More than 180 days of credit allowed or not under FEMA

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Sakshi (Querist)
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01 November 2021 If company X is selling a capital good to company y (wholly owned foreign subsidiary), then can X give a credit period of more than 180 days to Y under the FEMA Law?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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01 November 2021 Vide Notification No. FEMA 23(R)/(3)/2020-RB dated March 31, 2020 published in the Official Gazette of India, Extra Ordinary, Part III, Section 4 dated March 31, 2020; the period is nine months, which can be extended for a sufficient and reasonable cause.

Sakshi

Sakshi (Querist)
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02 November 2021 Thankyou Sir, but the notification says that it is applicable for the export made up to or on 31st July 2020. Is it applicable now?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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02 November 2021 I have not come across any further amendment in the said clause.
The latest amendment as on 10/09/2021 is as under.....

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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02 November 2021 Foreign Exchange Management (Export of Goods & Services) Regulations, 2015 (Amended upto September 10, 2021)

RESERVE BANK OF INDIA
FOREIGN EXCHANGE DEPARTMENT
CENTRAL OFFICE
MUMBAI 400 001

Notification No. FEMA 23(R)/2015-RB

January 12, 2016
(Amended upto September 10, 2021)
(Amended upto January 11, 2021)
(Amended upto March 31, 2020)
(Amended upto December 09, 2019)
(Amended upto June 23, 2017)

Foreign Exchange Management (Export of Goods & Services) Regulations, 2015

In exercise of the powers conferred by clause (a) of sub-section (1), sub-section (3) of Section 7 and sub-section (2) of Section 47 of the Foreign Exchange Management Act, 1999 (42 of 1999) and in supersession of its Notification No.FEMA.23/2000-RB dated May 3, 2000 as amended from time to time, Reserve Bank of India makes the following Regulations in respect of Export of Goods and Services from India, namely:
..........

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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02 November 2021 9. Period within which export value of goods/software/ services to be realised:-

(1) The amount representing the full export value of goods / software/ services exported shall be realised and repatriated to India within nine months or within such period as may be specified by the Reserve Bank, in consultation with the Government, from time to time, from the date of export, provided

(a) that where the goods are exported to a warehouse established outside India with the permission of the Reserve Bank, the amount representing the full export value of goods exported shall be paid to the authorised dealer as soon as it is realised and in any case within fifteen months or within such period as may be specified by the Reserve Bank, in consultation with the Government, from time to time from the date of shipment of goods;

(b) further that the Reserve Bank, or subject to the directions issued by that Bank in this behalf, the authorised dealer may, for a sufficient and reasonable cause shown, extend the said period.

(2) (a) Where the export of goods / software / services has been made by Units in Special Economic Zones (SEZ) / Status Holder exporter / Export Oriented Units (EOUs) and units in Electronics Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Bio-Technology Parks (BTPs) as defined in the Foreign Trade Policy in force, then notwithstanding anything contained in sub-regulation (1), the amount representing the full export value of goods or software shall be realised and repatriated to India within nine months or within such period as may be specified by the Reserve Bank, in consultation with the Government, from time to time, from the date of export.

Provided further that the Reserve Bank, or subject to the directions issued by the Bank in this behalf, the authorised dealer may, for a sufficient and reasonable cause shown, extend the said period.

(b) The Reserve Bank may for reasonable and sufficient cause direct that the said exporter/s shall cease to be governed by sub-regulation (2);

Provided that no such direction shall be given unless the unit has been given a reasonable opportunity to make a representation in the matter.

(c) On such direction, the said exporter/s shall be governed by the provisions of sub-regulation (1), until directed otherwise by the Reserve Bank.'

Explanation:

For the purpose of this regulation, the “date of export” in relation to the export of software in other than physical form, shall be deemed to be the date of invoice covering such export.

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