Liberalised Remittance Scheme for Resident Individuals

RESERVE BANK OF INDIA

Foreign Exchange Department

Central Office

Mumbai - 400 001

_____________________________________________________

RBI/2011-12/430                                                March 06, 2012

A.P. (DIR Series) Circular No. 90

To,
All Category - I Authorised Dealer Banks

Madam / Sir,

Clarification - Liberalised Remittance Scheme for Resident Individuals

1.Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to A. P. (DIR Series) Circular No. 64 dated February 4, 2004, as amended form time to time, A. P. (DIR Series) Circular No. 24 dated December 20, 2006, A.P. (DIR Series) Circular No. 9 dated September 26, 2007, A.P. (DIR Series) Circular No. 51 dated May 8, 2007 and A.P. (DIR Series) Circular No. 32 dated October 10, 2011 on the Liberalised Remittance Scheme for Resident Individuals (the Scheme).

2. In this regard, it is clarified that:

i. The facility is available to all resident individuals including minors. In case of remitter being a minor, the LRS declaration form should be countersigned by the minor’s natural guardian. Accordingly, the modified LRS application cum declaration form is enclosed;

ii. Remittances under the facility can be consolidated in respect of family members subject to individual family members complying with the terms and conditions of the scheme; and

iii. Remittances under the scheme can be used for purchasing objects of art subject to the provisions of other applicable laws such as the extant Foreign Trade Policy of the Government of India.

3. All other terms and conditions mentioned in the afore-mentioned Circulars shall remain unchanged.

4. AD - Category I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this Circular have been issued under sections 10 (4) and 11 (1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Meena Hemchandra)

Chief General Manager In-Charge

Annex

[Annex to A. P. (DIR Series) Circular No. 90

dated March 06, 2012]

Application cum Declaration for purchase of foreign exchange under the Liberalised Remittance Scheme of USD 200,000 for Resident individuals

(To be completed by the applicant)

I. Details of the applicant

a. Name …………………………..

b. Address…………………………

c. Account No……………………..

d. PAN No………………………….

II. Details of the foreign exchange required

1. Amount (Specify currency)………………………………

2. Purpose ……………………………………………………

III. Source of funds: ………………………………………….

IV. Nature of instrument

Draft………………………..

Direct remittance…………

V. Details of the remittance made under the Scheme in the financial year (April- March) 20__ – 20__

Date :………………

Amount :………….

VI. Details of the Beneficiary

1. Name ……………………..

2. Address ……………………

3. Country ……………………

4*. Name and address of the bank……………………….

5*. Account No……………………………………………..

(* Required only when the remittance is to be directly credited to the bank account of the beneficiary)

This is to authorize you to debit my account and effect the foreign exchange remittance/ issue a draft as detailed above (strike out whichever is not applicable).

Declaration

I, ………………. …………(Name), hereby declare that the total amount of foreign exchange purchased from or remitted through, all sources in India during the financial year as per item No. V of the Application, including utilisation of the said limit on account of loan extended or gift made in rupees credited to NRO account of non-resident close relative(s), is within the limit of USD 200,000/- (US Dollar Two hundred thousand only), which is the limit prescribed by the Reserve Bank for the purpose and certify that the source of funds for making the said remittance belongs to me and will not be used for prohibited purposes.

Signature of the applicant

(Name)

Signature of the natural guardian of the applicant @

(Name)

@ Where the applicant is minor, the application should be countersigned by minor’s natural guardian 

Certificate by the Authorised Dealer

This is to certify that the remittance is not being made by/ to ineligible entities and that the remittance is in conformity with the instructions issued by the Reserve Bank from time to time under the Scheme.

Name and designation of the authorised official:

Place:

Signature:

Date:

Stamp and Seal

Release of Foreign Exchange for Imports - Further Liberalisation

RESERVE BANK OF INDIA

Foreign Exchange Department

Central Office

Mumbai - 400 001

RBI/2011-12/404                                       February 21, 2012
A.P. (DIR Series) Circular No. 82

To
All Authorised Dealers in Foreign Exchange

Madam / Sir,

Release of Foreign Exchange for Imports – Further Liberalisation

1.Attention of all the Authorised Dealers (ADs) in foreign exchange is invited to the A.P.(DIR Series) Circular No. 106 dated June 19, 2003 in terms of which 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.

