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

Meera Textiles Pvt. Ltd. exported goods worth USD 50,000 to a buyer in Germany. Under the FEMA regime, what is the general obligation of the exporter regarding the export proceeds?

An exporter must realise and repatriate the full export value of goods or services to India within the period prescribed under FEMA regulations, generally nine months from the date of export. The obligation applies irrespective of profit or any relationship with the buyer.

  1. ARetain the proceeds abroad indefinitely as the exporter may choose
  2. BRealise and repatriate the full export value to India within the prescribed periodCorrect
  3. CRepatriate only the profit element of the export value
  4. DRepatriate proceeds only if the buyer is a related party

Explanation

FEMA requires an exporter to furnish export declarations and to realise and repatriate the full export value to India within the period prescribed (generally nine months from the date of export). Retaining the proceeds abroad or repatriating only profit is not permitted. Relationship with the buyer is irrelevant to the obligation.

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