Conditions for Realization of export payment
An export contract should clearly specify when, where and how the payment for exports would be made. The method of payment to be adopted in the international market depends upon the following factors:
(a) Agreement between the exporter and importer.
(b) Rules and regulations laid down by the RBI.
(c) Monetary and fiscal policy of the government.
(d) Laws affecting payment mechanism in the foreign country.
(e) Political situation in the world.
The method of export payment in India is subject to the following conditions:
a) Indian exporters must receive payments in terms of 'permitted currencies', such as, US dollars, Pound Sterling, and for which a fairly active market exists for dealing.
(b) Where payments are permitted in currencies other than 'permitted currencies', the authorised dealers should ensure that the foreign exchange so acquired does not become immobilized.
(c) The shipping documents must be submitted to an authorised dealer within 21 days of the date of shipment.
(d) The exporter must realize full export value of goods on the due date of payment or within six months from the date of export, whichever is earlier. Where it is not possible to realise export proceeds in the prescribed time period, the exporter is required to make an application to the RBI in prescribed form ETX (in duplicate) for extension.
(e) It is obligatory for every exporter in India to receive his payment through the intermediary of authorised dealers, i.e., commercial banks authorized to deal in foreign exchange.
(f) Indian exporters are also authorised to receive payments in the form of a bank draft, cheque, pay order, currency notes, traveler’s cheque, etc.) Provided the foreign currency so received is surrendered within the specified period to the authorized dealer of which the exporter is customer.
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