2. Based on suggestions received from the various stake holders, the said limit has been reviewed and it has been decided as a measure of liberalization to raise the above limit for foreign exchange remittance towards imports without any documentation formalities, from USD 500 or its equivalent to USD 5000 or its equivalent, with immediate effect.

3. 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.

4. Authorised Dealers may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rashmi Fauzdar)

Chief General Manager

Export of Goods and Services - Receipt of advance payment for export of goods Involving shipment (manufacture and ship) beyond one year

RESERVE BANK OF INDIA

Foreign Exchange Department

Central Office

Mumbai - 400 001

RBI/2011-12/ 403                                           February 21, 2012
A.P. (DIR Series) Circular No.81

To
All Category – I Authorised Dealer Banks

Madam / Sir,

Export of Goods and Services -

Receipt of advance payment for export of goods

Involving shipment (manufacture and ship) beyond one year

1.Attention of Authorised Dealer Category – I (AD Category I) banks is invited to the sub-regulation (2) of Regulation 16 of the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, notified vide Notification No.FEMA.23/RB-2000, dated 3rd May 2000, as amended from time to time, in terms of which prior approval of the Reserve Bank is required to be obtained by an exporter for receipt of advance where the export agreement provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment.

2. With a view to liberalizing the procedure, it has been decided to permit AD Category- I banks to allow exporters to receive advance payment for export of goods which would take more than one year to manufacture and ship and where the ‘export agreement’ provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment subject to the following conditions:-

i) the KYC and due diligence exercise has been done by the AD Category –I bank for the overseas buyer;

ii) compliance with the Anti Money Laundering standards has been ensured;

iii) the AD Category-I bank should ensure that export advance received by the exporter should be utilized to execute export and not for any other purpose i.e., the transaction is a bona-fide transaction;

iv) progress payment, if any, should be received directly from the overseas buyer strictly in terms of the contract;

v) the rate of interest, if any, payable on the advance payment shall not exceed London Inter-Bank Offered Rate (LIBOR) + 100 basis points;

vi) there should be no instance of refund exceeding 10% of the advance payment received in the last three years;

vii) the documents covering the shipment should be routed through the same authorised dealer bank; and

viii) in the event of the exporter's inability to make the shipment, partly or fully, no remittance towards refund of unutilized portion of advance payment or towards payment of interest should be made without the prior approval of the Reserve Bank.

3. Necessary amendments to the Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, wherever necessary, are being issued separately.

4. AD Category - I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any law.

Yours faithfully,

(Rashmi Fauzdar)

Chief General Manager

Clarification - Purchase of Immovable Property in India – Reporting requirement

RBI/2011/12/399
A.P. (DIR Series) Circular No. 79

February 15, 2012

To

All
Authorised Dealers in Foreign Exchange

Madam /Sir,

Clarification - Purchase of Immovable Property in India –
Reporting requirement

1.Attention of Authorised Dealer Category-I banks is invited to Regulation 5 of Notification No. FEMA 21/2000-RB viz. Foreign Exchange Management (Acquisition and Transfer of Immovable Property in India), Regulations, 2000 dated May 3, 2000, as amended from time to time. In terms of the above Regulation, when a person resident outside India, who has established in India in accordance with the Foreign Exchange Management (Establishment in India of Branch or Office or other Place of Business) Regulations, 2000, a branch, office or other place of business, excluding a liaison office, acquires any immovable property in India in accordance with the provision of said regulation, the said person has to file with the Reserve Bank a declaration in the form IPI annexed to those regulations, not later than ninety days from the date of such acquisition. As the form is required to be submitted by such persons only, the form is suitably amended to reflect the position.

2.  It is clarified that the extant regulations do not prescribe any reporting requirements for transactions where a person resident outside India who is a citizen of India or a Person of Indian Origin (PIO) as defined in Regulation 2(c) of Notification No. FEMA 21/2000-RB, ibid, acquire/s immovable property in India in accordance with the said provisions of the aforesaid Notification. Form IPI has been, accordingly, amended for greater clarity.

