The Reserve Bank of India (RBI) with a view to liberalise the Import/ export framework had released the draft rules and regulations on 2nd July, 2024 inviting public comments. The Reserve Bank along with Government of India has been taking up various steps for increasing foreign inflows along with providing ease of doing business.
The proposed draft framework shall have the below impact on the Import/ export framework:
| Sr. No. | Particulars | Proposed Framework | MMJC view |
| 1. | Empowerment to Authorised dealer banks | The Reserve Bank of India has directed the Authorised Dealer (AD) Banks to put in place comprehensive, well documented policies approved by their Board of Directors for handling payment transactions related to export/import of goods and services and merchanting trade. | This move shall empower the AD Banks to process import/ export transactions as per Board approved policy. It is also considerable that the application shall be processed as per policies approved by the Board of Directors, which means that any transaction or situation not specified under the policy or beyond the policy guidelines will have to be referred to the Board for approval. |
| 2. | Relaxation for timeline for completion of Import payments | The existing master directions issued by RBI for import of goods provide for payment against imports to be completed within six months from the date of shipment. The proposed framework shall enable setting up payment terms under the contract. | The proposed framework could ease the payment terms for the importers, it shall help importers reap the benefit of relatively greater credit period. |
| 3. | Elimination of period prescribed for export of goods against advances | While the existing master directions laid down by RBI obligates an exporter to ensure that the shipment of goods is made within one year from the date of receipt of advance payment, the draft framework provides leverage to determine the time limit as per the export contract. Applications for refund of advances post one year of receipt were routed to RBI for approval. | The proposed framework shall shift the responsibility of justifying the time period between receipt of advances and exports against the same on the exporter and also empower the Authorised Dealer Banks to grant extensions of time. |
| 4. | Declaration of services in Export Declaration Form | The draft framework proposes declaration of export of services in Form EDF to be submitted with the AD Bank. | This shall require declaration of export of services to the AD Bank. While the declaration for export of services to the AD Bank is not required under the existing framework, the export of services shall also be under the purview of the AD Banks as per the proposed framework. |
| 5. | RBI approval for advances towards Import of gold/ silver | The proposed framework shall allow remittance of advances against Import of gold and silver under RBI approval route only. | While RBI has proposed to empower the AD Banks for processing of import/ export applications, the application for remitting advance payments for import of gold/ silver shall still lie with RBI. |
| 6. | Caution listing of exporters in EDPMS for non-realisation of export proceeds | Where the existing framework does not prescribe any specific timeline for caution listing of exporters, the proposed framework prescribes a period two years from the due date of realization (including extension of the period granted by AD bank, if any for realisation of export proceeds). | In case of export amount being outstanding in EDPMS for a period of more than two years, the exporter post given an opportunity of being heard can be caution listed.
Such caution-listed exporters shall be allowed to undertake exports against advance payment in full or against an irrecoverable letter of credit. |
The proposed framework shall not only provide authority to AD Banks for processing of applications as per the Board approved policies but also ease the difficulties faced by genuine transactions taking longer period for completion as compared to prescribed timelines. The proposed framework released for comments does not yet provide for any guidelines pertaining to write off, netting off which could form the basis of Board policies to be drafted by the AD Banks.
Link for press release by RBI: RBI Press Release: 2024-2025/615, Dated: Jul 02, 2024
The article is written by Ms. Riddhi Gada – Manager!
Author Bio
