DGFT eases rules for export realization

2.52: Denomination of Export Contracts

(a) All export contracts and invoices must be denominated either in freely convertible currency or Indian rupees, but export proceeds must be realized in freely convertible currency.

(b) Export proceeds for specific exports may also be realized in rupees, through a freely convertible Vostro account of a non-resident bank located in a country other than an ACU member, Nepal, or Bhutan. Rupee payment via Vostro account must correspond to free foreign currency payment by the buyer in their non-resident bank account. The free foreign exchange remitted by the buyer to their non-resident bank (after deducting bank service charges) will count as export realization under FTP export promotion schemes.

(c) Contracts settled through the ACU must be denominated in ACU Dollars, although transactions may be settled in ACU Dollar or ACU Euro per RBI notifications. The Central Government may relax these provisions when appropriate. Export contracts and invoices can be denominated in Indian rupees under an EXIM Bank/Government of India line of credit.

(d) Invoicing, payment, and settlement of exports and imports in INR are also permitted, subject to compliance with RBI’s A.P. (DIR Series) Circular No. 10, dated July 11, 2022. INR trade transactions must follow these guidelines:

(i) Indian importers must pay in INR, credited into the Special Vostro account of the correspondent bank of the partner country, against invoices for goods or services from the overseas seller/supplier.

(ii) Indian exporters must receive export proceeds in INR from balances in the designated Special Vostro account of the correspondent bank of the partner country.

(a) All export contracts and invoices, other than those involving member countries of the Asian Clearing Union (ACU), shall be denominated either in foreign currency or Indian Rupees. Export proceeds shall be realized either in any foreign currency or in Indian Rupees.

(b) Export contracts involving member countries of the ACU, other than Nepal and Bhutan, shall be denominated in a currency determined by the ACU. However, such transactions may also be denominated and settled in accordance with the directions issued by the Reserve Bank of India from time to time.

(c) Export contracts involving Nepal and Bhutan shall be denominated and settled in Indian Rupees, or in accordance with the directions issued by the Reserve Bank of India from time to time. Further, export contracts and invoices under EXIM Bank/Government of India Lines of Credit may also be denominated in Indian Rupees.

2.53: Applicability of FTP Schemes for Export Realizations in Indian Rupees

i. Export proceeds realized in Indian Rupees against exports to Iran are permitted to avail exports benefits / incentives/fulfilment of Export Obligations under the FTP, at par with export proceeds realized in freely convertible currency subject to compliance of para 2.19 of the FTP.

ii. Export proceeds realized in Indian Rupees as per para 2.52(d)(ii) are permitted to avail exports benefits / incentives / fulfilment of Export Obligations under the FTP.

Exports to any country, other than Nepal and Bhutan, for which export proceeds are realized in Indian Rupees through banking channels by credit to Indian Rupee accounts of persons resident outside India, opened in accordance with the Foreign Exchange Management (Deposit) Regulations, as amended from time to time, shall be eligible for export benefits/incentives and fulfilment of Export Obligations under the FTP, at par with exports realized in any foreign currency.

In the case of exports to Iran, the above provisions shall apply, subject to compliance with the provisions of para 2.19 of the FTP.