3. Authorised Dealer Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Meena Hemchandra)

Chief General Manager-in-Charge

Annex

[Annex to A.P. (DIR Series) Circular No. 79
dated February 15, 2012]

Form IPI

( See Regulation 5 )

Declaration of immovable property acquired in Indiaby a person resident outside India who has established in India a branch, office or other place of business, excluding a liaison office

Instructions:

1. The declaration should be completed in duplicate and submitted directly to the Chief General Manager, Foreign Exchange  Department, (Foreign Investment Division), Reserve Bank  of India , Central Office , Mumbai – 400001 within 90 days from the date of acquisition of the immovable property.
2. This form is not to be submitted by a person resident outside India who is a citizen of India or a Person of Indian Origin (PIO) acquiring immovable property in India under General Permission in accordance with Regulations 3 and 4 of Notification No. FEMA 21/2000-RB dated May 3, 2000.

Documentation:

Certified copies of letter of approval from Reserve Bank obtained under section 6(6) of FEMA, 1999 (42 of 1999).

1		Full name and address of the acquirer who has acquired the immovable property
2	(a)	Description of immovable property	(a)
	(b)	Details of its exact location stating the name of the state, town and municipal/survey number, etc	(b)
3	(a)	Purpose for which the immovable property has been acquired	(a)
	(b)	Number and date of Reserve Bank’s permission , if any	(b)
4		Date of aquisition of the immovable property
5	(a)	How the immovable property was acquired i.e. whether by way of purchase or lease	(a)
	(b)	Name , citizenship and address of the seller/lessor	(b)
	(c)	Amount of purchase price and sources of funds	(c)

I/ We
hereby declare that-

(a) the particulars given above are true and correct to the best of my/our knowledge and belief;

(b) no portion of the said property has been leased /rented to, or is otherwise being allowed to be used by, any other party.

-------------------------------------

(Signature of Authorised official)

Name:------------------------------

Designation:---------------------

Encls:

Stamp

Place: -------

Date:--------

Export of Goods and Services-Simplification and Revision of Softex Procedure

RESERVE BANK OF INDIA

Foreign Exchange Department

Central Office

Mumbai - 400 001

_________________________________________________

RBI/2011/12/400                                     February 15, 2012
A.P. (DIR Series) Circular No. 80

To
All Authorised Dealers in Foreign Exchange

Madam / Sir,

Export of Goods and Services-

Simplification and Revision of Softex Procedure

1.Attention of the Authorised Dealers is invited to Regulation 6 of the Notification No.FEMA 23/2000-RB dated May 3, 2000 viz. Foreign Exchange Management (Export of Goods and Services) Regulations, 2000, as amended by the Notification No.FEMA 36/2001-RB dated February 2, 2001, in terms of which designated officials of the Ministry of Information Technology, Government of India at the Software Technology Parks of India (STPIs) or at Free Trade Zones (FTZs) or Export Processing Zones (EPZs) or Special Economic Zones(SEZs), had been authorised to certify exports declared through SOFTEX Forms.

2. Considering the spurt in the volume of software exports from India in recent times, the complexity of work contracts involved, the voluminous nature of contract agreements and the duration involved in execution of each contract as well as the time-consuming process involved in the certification of SOFTEX forms, the matter was revisited and a revised procedure, given herein below, has now been finalised in consultation with the stakeholders involved.

3. As per the revised procedure, a software exporter, whose annual turnover is at least Rs. 1000 crore or who files at least 600 SOFTEX forms annually, will be eligible to submit a statement in excel format as per Annexure A, giving all particulars alongwith quadruplicate set of SOFTEX form to the nearest STPI. STPI will then verify the details and decide on a percentage sample check of the documents in details. Software companies will submit all the documents on demand to STPI within 30 days of their advice or any reasonable/extended time at the discretion of the Director, STPI, at the request from the exporter. STPI will thus certify the statement and SOFTEX forms in bulk on the “Top Sheet” regarding the values etc. and will thereafter forward the first copy of the revised SOFTEX format to the concerned Regional Office of RBI, the duplicate copy alongwith bulk statement in excel format to Authorised Dealers for negotiation / collection / settlement, the third copy to the exporter and the last copy will be retained by STPI for its own record. Under the revised procedure, the exporters, however, will have to provide information about all the invoices including the ones lesser than US$25000, in the bulk statement in excel format. [The revised procedure for submission of the Softex form and other relevant documents are detailed in the Annex.]

