Export to Nepal

[BRIJMOHAN GOYAL]

Dear All,

We are executing Hydro Power plant contract in Nepal, order is received against bidding and funding by Joint venture of Govt of Nepal and Govt of India. All payment will be received against supply in INR.

We want confirmation for :-

(1) As a manufacturer , Is Advance Authorisation under Physical Export allowed for Import of Raw material & components for manufacturing of Power Plant equipment ?

(2) If allowed , Documents required for EODC,

In this case , we will fulfill value addition condition but payment is only in INR.

Regards,

BM Goyal

[Spudarjunan S]

Dear Sir,

Q.1 - Reply: Available as there is no explicit restriction.

Q.2 - Reply: Receipt of payment in INR from Nepal allowed. Basis for such opinion provided below:-

In terms of RBI master circular no.14/2015-16 dated July 2015, all transactions between a person resident in India and a person resident in Nepal can be settled in INR provided if such person from Nepal has been permitted by Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism.

Link to the circular :- https://www.rbi.org.in/Scripts/BS_ViewMasterCirculars.aspx?Id=9890&Mode=0

So in my opinion you can export goods to Nepal by settling the transaction in INR.

[YAGAY andSUN]

Master Circulars are now outdated, please refer Master Directions instead.

RBI/FED/2015-16/11 FED Master Direction No. 16/2015-16 updated till Jan' 2018

https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=10395

[BRIJMOHAN GOYAL]

Sir,

Thanks for valuable suggestion for Export to Nepal, In our case The Customer/Govt of Nepal will make payment in INR through their bank to our Account , to be opened in Nepal . Hence , there is no involvement of Free Foreign currency.

Under this situation, Import under AA is permitted for Raw Material and components required for Export product.

Regards,

BM Goyal

AI Summary

Settlement in INR for exports to Nepal permitted, enabling Advance Authorisation use for raw material imports. Advance Authorisation for import of raw materials and components for supply to Nepal is available as there is no explicit restriction; RBI guidance permits settlement of transactions between Indian and Nepalese residents in INR if the Nepalese party has Nepal Rastra Bank permission, with payments routed through the ACU mechanism, and Master Directions replace earlier master circulars. Receipt of INR for export supplies to Nepal is acceptable, and where value-addition conditions are fulfilled, imports under Advance Authorisation for manufacture of the export product are permissible.