‘FTP benefits are available against settlement of claims by ECGC’

RBI Master Direction on export of goods and services states that ECGC claims are not treated as realisation and so, BRC cannot be issued. While writing off bills on the basis of ECGC claim and closing my shipping bill in EDPMS, the bank wants me to surrender export incentives, whereas HBP states that ECGC claims can be considered for claiming export incentives. Under which conditions can ECGC claims be considered for availing export incentives, so that I can get my shipping bill closed in the EDPMS without surrendering incentives?

Para C.24 of the RBI Master Direction no.16/2015-16 dated January 1, 2016 (as amended), deals with write-off in cases of payment of claims by ECGC and private insurance companies regulated by Insurance Regulatory and Development Authority of India. It clearly says that surrender of incentives, if any, in such cases will be as provided in the Foreign Trade Policy (FTP). So, your bankers must proceed in accordance with Para 2.85 of HBP and not demand surrender of incentives.

A foreign national of non-Indian origin, resident abroad, wants to purchase commercial properly in India and rent it out to a branch of a foreign company. Is this permitted?

Foreign Exchange Manage­ment (Acquisition and Transfer of Immovable Property in India) Regulations, 2018) does not specifically allow a foreign national of non-Indian origin to buy immovable property in India for any commercial purpose. Indeed, the Government of India through a press release dated February 1, 2019 has specifically cautioned against foreign nationals buying immovable property illegally in some parts of the country, particularly in Goa. Please see this link for further details: https://rbidocs.rbi. org.in/rdocs/notification/PDFs/07MIP0101168C51C4CB845342D09E8A4A613B1F1C6D.PDF

I manufacture tags for garment industries, and also export to various countries worldwide. My invoice value is mostly less than $50 and I get paid around $20 after deduction of overseas bank charges. Since the realisation value is less than 75 per cent of the shipping bill value, my bank refuses to close the bill. How to resolve this issue?

I have not been able to locate any precise RBI instructions in this regard. However, CBIC Circular no.33/2019-Cus dated September 19, 2019, deals with the contention of exporters that short realisation of export sale proceeds due to bank charges deducted by foreign banks should be treated as full realisation of export proceeds. The Circular says that RBI has clarified that such deductions are enabled under notification No. FEMA 23(R) 2015-RB dealing with Foreign Exchange Management (Export of Goods and Services) Regulations 2015.

It also says that as per Para 2.52 of FTP 2015-20, free foreign exchange remitted by buyer after deduction of bank service charges are taken as full export realisation. Based on this, you may approach your bankers. If they still don’t agree, you may approach RBI through your bankers, in accordance with Para C.23.10 and Para A.1(vi) of the Master Direction no. 16/2015-16 dated January 1, 2016 (as amended) on “Export of Goods and Services”.

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