Thursday, September 9, 2021

IGNOU : M.COM : IBO 4 : UNIT 10 : Q - 2. Explain various exchange control regulations concerning imports.

 

Ans. EXCHANGE CONTROL REGULATIONS CONCERNING IMPORTS

Exchange control regulations refer to rules and regulations framed and administered by the Reserve bank of India (RBI) under the provisions of Foreign Exchange Management Act, 1999. These regulations aim at pooling resources for national development in the best interest of the country. Under the provisions of the Act, RBI regulates sale and purchase of foreign currencies, Commercial banks with a license to deal in foreign currencies, called authorized dealers (ADS) buy and sell foreign currencies in accordance with the guidance provided by the RBI. Let us learn various regulations regarding payment of imports.

 Mode of Payment: Exchange control regulations govern sales of foreign currencies to non - residents against import of goods from any country except - Nepal and Bhutan. It may be pointed OLI~ that residents of these two countries are residents for the purposes of exchange control regulations, hence, ADS cannot sell any foreign exchange for financing imports from these two countries.

Under the existing regulations, ADS provide foreign currencies to importers:

i) for remittance to foreign supplies as advance payments.

 ii) Paying the foreign supplies in compliance of their undertaking under the letter of credit.

iii) discounting on purchasing except documents.

iv) advances against shipping documents.

Authorized dealers can open a letter of credit (LIC) to facilitate imports, subject to following regulations:

a) Letters of credit may be opened by banks only on behalf of their customers who maintain account with then.

 b) LIC should be opened in favour of overseas suppliers of shipper of goods.

 c) Application for L/C must be accompanied by sale contract and other documentary evidence relating to the order and its confirmation and import license, if any.

Authorized dealers have been permitted to sell foreign currencies for making payment towards imports into India. For this purpose, importers have to submit an application in form A giving the necessary details including classification of goods based on Harmonized system. It is also obligatory on the part of an importer to submit exchange control copy of customs bill of entry to the authorized dealer through whom the relative remittance was made as evidence that the relative goods for which the payment was made have actually been , imported into India within three months from the date of remittance.

Currency of Payment: According to exchange control regulations, payment for imports should be made in a currency appropriate to the country or through an account appropriate to the country of origin of goods irrespective of the country from where they are shipped or supplied. RBI has given a list of permitted currencies and approved methods of payment for imports in Exchange Control Manual for guidance of importers.

Time limit for settlement of imports bills: Time limit for settlement of import bill is 6 months from the date of shipment, but authorized dealers can settle without reference to RBI even if the period of six months has expired, provided the AD is satisfied about the bonafides of the circumstances.

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