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Supply in india but payment received in us dollar

Jane (Export) (48 Points)

09 April 2015

Dear Sir/madam,

We received an advance payment of USD 1000 from one of our client located at USA. They asked us to supply material in two parts in two locations. $600 value of material to be supplied to South Africa and $ 400 value of material in India.

South Africa distribution is OK no issue.

But how we supply products in India against Foreign Currency payment receipt.

Is any regulatory issue? If the law allows, which currency we have to use for India transaction?

How we manage the BRC (Bank Realization Certificate) for the Domestic supply?

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1 Replies

RAMESH KUMAR VERMA (Advocate ) (5965 Points)
Replied 09 April 2015

Refer to Foreign Trade Policy 2015-2020 Para 2.52

Denomination of Export Contracts
(a) All export contracts and invoices shall be denominated either in freely convertible currency or Indian rupees but export proceeds shall be realized in freely convertible currency.

(b) However, export proceeds against specific exports may also be realized in rupees, provided it is through a freely convertible Vostro account of a non resident bank situated in any country other than a member country of Asian Clearing Union (ACU) or Nepal or Bhutan. Additionally, rupee payment through Vostro account must be against payment in free foreign currency by buyer in his non-resident bank account. Free foreign exchange remitted by buyer to his non-resident bank (after deducting bank service charges)on account of this transaction would be taken as export realization under export promotion schemes of FTP.
(c) Contracts (for which payments are received through Asian Clearing Union (ACU) shall be denominated in ACU Dollar. Central Government may relax provisions of this paragraph in appropriate cases. Export contracts and invoices can be denominated in Indian rupees against EXIM Bank/Government of India line of credit.