QA Series No 28 - Imports Part 1

 

The Banking Tutor

Question Answer Series 2025

S No 28                                                                    25-07-2025

Imports – Part 1 

01. Who regulates Import Trade in India ? 

Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry, Department of Commerce, Government of India. 

02. What is the responsibility of AD I Banks related to Imports ? 

AD Category – I Banks should ensure that the imports into India are in conformity with the Foreign Trade Policy and FEMA (Current Account Transactions) Rules, 2000 and the Directions issued by RBI under FEMA 1999. 

03. What is the Time limit for Settlement of Import Payments ? 

Remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, etc. 

04. What are the norms for payment of interest in case of delay in settlement of import payments due to disputes ? 

Interest if any, on delayed payments, usance bills or overdue interest is payable only for a period of up to three years from the date of shipment. 

05. What is the time limit for settlement of Deferred Payment Arrangements ? 

Any deferred payment arrangements (including suppliers’ and buyers’ credit) entered into, for up to three years in case of import of capital goods and up to one year or the operating cycle whichever is less, in case of import of non-capital goods. 

06. Whether AD Bank can permit extension of time for settlement of import payments ? 

AD I banks can grant extension of time for settlement of import dues up to a period of six months at a time (maximum up to the period of three years) irrespective of the invoice value for delays on account of disputes about quantity or quality or non-fulfilment of terms of contract; financial difficulties and cases where importer has filed suit against the seller. 

07. What precautions are to be taken by AD I Bank while permitting extension of time for import payments ? 

a) AD has to ensure that the import transactions covered by the invoices are not under investigation by ED/CBI etc. 

b)  While considering extension beyond one year from the date of remittance the total outstanding of the importer does not exceed USD one million or 10 per cent of the average import remittances during the preceding two financial years, whichever is lower; and 

c) Where extension of time has been granted by the AD Banks, the date up to which extension has been granted may be indicated in the ‘Remarks’ column. 

08. What is the norms for import of Foreign Currency into India ? 

a) A person may send into India, without limit, foreign exchange in any form other than currency notes, bank notes and travellers cheques; 

b) A person may bring into India from any place outside India, without limit, foreign exchange (other than unissued notes), subject to the condition that such person makes, on arrival in India, a declaration to the Custom Authorities at the Airport in the Currency Declaration Form (CDF). 

09. What are the norms related to CDF in the context of import of currency ? 

Currency Declaration Form (CDF) is necessary where the aggregate value of the foreign exchange in the form of currency notes, bank notes or travellers cheques

brought in by such person at any one time exceed USD 10,000 (US Dollars ten thousand) or its equivalent and/or the aggregate value of foreign currency notes (cash portion) alone brought in by such person at any one time exceed USD 5,000 (US Dollars five thousand) or its equivalent. 

10. What are rules related to Import of Indian Currency and Currency Notes ? 

a) Any person resident in India who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank of India notes up to an amount not exceeding Rs.25,000 (Rupees twenty five thousand only). 

b) A person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank of India for any amount in denominations up to Rs.100/-. 

11. What are the guidelines related to Third Party Payment for Import Transactions? 

AD I banks are allowed to make payments to a third party for import of goods, subject to conditions as under: 

a) Firm irrevocable purchase order / tripartite agreement should be in place. However this requirement may not be insisted upon in case where documentary evidence for circumstances leading to third party payments / name of the third party being mentioned in the irrevocable order / invoice has been produced. 

b) The Invoice should contain a narration that the related payment has to be made to the (named) third party; 

c) Bill of Entry should mention the name of the shipper as also the narration that the related payment has to be made to the (named) third party. 

12. What are the guidelines for Advance Remittance for Import of Goods ? 

AD I Bank may allow advance remittance for import of goods without any ceiling subject to the following conditions: 

(a) If the amount of advance remittance exceeds USD 200,000 or its equivalent, an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute situated outside India or a guarantee of an AD Category – I bank in India, if such a guarantee is issued against the counter-guarantee of an international bank of repute situated outside India, is obtained. 

(b) In cases where the importer (other than a Public Sector Company or a Department/Undertaking of the Government of India/State Government/s) is unable to obtain bank guarantee from overseas suppliers and the AD I Bank is satisfied about the track record and bonafides of the importer, the requirement of the bank guarantee / standby Letter of Credit may not be insisted upon for advance remittances up to USD 5,000,000 (US Dollar five million). 

(c) A Public Sector Company or a Department/Undertaking of the Government of India / State Government/s which is not in a position to obtain a guarantee from an international bank of repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance, Government of India before making advance remittance exceeding USD 100,000. 

13. What are the guidelines related to Receipt of import documents by the importer directly from overseas suppliers ? 

Import bills and documents should be received from the banker of the supplier by the banker of the importer in India. AD I Bank should not, therefore, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: 

a)  Where the value of import bill does not exceed USD 300,000. 

b) Import bills received by wholly-owned Indian subsidiaries of foreign companies from their principals. 

c) Import bills received by Status Holder Exporters as defined in the Foreign Trade Policy, 100% Export Oriented Units / Units in Special Economic Zones, Public Sector Undertakings and Limited Companies. 

d) Import bills received by all limited companies viz. public limited, deemed public limited and private limited companies. 

14. What are the guidelines related to Receipt of import documents by the AD I Bank directly from overseas suppliers ? 

At the request of importer clients, AD I Bank may receive bills directly from the overseas supplier, provided the AD I Bank is fully satisfied about the financial standing/status and track record of the importer customer. 