4. The new procedure will be effective initially in STPI Bangalore, Hyderabad, Chennai, Pune and Mumbai with effect from April 01, 2012. Based on the success in these centers, it would be adopted by all the STPIs and SEZ/ EPZ/ 100% EOU/ EHTP/ DTA units by June 2012.

5. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.

6. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rashmi Fauzdar)

Chief General Manager

___________________________________________

ANNEX

[Annex to A.P. (DIR Series) Circular No. 80

dated February 15, 2012]

1. Revised Procedure : Reporting of Software exports to STPI

A. Periodicity – Monthly

B. Time period – Not later than 30 days from the close of the month in which the invoice is raised

C. Applicability – Software exporters with annual turnover in excess of Rs. 1,000 crore or submitting at least 600 Softex forms annually.

D. Softex Number – Softex number shall be allocated/issued centrally by RBI once a year based on the requirements of exporter which can be about 200,000 numbers to be used by large exporters for the year for all locations. If the softex numbers are exhausted, the exporter can apply again to RBI for allotment of number. Exporters can use the allocated Softex number either for each invoice or for a group of invoices with same currency of a particular customer. Softex number would be the control number for identifying any of the export transaction.

E. Details of information – As per the template in Annexure A, which will broadly cover information as under

i. Name and Address of the Exporter

ii. Letter of permission number and date

iii. Name of authorized data com service provider

iv. Import Export Code number

v. Software Export Declaration

vi. Details of Export of Software during the period

a) Period of submission i.e. Month name

b) SOFTEX Number

c) Name of Client

d) Address of Client

e) Country of Export

f) Invoice Number

g) Invoice Date

h) Project Code or Contract or Agreement or PO & Date

i) Type of Software Exported

j) Invoice Currency

k) Offshore Invoice value

vii. Details of billings on account of Royalty on Software Packages/products exported as per Annexure B

a) Period of submission i.e., Month name

b) SOFTEX Number

c) Name of Client

d) Address of Client

e) Country of Export

f) Invoice Number

g) Invoice Date

h) Unique internal Project Code or Contract/Agreement/PO Date

i) Invoice Currency

j) Offshore Invoice value

k) Details of Software Package(s)/product(s) exported

l) Royalty agreement details

1. % age and amount of royalty

2. Period of Royalty agreement

3. Mode of realisation of Royalty value

4. Calculation of Royalty amount

viii. The Authorized dealer’s name should be given in Section A of individual bulk statement itself along with email id (Annexure A & B). If there are multiple ADs, then exporter may provide full details - i.e., Details such as bank name, address and Authorized Dealer code plus

a) Details of Letter of Credit(L/C) facilty availed by the exporter

b) Details of Bank Guarantee taken by the exporter

c) Details of the Bank Accounts into which the transfer/remittance are received

ix. Email id of the Exporter shall be specified to which the attested Bulk Softex statement will be sent

F. Soft copy Submission – Software Exports Declaration in summary excel sheet with above details.

G. Hard copy submission – Covering letter along with summary sheet declarations and Annexure copies in quadruplicate. Copies of Softex forms, Invoices, SoW, MSA or any other document are not required to be submitted along with summary.

H. Additional Information – At the request of STPI, software exporter need to submit additional details about selected sample invoices within 30 days of the request or any reasonable extended time at the discretion of the Director , STPI at the request from the exporter.

I. Time Period for additional Information – STPI would do sample audit periodically but not during the period beyond six months, to make the records concurrent with the filing of the Softex. This however, doesn’t stop the regulator from asking old records as per FEMA.

J. STPI will send the attested Bulk Softex statement in hardcopy to software exporter and soft copy to RBI, Regional Office, Authorized Dealer and Exporter with password protection (to be provided by STPI)

K. Authorized Dealer will upload this information in their systems for further processing

L. Authorized Dealer will settle the Softex using AD internal control number based on details provided by Exporter on collections as per Annexure C

2. Reporting of Software export Realizations to Authorized Dealer (AD)

Software Exporters can have collection account overseas or get credit directly in the bank accounts maintained in India, where individual invoices raised on customers are collected. After meeting “onsite” branch expenses, as permitted by FEMA, net amount will be remitted to India. This would also include 100% realization of offsite exports.

