This circular, A.P. DIR Series Circular No. 39, issued by the Reserve Bank of India (RBI/2015-16/287) on January 14, 2016, addresses project exports and deferred service exports, specifically Regulation 18 of Notification No. FEMA 23/2000-RB dated May 3, 2000, under the Foreign Exchange Management Act (FEMA).
The circular informs Authorized Dealer (AD) banks of revisions to the Memorandum of Instructions on Project and Service Exports (PEM). These revisions follow the Government of India's advice to rename the Overseas Construction Council of India (OCCI) as the Project Export Promotion Council (PEPC). It also clarifies that civil construction contracts may encompass turnkey engineering contracts, process and engineering consultancy services, and project construction items (excluding steel and cement).
AD banks and Exim Bank are authorized to consider awarding post-award approvals and subsequent changes within FEMA guidelines, removing the previous monetary limit of USD 100 Million and dispensing with the Working Group structure detailed in A.P. DIR Series Circular No. 11 dated July 22, 2014. Project and service exporters can approach AD banks or Exim Bank based on their commercial judgment.
The revised PEM is enclosed with the circular, and AD banks are instructed to inform their constituents of these changes. The directives are issued under Sections 10(4) and 11(1) of FEMA, 1999 (42 of 1999) and do not override other applicable laws.
A. K. Pandey, Chief General Manager, is the contact person at the Reserve Bank of India.
Key Entities Referenced
Reserve Bank of India: Central bank of India, the issuer of the circular.
Mumbai, Maharashtra: The city in which the Reserve Bank of India is located.
Foreign Exchange Management Act (FEMA), 1999: Indian legislation governing foreign exchange regulations.
Exim Bank: Export-Import Bank of India, involved in project exports.
ECGC: Export Credit Guarantee Corporation of India, related to export credit insurance.
Project Export Promotion Council (PEPC): Formerly known as OCCI, an organization for promoting project exports.
A.P. DIR Series Circular No. 39: A specific circular issued by the Reserve Bank of India regarding export of goods and services.
Memorandum of Instructions on Project and Service Exports (PEM): A document providing instructions and guidelines related to project and service exports.
RESERVE BANK OF INDIA
Mumbai - 400 001
RBI/2015-16/287 January 14, 2016
A.P. (DIR Series) Circular No. 39
To
All Category – I Authorised Dealer Banks
Madam/ Sir,
Export of Goods and Services – Project Exports
Attention of Authorised Dealers is invited to Regulation 18 of Notification No.
FEMA 23/2000-RB dated 3rd May 2000 viz. Foreign Exchange Management
(Export of Goods and Services) Regulations, 2000 in terms of which export of
goods or services on deferred payment terms or in execution of a turnkey
project or a civil construction contract requires prior approval of the approving
authority, which shall consider the proposal in accordance with the guidelines
issued by the Reserve Bank from time to time. Further, attention of Authorized
Dealers (AD) is also invited to A.P. (DIR Series) Circular No.11 dated July 22,
2014, in terms of which the structure of Working Group (consisting of
representatives from Exim Bank, ECGC & RBI), which has hitherto been
permitted to consider project exports and deferred service exports proposals
for contracts exceeding USD 100 Million in value has been dispensed with
and AD banks / Exim Bank have been permitted to consider awarding post-
award approvals without any monetary limit and permit subsequent changes
in the terms of post award approval within the relevant FEMA guidelines /
regulations. Project and service exporters may accordingly approach AD
banks / Exim Bank based on their commercial judgment.
2. As it has been advised by the Government of India that i) the ‘OCCI’ has
been renamed as ‘Project Export Promotion Council’ (PEPC) and ii) civilconstruction contracts may include turnkey engineering contracts, process
and engineering consultancy services and Project construction items
(excluding steel & Cement) along with civil construction contracts, it has been
decided to make the necessary changes in Memorandum of Instructions on
Project and Service Exports (PEM) accordingly.
3. The revised Memorandum of Instructions on Project and Service Exports
(PEM) is enclosed.
4. Authorized Dealers may bring the revision in the Memorandum to the notice
of their constituents concerned.
5. The directions contained in this circular have been issued under section
10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42
of 1999) and are without prejudice to permissions / approvals, if any, required
under any other law.
Yours faithfully,
(A. K. Pandey)
Chief General Manager
Encl.: Revised PEM