Before extending the facility, the AD Category – I bank should obtain a report on each individual overseas supplier from the overseas banker or a reputed overseas credit agency. However, such credit report on the overseas supplier need not be obtained in cases where the invoice value does not exceed USD 300,000 provided the AD Category – I bank is satisfied about the bonafides of the transaction and track record of the importer constituent.

15. How to ensure that the Imported goods have reached India ? (Evidence of Imports in case of physical imports) 

In case of all imports, irrespective of the value of foreign exchange remitted / paid for import into India, it is obligatory on the part of the AD Category– I bank through which the relative remittance was made, to ensure that the importer submits:- 

(a) The importer shall submit BoE number, port code and date for marking evidence of import under IDPMS. 

(b) Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities, where import has been made by post, or Courier Bill of Entry as declared by the courier companies to the Customs Authorities in cases where goods have been imported through couriers, as evidence that the goods for which the payment was made have actually been imported into India. 

(b) For goods imported and stored in Free Trade Warehousing Zone (FTWZ) or SEZ Unit warehouses or Customs bonded warehouses, etc., the Exchange Control Copy of the Ex-Bond Bill of Entry or Bill of Entry issued by Customs Authorities by any other similar nomenclature the importer shall submit applicable BoE number, port code and date for marking evidence of import under IDPMS.  

(c) In respect of imports on Delivery against acceptance basis, AD I Bank shall verify the evidence of import from IDPMS at the time of effecting remittance of import bill. However, if importers fail to produce documentary  evidence due to genuine reasons such as non- arrival of consignment, delay in delivery/ customs clearance of consignment, etc., AD bank may, if satisfied with the genuineness of request, allow reasonable time, not exceeding three months from the date of remittance, to the importer to submit the evidence of import. 

AD banks are required to create Outward Remittance Message (ORM) for all such outward remittances irrespective of value and shall perform the subsequent activity viz document submission, outward remittance data, matching with ORM, closing of transactions etc. as per IDPMS guidelines.

16. What is IDPMS ? 

IDPMS stands for Import Data Processing and Monitoring System. It is an online system developed by the Reserve Bank of India (RBI) to track and monitor import transactions in India. The system ensures that import payments are made correctly and in accordance with regulations, and that the actual goods arrive in the country as per the records. 

17. What is ORM in the context of Imports ? 

In the context of import transactions in India, ORM stands for Outward Remittance Message. It's a message generated by banks to track and manage payments made by importers to their foreign suppliers. It plays a crucial role in the Import Data Processing and Monitoring System (IDPMS) by ensuring that these payments align with regulations and are properly documented. 

18. How ORMs are settled ? 

ORM messages are settled against Bill of Entry (BoE) details, which are the documents that signify the import of goods. 

19. What is Bill of Entry ? 

A Bill of Entry (BOE) is a is a legal document that is filled by importers or their customs house agent. The said document helps to pass through import customs clearance so that they can receive imported cargo. 

20. How to file BoE ? 

Importers typically file the BOE electronically through the ICEGATE portal, the official customs website. 

21. What is ICEGATE ? 

ICEGATE full form is Indian Customs and Central Excise Electronic Commerce/Electronic Data Interchange (EC/EDI) Gateway. It is essentially an online portal (aka ice gate portal)  caters to both cargo and trade carriers through e-filing services. It also serves the clientele of the country’s customs department. 

22. Can AD I Bank accept any other evidence in place of Bill of Entry ?                                                                                                                                

Yes. An AD Category – I bank in India may accept alternative import evidence instead of the Bill of Entry under certain conditions. AD I Bank may accept a certificate from the importer company's CEO or auditor subject to following  

a)  foreign exchange remittances of less than USD 1,000,000 or its equivalent. 

b)  Applicable only to companies listed on an Indian stock exchange with a net worth of at least Rs. 100 crore, public sector companies, government undertakings, and autonomous bodies audited by the Comptroller and Auditor General of India (CAG). 

23. What is evidence in case of Non Physical Imports ? 

Where imports are made in non-physical form, i.e., software or data through internet / datacom channels and drawings and designs through e-mail / fax, a certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer, may be obtained. 

24. What are the guidelines related to preservation of Evidence of Imports? 

Documents evidencing import into India should be preserved by AD I Bank for a period of one year from the date of their verification. However, in respect  of cases which are under investigation by investigating agencies, documents, and/or data, process may be destroyed only after obtaining clearance from the investigating agency concerned.

25. What is a Postal Appraisal Form ? 

A "postal appraisal form"  refers  to Postal Bill of Export (PBE) for commercial exports through the postal system. This form is required for commercial exports of goods via post, including e-commerce exports. It must be filed with supporting documents like invoices, packing lists, and proof of payment at a Foreign Post Office (FPO). The PBE is subject to customs examination, assessment, and clearance procedures. 

26. What is a Customs Assessment Certificate ? 

A Customs Assessment Certificate is a document issued by a customs authority, often after an assessment of imported or exported goods, that confirms the determination of customs duties and taxes. It signifies that the customs valuation and any applicable duties have been reviewed and finalized, either through self-assessment or by a customs officer. This certificate can be crucial for importers and exporters in various situations, such as claiming reimbursements or fulfilling regulatory requirements. 

Next Issue  will be shared on 27^rd     July 2025.

Sekhar Pariti

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