The Reserve Bank of India today released the revised guidelines on Merchanting Trade Transactions. The earlier guidelines on the subject were issued in 2003. Merchanting or Intermediary Trade involves purchase of goods by Indian residents from non-residents and then reselling them to another non-resident directly without the goods touching the Indian ports. Although the merchanting trade transactions do not contribute to the exports from India, they result in net foreign exchange inflows. The Technical Committee on Services / Facilities to exporters (Chairman: Shri G. Padmanabhan) in its report (May 2013) recommended that the procedure be simplified.

Under the revised guidelines, total period of merchanting trade has been extended from six months to nine months and short term financing for both export and import leg has been enabled. Half yearly reporting of outstanding merchanting trade by AD Banks has also been prescribed to ensure better monitoring.

Ajit Prasad

Assistant General Manager

Merchanting trade guidelines: revised period extended and short term financing enabled with enhanced AD bank reporting requirements. The revised guidelines define merchanting trade as resident purchase from non residents and resale to another non resident without goods entering domestic ports, note that such trade yields net foreign exchange inflows, extend the permissible merchanting trade period, enable short term financing for both export and import legs, and require Authorized Dealer banks to report outstanding merchanting trade half yearly for improved monitoring.