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

Sunrise Textiles Ltd, an Indian exporter, exports goods worth USD 50,000 to a buyer in Germany. Payment is due but the exporter delays realisation and repatriation of the export proceeds beyond the period specified. Under FEMA, 1999, what is the legal obligation of an exporter?

The exporter must declare the export particulars and take all reasonable steps to realise and repatriate the full export proceeds to India within the period specified by RBI. Buyer consent or the destination country does not relieve this obligation under FEMA.

  1. AThe exporter may keep the proceeds abroad indefinitely if the buyer agrees
  2. BThe exporter must furnish a declaration of the export and take all reasonable steps to realise and repatriate the export proceeds to India within the period specified by RBICorrect
  3. CRealisation is optional if the exports are made to a developed country
  4. DOnly the buyer, not the exporter, is liable under FEMA

Explanation

Section 7 of FEMA requires an exporter of goods to furnish to the RBI or authorised person a declaration containing the true and correct material particulars, including the amount representing the full export value. The exporter must also take all reasonable steps to realise and repatriate the proceeds within the prescribed period. Parties cannot waive this by agreement, and the destination country makes no difference.

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