RBI Master Directions enabling qualified jewellers to Import Gold through India International Bullion Exchange IFSC Ltd

RBI/FED/2016-17/12 FED Master Direction No. 17/2016-17 January 1, 2016 (Updated as on January 06, 2022) (Updated as on December 07, 2021) (Updated as on October 28, 2020) (Updated as on January 27, 2020) (Updated as on April 01, 2019) (Updated as on February 02, 2018) (Updated as on January 12, 2017) (Updated as on October 20, 2016) (Updated as on March 31, 2016) (Updated as on February 4, 2016) To All Authorised Dealer Category – I banks and Authorised Banks Madam / Dear Sir, Master Direction – Import of Goods and Services Import of Goods and Services into India is being allowed in terms of Section 5 of the Foreign Exchange Management Act 1999 (42 of 1999), read with Notification No. G.S.R. 381(E) dated May 3, 2000 viz. Foreign Exchange Management (Current Account Transaction) Rules, 2000. These Regulations are amended from time to time to incorporate the changes in the regulatory framework and published through amendment notifications. 2. Within the contours of the Regulations, Reserve Bank of India also issues directions to Authorised Persons under Section 11 of the Foreign Exchange Management Act (FEMA), 1999. These directions lay down the modalities as to how the foreign exchange business has to be conducted by the Authorised Persons with their customers/constituents with a view to implementing the regulations framed. 3. Instructions issued on import of goods and services into India have been compiled in this Master Direction. The list of underlying circulars/ notifications which form the basis of this Master Direction is furnished in the Appendix. Reporting instructions can be found in Master Direction on reporting (Master Direction No. 18 dated January 01, 2016). 1 4. It may be noted that, whenever necessary, Reserve Bank shall issue directions to Authorised Persons through A.P. (DIR Series) Circulars in regard to any change in the Regulations or the manner in which relative transactions are to be conducted by the Authorised Persons with their customers/ constituents. The Master Direction issued herewith shall be amended suitably simultaneously. Yours faithfully, (R S Amar) Chief General Manager 2 INDEX Section I - Introduction Section II - General Guidelines for imports B.1. General Guidelines B.2. Remittances for Import Payments B.3. Import Licenses B.4. Obligation of Purchaser of Foreign Exchange B.5. Time Limit for Settlement of Import Payments B.6. Import of Foreign exchange / Indian Rupees B.7. Third Party Payment for Import Transactions B.8. Issue of Guarantees by an Authorised Dealer Section III - Operational Guidelines for Imports C.1. Advance Remittance C.2. Interest on Import Bills C.3. Remittances against Replacement Imports C.4. Guarantee for Replacement Import C.5. Import of Equipment by Business Process Outsourcing (BPO) Companies for their overseas sites C.6. Receipt of Import Bills/Documents by the Importer Directly from Overseas Suppliers C.7. Evidence of Import C.8. 1Import Data Processing and Monitoring System C.9. Verification and Preservation C.10. Follow up for Import Evidence C.11. Import of Gold C.12. Import of Other Precious Metals C.13. Import Factoring C.14. Merchanting Trade C.15. Import Payments through Online Payment Gateway Service Providers 2C. 16 Settlement of Import transactions in currencies not having a direct exchange rate Consolidated List of Circulars in the Master Direction 1 Modified vide AP (DIR Series) Circular No.65 dated April 28, 2016 and AP (DIR Series) Circular No.5 dated October 06, 2016 prior to modification it read as ‘’Issue of acknowledgement” 2 Inserted vide AP (DIR) Series Circular 42 dated February 4, 2016 3 Master Direction 17 – Import of Goods and Services Section I - Introduction (i) Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, Department of Commerce, Government of India. Authorised Dealer Category – I (AD Category – I) banks should ensure that the imports into India are in conformity with the Foreign Trade Policy in force and Foreign Exchange Management (Current Account Transactions) Rules, 2000 framed by the Government of India vide Notification No. G.S.R.381 (E) dated May 3, 2000 and the Directions issued by Reserve Bank under Foreign Exchange Management Act, 1999 from time to time. (ii) AD Category – I banks should follow normal banking procedures and adhere to the provisions of Uniform Customs and Practices for Documentary Credits (UCPDC), etc. while opening letters of credit for import into India on behalf of their constituents. (iii) Compliance with the provisions of Research & Development Cess Act, 1986 may be ensured for import of drawings and designs. (iv) AD Category – I banks may also advise importers to ensure compliance with the provisions of Income Tax Act, wherever applicable. (v) 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 its jurisdiction for necessary approval. Section II - General Guidelines for Imports B.1. General Guidelines Rules and regulations to be followed by the AD Category – I banks from the foreign exchange angle while undertaking import payment transactions on behalf of their clients are set out in the following paragraphs. Where specific regulations do not 4 exist, AD Category – I banks may be governed by normal trade practices. AD Category – I banks may particularly note to adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Regulation) in all their dealings. B.2. Remittances for Import Payments AD Category I Banks may allow remittance for making payments for imports into India, after ensuring that all the requisite details are made available by the importer and the remittance is for bona fide trade transactions as per applicable laws in force. B.3. Import Licences Except for goods included in the negative list which require licence under the Foreign Trade Policy in force, AD Category - I banks may freely open letters of credit and allow remittances for import. While opening letters of credit, the ‘For Exchange Control purposes’ copy of the licence should be called for and adherence to special conditions, if any, attached to such licences should be ensured. After effecting remittances under the licence, AD Category - I banks may preserve the copies of utilised licence /s till they are verified by the internal auditors or inspectors. B.4. Obligation of Purchaser of Foreign Exchange (i) In terms of Section 10(6) of the Foreign Exchange Management Act, 1999 (FEMA), any person acquiring foreign exchange is permitted to use it either for the purpose mentioned in the declaration made by him to an Authorised Dealer Category – I bank under Section 10(5) of the Act or for any other purpose for which acquisition of foreign exchange is permissible under the said Act or Rules or Regulations framed there under. (ii) Where foreign exchange acquired has been utilised for import of goods into India, the AD Category – I bank should ensure that the importer furnishes evidence of import viz., 3as in IDPMS as explained in para C.7, Postal Appraisal Form or Customs Assessment Certificate, etc., and satisfy himself that goods equivalent to 3 Modified vide AP DIR Series Circular No. 27 dated January 12, 2017 prior to modification it read as “Exchange Control Copy of the Bill of Entry”