CA Final · Integrated Business Solutions (Multidisciplinary Case Study with Strategic Management) · Corporate and Economic Laws

Case: Sapphire Exports Pvt Ltd (India) exported goods worth USD 200,000 on 1 April. The invoice is payable within the period permitted under FEMA export regulations. The buyer has not paid by the due date, and Sapphire also wants to set off the export receivable against an import payable to the same overseas party. Which statement best follows FEMA export regulations?

Export proceeds must be realised and repatriated to India within the period prescribed under FEMA and RBI directions, and set-off against import payables is permitted only under specified conditions with proper reporting. Proceeds cannot be left abroad indefinitely, and a letter of credit does not remove the obligation to realise.

1. AExport proceeds must be realised and repatriated within the prescribed period from date of export, and any set-off of exports against imports is allowed only as per the permitted conditions and reporting under RBI directionsCorrect
2. BExport proceeds can be held abroad indefinitely if the buyer is a long-term client
3. CSet-off of export receivables against import payables is freely allowed with no conditions or reporting
4. DThe exporter need not realise proceeds if goods were exported under a letter of credit