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

Sundaram Textiles Ltd., an Indian company, exports garments worth USD 50,000 to a buyer in Germany. The export proceeds are due, but the company wants to know the general FEMA position on realisation. Which statement reflects the correct position?

The exporter must realise the full export value and bring it into India within the period prescribed under FEMA regulations. Parties cannot agree to hold proceeds abroad indefinitely, and a small invoice value does not exempt the exporter from the repatriation requirement.

  1. AExport value must be realised and repatriated to India within the period prescribed under FEMA regulationsCorrect
  2. BExporter may keep proceeds abroad indefinitely if the buyer agrees
  3. CExport proceeds need not be repatriated if the amount is below USD 1 lakh
  4. DOnly the RBI may realise proceeds, never the exporter

Explanation

FEMA requires an exporter to realise the full export value and repatriate it to India within the prescribed period. There is no exemption for keeping proceeds abroad by mutual consent or merely because the amount is small. The exporter itself realises proceeds through authorised dealers.

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