Background
The Reserve Bank of India (RBI), under the Foreign Exchange Management Act (FEMA), regulates all transactions involving foreign exchange, including payments for import of goods and services. The Master Direction on Import of Goods and Services consolidates and formalises the rules governing import payments, documentary evidence, time limits for settlement, reporting through IDPMS, and the responsibilities of Authorised Dealer Category–I (AD Category–I) banks and importers.
The circular establishes a unified regulatory framework for import-related foreign exchange transactions and integrates amendments issued over time. It acts as a central reference for banks, corporates, and compliance professionals handling cross-border trade. The Direction is designed to ensure transparency, prevent misuse of foreign exchange, enforce timely settlement of import liabilities, and facilitate smooth monitoring by RBI through digital systems like IDPMS.
By providing detailed operational instructions—ranging from advance remittances, documentary requirements, deferred payment arrangements, acceptance of import evidence, to rules governing non-physical imports—the Master Direction strengthens India’s external sector compliance architecture.
Applicability
The Master Direction applies to:
Any entity remitting foreign exchange for import of goods or services must comply with the rules on evidence of import, timelines, reporting, documentation, and eligibility conditions.
Banks authorised to deal in foreign exchange are responsible for:
Entities importing intangibles must provide CA-certified evidence of receipt.
Including:
Banks, auditors, and finance departments managing import transactions must align their internal processes with the Direction.
Compliance Requirements in Accordance with the Master Direction: Import of Goods and Services updated as on 01.10.25
Where foreign exchange acquired has been utilised for import of goods into India, the AD Category – I bank should ensure that the importer furnishes evidence of import viz., as in IDPMS as explained in para C.7, Postal Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to the value of remittance have been imported.
Under Section 10(6) of FEMA 1999, anyone acquiring foreign exchange must use it only for the purpose declared to the AD Category-I bank or for any other purpose legally permitted under FEMA, its rules, or regulations. Where foreign exchange acquired has been utilised for import of goods into India, the importer shall furnish evidence of import viz., as in IDPMS as explained in para C.7, Postal Appraisal Form or Customs Assessment Certificate, etc. to confirm that goods equivalent to the value of remittance have been imported.
2. Time Limit for Settlement of Normal Import Payments (Para B.5.1)
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.
Para B.5.4: Extension of time:
3. Time Limit for Settlement of Deferred Payment Arrangements (Para B.5.2)
Any deferred payment arrangements (including suppliers’ and buyers’ credit) entered into, for up to three years in case of import of capital goods and up to one year or the operating cycle whichever is less, in case of import of non-capital goods, shall be treated as trade credits for which the procedural guidelines as laid down in the Master Direction on External Commercial Borrowings, Trade Credits and Structured Obligations may be followed.
4. Advance Remittance for Import of Goods (Para C.1.1)
Advance Remittance for Import of Goods may be allowed subject to following conditions:
i) Amounts over USD 200,000 require an irrevocable standby LC or bank guarantee from a reputed international or Indian AD bank.
iii) Public sector/government entities need a Finance Ministry waiver for remittances over USD 100,000.
All payments towards advance remittance for imports shall be subject to the specified conditions and AD banks are required to create Outward Remittance Message (ORM) for all such outward remittances in IDPMS & follow other extant IDPMS guidelines.
5. Advance Remittance for Import of Services (Para C.1.4)
Advance remittance for import of services allowed subject to the following conditions:
a) For advance remittance exceeding USD 500,000, a guarantee from a reputed international bank or an Indian AD bank (with counter-guarantee) is required.
b) PSU/government entities need Finance Ministry approval for remittances over USD 100,000 without a bank guarantee.
6. Remittances Against Replacement Imports (Para C.3)
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 – 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. AD bank should ensure that proper remark/indicator is entered for ORM mark-off/closure of Bills in IDPMS etc. as per extant IDPMS guidelines.
Para C.4 – 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.