A. Periodicity – Quarterly

B. Applicability – Software exporters with annual turnover in excess of Rs. 1,000 crore or submitting in excess of 600 Softex forms annually.

C. Details of information – As per Annexure C, which will cover information as under

i. Name and Address of the Exporter

ii. Import Export Code number

iii. Details of invoice wise collections (Attachment A)

a) SOFTEX Number

b) Name of Customer

c) Invoice Number

d) Invoice Date

e) Invoice Currency

f) Offshore Invoice value

g) Offshore Invoice value realized

h) Date of Realization of exports proceeds

i) Name of the Bank

j) Country of the Bank

iv. Details of Foreign Currency Inward Remittance in India(Attachment B). Authorized Dealers will give a control number for this Attachment B, which shall be used by them to settle all the softex forms in Attachment A

a) Inward remittance in India from overseas bank accounts

1. Name and address of the Authorized Dealer at which the amount has been received

2. Inward remittance details like FIRC number, date, amount and foreign currency

3. Name and address of the Overseas bank from which remittance has been effected

b) Direct Inward remittance in India from customers against exports of software

1. Name and address of the Authorized Dealer at which the amount has been received

2. Inward remittance details like FIRC number, date, amount and foreign currency

3. Name and address of the Customer from which remittance has been received

v. Documentation: FIRCs to be given to AD for endorsement along with above details

vi. Software exporters will furnish the credit notes to AD for invoices which have already been certified by STPI and settle the respective Softex forms.

3. Online Submission of Periodic Software Exports Declaration

STPI is in the process of computerizing the submission of Softex form. STPI would be required to ensure that the computerisation of the Softex forms and the populating of the data must be compatible to 'Softex Card Design' as detailed in Annexure E and be able to generate a report in 'ENC file format' as detailed in Annexure D

N.B. In the event of full computerisation at the STPIs, the exporters will upload their bulk statement to the STPI system which will be verified and certified by the STPI and the certified information will flow to RBI, Regional Office, Exporter as well as AD online. The data will eventually flow to DSIM, RBI for record with a copy retained at STPI.

Annexure

 

Liberalization of the policy in Single-Brand Retail Trading

Government of India

Ministry of Commerce & Industry

Department of Industrial Policy & Promotion

(FC-I Section)

Press Note No.1 (2012 Series)

Subject: Review of the policy on Foreign Direct Investment- liberalization of the policy in Single-Brand Retail Trading.

1.0 Present Position:

Foreign Direct Investment (FDI), in retail trade, is prohibited except in single brand product retail trading, in which FDI, up to 51% is permitted, subject to conditions specified under paragraph 6.2.16.4 of 'Circular 2 of 2011- Consolidated FDI Policy'.

2.0 Revised Position:

The Government of India has reviewed the extant policy on FDI and decided that FDI, up to 100%, under the government approval route, would be permitted in Single-Brand Product Retail Trading, subject to specified conditions, as indicated in paragraph 3.0 below.

3.0 Accordingly, the following amendment is made in 'Circular 2 of 2011- Consolidated FDI Policy', dated 30.09.2011, issued by the Department of Industrial Policy & Promotion:

