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CA Intermediate · Corporate and Other Laws · The Foreign Exchange Management Act, 1999

Meera Textiles, a resident firm, holds an export bill for goods shipped to a buyer in Dubai. A banker advises that the export proceeds must be realised and repatriated to India in accordance with FEMA. Which statement states the legal position correctly?

An exporter must furnish the required declaration and take all reasonable steps to realise and repatriate the full export value to India within the period and manner specified by the RBI. Private agreements with the buyer or self-set thresholds cannot override this statutory requirement.

  1. AEvery exporter must realise and repatriate full export value within the time and manner prescribed by the regulations, and the RBI may give directions on thisCorrect
  2. BExport proceeds may be kept abroad indefinitely if the buyer agrees in writing
  3. COnly exports above a threshold set by the exporter's own board need to be repatriated
  4. DRepatriation applies only to exports made to countries in the Asian Clearing Union

Explanation

FEMA requires an exporter to furnish a declaration and to take all reasonable steps to realise and repatriate the full export value to India within the period and in the manner specified by the RBI. A buyer's consent or a self-set threshold cannot override this. Option B is wrong because the period is fixed by regulation, not by private agreement.

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