Foreign currency

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kartik_somu (Querist)

26 July 2011 We have received an order in foreign currency.

We will be delivering the goods to a place within india.
invoice will be raised to the foreign customer, but delivery will be made to a local customer as per arrangement.
payment will be received in foreign currency.

is it possible to make a sale like this?

Goods will not move out of india. pls quote circular/notification if applciable.

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)

26 July 2011 https://rbidocs.rbi.org.in/rdocs/Notification/PDFs/78381.pdf

kartik_somu

kartik_somu (Querist)

26 July 2011 sir,

but i don't find answer to my question in that...

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

25 July 2024 Yes, it is possible to conduct a sale transaction where you receive an order in foreign currency, deliver the goods within India to a local customer, and receive payment in foreign currency from the foreign customer. Here’s how such transactions typically work and the applicable regulations:

### Key Points to Consider:

1. **Invoice and Payment in Foreign Currency:**
- You can issue an invoice to your foreign customer in their currency (e.g., USD, EUR).
- The payment can be received in the same foreign currency into your designated foreign currency account maintained with an authorized dealer (typically an authorized bank).

2. **Goods Delivery Within India:**
- While the invoice is addressed to the foreign customer, the physical delivery of goods can be made to a local customer within India as per your arrangement.
- This scenario is permissible as long as the terms of the sale (price, terms of delivery, etc.) are agreed upon between you and your foreign customer.

3. **Regulatory Aspects:**
- **Foreign Exchange Management Act (FEMA)**: Under FEMA regulations, you are allowed to receive payments in foreign currency for export of goods or services from India. The goods, in this case, are not exported (since they remain within India), but the payment can still be received in foreign currency under certain conditions.
- **Authorized Dealer (AD):** You must ensure that the foreign currency payments are received through an authorized dealer bank in India, which can handle foreign exchange transactions.

4. **Circulars and Notifications:**
- While there isn’t a specific circular or notification that directly addresses this exact scenario (where goods do not physically leave India but payment is received in foreign currency), it is covered under the broader provisions of FEMA and related guidelines.
- You may refer to FEMA regulations and circulars issued by the Reserve Bank of India (RBI) for detailed guidance on foreign currency transactions.

### Practical Steps:

- Ensure that your invoice clearly states the foreign currency amount and includes all necessary details required for international transactions.
- Coordinate with your bank to set up a foreign currency account if you don’t already have one, and to handle the receipt of foreign currency payments.
- Maintain proper documentation of the transaction, including the foreign customer’s order, invoice, proof of delivery within India, and the receipt of foreign currency payment through an authorized dealer.

### Conclusion:

The scenario you described is feasible under Indian regulations, provided you comply with FEMA guidelines and handle foreign currency transactions through authorized channels. It’s recommended to consult with a professional advisor or your bank to ensure compliance with all applicable regulations and to handle the transaction smoothly.

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