exports (Section B.8, Reg 15)

An exporter receiving advance payment (with or without interest) from a buyer or named third party outside India must ensure:

(i) shipment of goods within three years from the receipt of advance;

(ii) interest, if any, does not exceed 100 basis points above LIBOR or any benchmark specified by the Reserve Bank;

(iii) shipment documents are routed through the authorised dealer that received the advance.

If the exporter cannot ship goods fully or partly within three years, no refund of the unutilized advance or interest payment may be remitted after the three-year period without prior RBI approval.

However, an exporter may receive advance payment for shipments extending beyond three years if the export agreement expressly provides for such extended timelines.

3. Invoicing of Software Exports within stipulated time period (Section B.15)

For long duration contracts involving series of transmissions, the exporters should bill their overseas clients periodically, i.e., at least once a month or on reaching the ‘milestone’ as provided in the contract entered into with the overseas client and the last invoice / bill should be raised not later than 15 days from the date of completion of the contract. It would be in order for the exporters to submit a combined SOFTEX form for all the invoices raised on a particular overseas client, including advance remittances received in a month

4. Manner of Receipt and Payment against export of goods and services as prescribed (Section B.2)

Full value of export of goods shall be received through an AD Bank in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA.14/2000-RB dated May 3, 2000.

5. EDF approval for export of goods for re-import (Section B.10)

For export of goods for re-import, exporters may request AD Category – I banks for granting EDF approval, subject to the condition that the exporter shall produce relative Bill of Entry within one month of re-import of the exported item from India.

Penalty & Punishment

If any person contravenes any provision of FEMA, or contravenes any rule, regulation, notification, direction or order issued in exercise of the powers under this Act, or contravenes any condition subject to which an authorisation is issued by the Reserve Bank, he shall, upon adjudication, be liable to a penalty up to thrice the sum involved in such contravention where such amount is quantifiable, or up to two lakh rupees where the amount is not quantifiable, and where such contravention is a continuing one, further penalty which may extend to five thousand rupees for every day after the first day during which the contravention continues.