RBI Proposes Revised FEMA Regulations to Streamline Export and Import Transactions
In a significant move to simplify cross-border trade processes, the Reserve Bank of India (RBI) has released revised draft regulations concerning export and import transactions under the Foreign Exchange Management Act (FEMA), 1999. The central bank aims to consolidate various directions into a unified framework, thereby enhancing ease of doing business for exporters and importers in India.
Key Highlights of the Draft Regulations:
- Export Proceeds Realisation Norms Tightened
One of the key proposals targets long-outstanding export proceeds. According to the draft:
- If an exporter’s unrealised export proceeds exceed ₹25 crore and remain unpaid for more than two years from the due date,
- The exporter will be allowed to make further exports only against full advance payment or an irrevocable letter of credit.
This measure is intended to ensure timely repatriation of export earnings and mitigate the risk of non-realisation.
- Stricter Norms on Import of Gold and Silver
The draft regulations propose a ban on advance remittances for the import of gold and silver:
- Authorised dealers (ADs) will not be permitted to process advance payments for such imports, aiming to strengthen monitoring and control of precious metal transactions.
- Unified Compliance Framework
The RBI has emphasized the importance of consolidating all instructions to Authorised Dealers (ADs) in one comprehensive document:
- This includes detailed processes for handling export and import-related transactions.
- Previously, these instructions were issued as separate guidelines, leading to operational challenges.
Background and Stakeholder Engagement
The initial draft was issued in July 2024, and the current version has been revised based on public feedback and consultations with stakeholders. The RBI has now invited further comments and feedback from the public and trade participants until 30th April 2025.
Objective: Ease of Doing Business
The overarching goal of these changes is to:
- Enhance transparency,
- Promote regulatory clarity,
- And simplify procedures for trade under FEMA.