Can an Exporter invoice in Indian Rupees to overseas buyer?

Who regulates Export Import trade in India? What is the role of Authorized Dealer Bank in Import and export in India? What are the RBI norms in International business?

Can an Exporter invoice in Indian Rupees to overseas buyer? What are the guidelines given by Reserve bank of India to Authorized Dealer banks to act as guarantee to Exporter on payment terms? Where to address RBI related issues of Exporter or Importer?

Master Direction – Export of Goods and Services (Updated as on January 08, 2021) on invoicing Export Invoice reads as follws:

(i) Export trade is regulated by the Directorate General of Foreign Trade (DGFT) and its regional offices, functioning under the Ministry of Commerce and Industry, Department of Commerce, Government of India. Policies and procedures required to be followed for exports from India are announced by the DGFT, from time to time.

(ii) AD Category – I banks may conduct export transactions in conformity with the Foreign Trade Policy in vogue and the Rules framed by the Government of India and the Directions issued by Reserve Bank from time to time. In exercise of the powers conferred by clause (a) of sub-section (1) and sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999), the Reserve Bank has notified the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 relating to export of goods and services from India, hereinafter referred to as the ‘Export Regulations’. These Regulations have been notified vide Notification No. FEMA 23(R)/2015-RB dated January 12, 2016.

(iii) The Directions contained in this Document should be read with the Rules notified by the Government of India, Ministry of Finance, vide Notification No.G.S.R.381 (E) dated May 3, 2000, as also Regulations notified by Reserve Bank vide its Notification No. FEMA 23(R)/2015-RB dated January 12, 2016.

(iv) In terms of Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000, notified vide Notification No. FEMA 8/2000-RB dated May 3, 2000 as amended from time to time, AD Category – I banks have been permitted to issue guarantees on behalf of exporter clients on account of exports out of India subject to specified conditions.

(v) There is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act 1999. Further, in terms of Para 2.52 of the Foreign Trade Policy (2015-2020),

“All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency. However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non-resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan.” Indian Rupee is not a freely convertible currency, as yet.

(vi) Any reference to the Reserve Bank should first be made to the Regional Office of the Foreign Exchange Department situated in the jurisdiction where the applicant person resides, or the firm / company functions, unless otherwise indicated. If, for any particular reason, they desire to deal with a different office of the Foreign Exchange Department, they may approach the Regional Office of their jurisdiction for necessary approval.

(vii) “Financial Year” (April to March) is reckoned as the time base for all transactions pertaining to trade related issues.

The above posts clarified about who regulates Export Import trade in India, the role of Authorized Dealer Bank in Import and export in India, RBI norms in International business, invoicing in Indian Rupees to overseas buyer by exporter, information about guidelines given by Reserve bank of India to Authorized Dealer banks to act as guarantee to Exporter on payment term, addressing RBI related issues of Exporter or Importer.

Hope the above information helps exporters of India to know a part of RBI guidelines.

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