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Last updated: 09 Jul, 2024  

FDI.9.Thmb.jpg Flexible forex rules for exporters

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Bikky Khosla | 09 Jul, 2024

The Reserve Bank of India (RBI) last week came out with a draft of Foreign Exchange Management (Export and Import of Goods and Services) Act Regulations, 2024 in which it proposes to rationalize regulations that cover export-import transactions. The aim is to promote ease of doing business, especially for small exporters and importers. Also, the proposed measures are intended to enable authorized dealer banks to provide efficient service to their foreign exchange customers.

Exporters, for quite some time now, have been of the view that the age-old mechanism of caution listing – the system of placing exporters who fail to bring in foreign exchange payments for exports in time on a 'caution list' –needs to be examined. Once a firm is caution-listed, then it can make the shipments against full advance payment or letter of credit. Now, the proposed guidelines want to change this, by allowing the flexibility that an exporter may escape the caution list if he can show that the delayed payments are still being pursued.

No doubt, this is good news for our small exporters. A shipping bill may remain open due to a variety of genuine reasons, and therefore exporters should be given an opportunity of hearing before inclusion in the caution-list. Prior to 2020, automatic caution listing had been done but it was discontinued later to give relief to the pandemic-hit exporters, and now the proposed guidelines, if implemented, would further ease the process.

Meanwhile, in another positive development, India’s services sector quickened its growth in June from May’s five-month low. According to an HSBC survey, there is record rise in export orders and this, along with stronger rise in new orders, has helped the sector to show this robust performance. It is also encouraging that at a time when the government is eying $800 billion target for goods and services exports combined, the survey signal to a positive outlook as well.

I invite your opinions.

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