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of <h1>Merchanting Trade Transactions: compliance, AD bank due diligence, time limits, FX rules, payment and reporting requirements prescribed</h1> Merchanting trade transactions (MTT) are prescribed to involve goods that do not enter the Domestic Tariff Area; limited transformation is permitted if documentary evidence establishes bonafides, and only goods permitted under the prevailing Foreign Trade Policy may be dealt with, with export- and import-leg compliance required (excluding EDF and Bill of Entry). Authorised Dealer (AD) banks must satisfy themselves on genuineness, KYC/AML, route entire MTT through one AD, verify transport and trade documents, and report defaults semi-annually; entire MTT must complete within nine months with no foreign-exchange outlay beyond four months. Short-term supplier/buyer credit and discounting are permitted (no LoU/LoC), receipts may be parked in EEFC/earmarked INR accounts, third-party payments are prohibited, agency commission largely disallowed, specified write-off conditions for unrealised export proceeds are provided, and reporting codes for FETERS are mandated.
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