3.1 Paragraph 6.2.16.4 is substituted with the following:

6.2.16.4	Single Brand product retail trading	100%	Government
	(1) Foreign Investment in Single Brand product retail trading is aimed at attracting investments in production and marketing, improving the availability of such goods for the consumer, encouraging increased sourcing of goods from India, and enhancing competitiveness of Indian enterprises through access to global designs, technologies and management practices. (2) FDI in Single Brand product retail trading would be subject to the following conditions: (a) Products to be sold should be of a 'Single Brand' only. (b) Products should be sold under the same brand internationally i.e.products should be sold under the same brand in one or more countries other than India. (c) 'Single Brand' product-retail trading would cover only products which are branded during manufacturing. (d) The foreign investor should be the owner ofthe brand. (e) In respect of proposals involving FDI beyond 51%, mandatory sourcing of at least 30% of the value of products sold would have to be done from Indian 'small industries/ village and cottage industries, artisans and craftsmen'. 'Small industries' would be defined as industries which have a total investment in plant & machinery not exceeding US $ 1.00 million. This valuation refers to the value at the time of installation, without providing for depreciation. Further, if at any point in time, this valuation is exceeded, the industry shall not qualify as a 'small industry' for this purpose. The compliance of this condition will be ensured through self-certification by the company, to be subsequently checked, by statutory auditors, from the duly certified accounts, which the company will be required to maintain. (3) Application seeking permission of the Government for FDI in retail trade of 'Single Brand' products would be made to the Secretariat for Industrial Assistance (SIA) in the Department of Industrial Policy & Promotion. The application would specifically indicate the product/ product categories which are proposed to be sold under a 'Single Brand'. Any addition to the product/ product categories to be sold under 'Single Brand' would require a fresh approval of the Government.  (4) Applications would be processed in the Department of Industrial Policy & Promotion, to determine whether the products proposed to be sold satisfy the notified guidelines, before being considered by the FIPB for Government approval.

4.0 The above decision will take immediate effect.

5.0 The above provisions will be incorporated in the next Circular on Consolidated FDI Policy to be issued on 31.3.2012.

(Anjali Prasad)

Joint Secretary to the Government of India

________________________________________________________

D/o IPP File No.: 5/12/2010-FC-l dated: 10th January, 2012

Copy forwarded to:

1. Press Information Officer, Press Information Bureau- for giving wide publicity to the above Press Note.

2. BE Section in the Department of Industrial Policy and Promotion- for uploading the Press Note on DIPP's website.

“Set-off” of export receivables against import payables - Liberalization of Procedure

RBI/2011-12/264
A.P. (DIR Series) Circular No. 47

November 17, 2011

To
All Category – I Authorized Dealer Banks

Madam/Sir,

“Set-off” of export receivables against import payables-Liberalization of Procedure

Attention of Authorized Dealer Category – I (AD Category – I) banks is invited to the fact that the requests received from the exporters through their AD branches for set-off of export receivables against import payables are considered by the Reserve Bank of India. As a measure of further liberalization, it has been decided to delegate power to AD Category – I banks to deal with the cases of “set-off” of export receivables against import payables, subject to following terms and conditions:

a.The import is as per the Foreign Trade Policy in force.

b.Invoices/Bills of Lading/Airway Bills and Exchange Control copies of Bills of Entry for home consumption have been submitted by the importer to the Authorized Dealer bank.

c.Payment for the import is still outstanding in the books of the importer.

d.Both the transactions of sale and purchase may be reported separately in ‘R’ Returns.

e.The relative GR forms will be released by the AD bank only after the entire export proceeds are adjusted / received.

f.The ” set-off” of export receivables against import payments should be in respect of the same overseas buyer and supplier and that consent for ”set-off” has been obtained from him.

g.The export / import transactions with ACU countries should be kept outside the arrangement.

h.All the relevant documents are submitted to the concerned AD bank who should comply with all the regulatory requirements relating to the transactions.

2. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

3. The directions contained in this circular have been issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Dr. Sujatha Elizabeth Prasad)

Chief General Manager

Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation

RBI/2011-12/241
A.P. (DIR Series) Circular No.40

November 01, 2011

To,
All Category - I Authorised Dealer Banks

Madam / Sir,

Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation

1. Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to A.P. (DIR Series) Circular No. 47 dated March 31, 2011 enhancing the period of realization and repatriation to India of the amount representing the full export value of goods or software exported, from six months to twelve months from the date of export. This relaxation was available up to September 30, 2011.

2. The issue has since been reviewed and it has been decided, in consultation with the Government of India, to extend the above relaxation w.e.f. October 01, 2011 till September 30, 2012.

3. The provisions in regard to period of realization and repatriation to India of the full export value of goods or software exported by a unit situated in a Special Economic Zone (SEZ) as well as exports made to warehouses established outside India remain unchanged.

