Rupee Trade Credit Policy Update: Importers Can Raise INR Credit for Imports, Excluding Gold, Under FEMA 1999.

The circular addresses Authorized Dealer Category - I banks regarding the Rupee (INR) denominated trade credit policy for importers in India. It allows resident importers to raise trade credit in INR for importing permissible items, excluding gold, under the Foreign Trade Policy. The credit period for non-capital goods is up to one year, and for capital goods, up to five years. Banks can permit trade credit up to USD 20 million per transaction and provide guarantees for up to three years. Overseas lenders can hedge their exposure in INR through derivatives. The circular is issued under the Foreign Exchange Management Act, 1999.

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