RBI Master Circular No: 08/2009-10 (01-Jul-09) Master Circular on Import of Goods and Services
To,
All Category -- I Authorised Dealer Banks
Madam / Sir,
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. GSR 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 the Appendix.
3. This Master Circular is being issued with a sunset clause of one year. This circular will stand withdrawn on July 1, 2010 and be replaced by an updated Master Circular on the subject.
(ii) AD Category -- 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 & Development Cess Act, 1986 may be ensured for import of drawings and designs.
(iv) AD Category -- I banks may also advise importers to ensure compliance with the provisions of Income Tax Act, wherever applicable.
B.1. General Guidelines
Rules and regulations from the foreign exchange angle to be followed by the AD Category -- I banks 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 -- I banks may be governed by normal trade practices. AD Category -- I banks may particularly note to adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Operations & Development) in all their dealings.
B.2. Form A-1
Applications by persons, firms and companies for making payments, exceeding USD 500 or its equivalent, towards imports into India must be made in Form A-1 (Annex-4).
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 ''For Exchange Control purposes'' 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 the 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-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 -- 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 -- I banks should ensure compliance with the instructions contained in sub-paragraphs (i) and (ii) above.
B.5.s 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 -- 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 5 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 time limit, provided, interest payment, if any, is as per the instructions in para 5 of Part III below.
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/RB- 2000 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 --
(i) send into India without limit foreign exchange in any form other than currency notes, bank notes and travelers 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 in Currency Declaration Form (CDF)...
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