4. AD Category-I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

5. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Rashmi Fauzdar)

Chief General Manager

Related Press Release

Nov 01, 2011 Export of Goods and Software – Realisation and Repatriation of export proceeds – Liberalisation

Press Release on Consolidated FDI policy

Corrigendum to Circular 2 Of 2011 - Consolidated FDI Policy

Circular 2 of 2011 was issued on 30th September, 2011. Para NO.3.3.2.1 of the above Circular hereby stands deleted. Erstwhile paragraph 3.3.2.1 of ‘Circular 2 of 2011’ went like this:

“ 3.3.2.1: Only equity shares, fully, compulsorily and mandatorily convertible debentures and fully, compulsorily and mandatorily convertible preference shares, with no in-built options of any type, would qualify as eligible instruments for FDI. Equity instruments issued/transferred to non-residents having in-built options or supported by options sold by third parties would lose their equity character and such instruments would have to comply with the extant ECB guidelines.”

This paragraph now stands deleted from ‘Circular 2 of 2011’.

The Circular duly corrected is available at http://www.dipp.nic.in/.

RBI Circulars

Gift in Rupees by Resident Individuals to NRI close relatives

Loans in Rupees by resident individuals to NRI close relatives

Repayment of loans of Non-resident close relatives by residents

Meeting of Medical expenses of NRIs close relatives by Resident Individuals

Foreign Direct Investment (FDI) in India - Issue of equity shares under the FDI Scheme allowed under the Government route

RBI/2010-11/586

A. P. (DIR Series) Circular No.74                        June 30, 2011


To All Authorised Dealer Category-I Banks

Madam / Sir,

Foreign Direct Investment (FDI) in India - Issue of equity shares under the FDI Scheme allowed under the Government route

1.Attention of Authorised Dealers Category – I (AD Category - I) banks is invited to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000, notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000, as amended from time to time.

2. In terms of the Schedule 1 of the Notification, ibid, an Indian company may, under the automatic route, issue equity shares/ preference shares to a person resident outside India, being a provider of technology / technical know-how and against royalty / lumpsum fees due for payment subject to certain conditions like entry route, sectoral cap, pricing guidelines and compliance with the applicable tax laws.

3. The extant guidelines for issue of equity shares/ preference shares under the Government route have been reviewed in consultation with the Government of India and, accordingly, it has been decided to permit issue of equity shares / preference shares under the Government route of the FDI scheme for the following categories of transactions:

(I) Import of capital goods/ machineries / equipments (including second-hand machineries), subject to compliance with the following conditions:

(a) The import of capital goods, machineries, etc., made by a resident in India, is in accordance with the Export / Import Policy issued by the Government of India as notified by the Directorate General of Foreign Trade (DGFT) and the regulations issued under the Foreign Exchange Management Act (FEMA), 1999 relating to imports issued by the Reserve Bank;

(b) There is an independent valuation of the capital goods / machineries / equipments (including second-hand machineries) by a third party entity, preferably by an independent valuer from the country of import along with production of copies of documents /certificates issued by the customs authorities towards assessment of the fair-value of such imports;

(c) The application should clearly indicate the beneficial ownership and identity of the importer company as well as the overseas entity; and

(d) All such conversions of import payables for capital goods into FDI should be completed within 180 days from the date of shipment of goods.

(II) Pre-operative/pre-incorporation expenses (including payments of rent, etc.) subject to compliance with the following conditions:

(a) Submission of FIRC for remittance of funds by the overseas promoters for the expenditure incurred;

(b) Verification and certification of the pre-incorporation/ pre-operative expenses by the statutory auditor;

(c) Payments should be made directly by the foreign investor to the company. Payments made through third parties citing the absence of a bank account or similar such reasons will not be eligible for issuance of shares towards FDI; and

(d) The capitalization should be completed within the stipulated period of 180 days permitted for retention of advance against equity under the extant FDI policy.

4. (i) All requests for conversion should be accompanied by a special resolution of the company.

(ii) Government’s approval would be subject to pricing guidelines of the Reserve Bank and appropriate tax clearance.

5. These directions have been issued with reference to the relevant paras of the Consolidated FDI Policy Circular 1 of 2011 dated March 31, 2011, issued by the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry, Government of India.

6. AD Category – I banks may bring the contents of this circular to the notice of their constituents and customers concerned.

7. Necessary amendments to the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 notified vide Notification No. FEMA 20/2000-RB dated May 3, 2000 will be issued separately.

8. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.

Yours faithfully,

(Meena Hemchandra)

Chief General Manager-in-Charge