7. Restriction on remittances where import bills received directly by importer (Para C.6.1)
Import bills and documents should be received from the banker of the supplier by the banker of the importer in India.
a) AD Category-I banks should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases:
(1) Where the value of import bill does not exceed USD 300,000
(2) Import bills received by wholly-owned Indian subsidiaries of foreign companies from their principals
(3) Import bills received by Status Holder Exporters, 100% EOUs/SEZ units, PSUs and limited companies
(4) Import bills received by all limited companies viz. public limited, deemed public limited and private limited companies
b) AD Category-I banks may receive import bills directly from overseas suppliers if satisfied with the importer’s financial standing and track record. They must obtain a credit report on each supplier, except when the invoice value is ≤ USD 300,000 and the transaction and importer are deemed bona fide. (Para C.6.3)
8. Evidence of Physical Import (Para C.7.1)
In case of all imports, irrespective of the value of foreign exchange remitted/paid for import into India, importer shall submit:
BoE number, port code and date for marking evidence of import under IDPMS as detailed in para C.8
Customs Assessment Certificate or Postal Appraisal Form where import has been made by post, or Courier Bill of Entry as declared by the courier companies to the Customs Authorities in cases where goods have been imported through couriers
Exchange Control Copy of the Ex-Bond Bill of Entry or BoE where goods are imported and stored in FTWZ/SEZ unit
(i) In respect of imports on Delivery-against-acceptance basis, AD banks shall verify evidence of import from IDPMS at the time of remittance. They may allow up to three months additional time where genuine delays exist.
(ii) AD banks must create ORMs for all outward remittances irrespective of value and carry out subsequent matching and closures as per IDPMS guidelines.
9. Evidence of Import in Lieu of Bill of Entry (Para C.7.2)
AD Category-I banks may accept a CEO or auditor certificate instead of the Exchange Control Copy of the BoE if the foreign exchange remitted is under USD 1 million and the importer is a listed company with ≥₹100 crore net worth, a PSU, or a government entity. This facility also applies to CAG-audited autonomous/scientific institutions.
Outward Remittance Message has to be created & BoE has to be downloaded from “BoE Master” in IDPMS (in case of EDI ports). In case of Non-EDI ports, duplicate copy/customs-certified copy has to be submitted or BoE waiver obtained from RBI.
10. Non-physical Imports (Para C.7.3)
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.
AD Category-I bank should advise importers to keep Customs Authorities informed of the imports made by them under this clause.
11. Obtain acknowledgement slip on settlement of ORM (Para C.8(vii),(viii))
On settlement of ORM with evidence of import AD Category – I bank shall in all cases issue an acknowledgement slip to the importer containing the following particulars:
The importer needs to preserve the printed ‘Importer copy’ of BoE as evidence of import and acknowledgement slip for future use.
12. Reconciliation of Import Entries in IDPMS ≤ Rs.10 lakh (Para C.17)
Import entries in IDPMS of value Rs.10 lakh per entry/bill or less shall be reconciled and closed based on Importer declaration w.r.t amount paid. Any reduction in declared value or invoice value of the bills of entry shall also be accepted, based on the declaration by the concerned importer.
The declarations referred may also be provided on a quarterly basis by the importers in a consolidated manner (by combining several bills in one declaration) for bulk reconciliation and closing of IDPMS entries. Accordingly, AD banks shall also review the charges levied for handling these small-value import transactions, keeping in view the revised procedure/relaxations mentioned above and ensure that the same are commensurate with the services rendered. AD banks shall not levy any penal charges (penalty) for delays in adherence to any regulatory guidelines.
Penalties & 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.
Conclusion
The RBI Master Direction on Import of Goods and Services establishes a comprehensive compliance framework governing foreign exchange utilisation, import documentation, reporting standards, settlement timelines, and risk controls. It ensures that import transactions are transparent, verifiable, and compliant with FEMA.
By mandating strict evidence of import, timely ORM management, restricted acceptance of direct import bills, and detailed requirements for advance remittances and deferred payments, the circular strengthens India’s regulatory oversight over cross-border trade flows.
It provides clarity to importers and AD banks, fosters uniformity across compliance practices, and safeguards the integrity of the foreign exchange system.
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