What are the objectives of exchange control? Discuss the foreign exchange regulation concerning exports.

 The objectives of the exchange control are as follows:

* to prevent flight of capital

* to ensure the availability of sufficient foreign exchange for specific purposes such as meeting the intemational commitments

* to stabilise the external value of the domestic currency, and

* to insulate the economy from external economic pressures.

Foreign exchange regulation concerning exports

Exports are the reasons for earning huge amount of foreign exchange for any country. With earning foreign exchange, exports need to be checked and regulate for the regular earning. In India, the amended

FERA, 1993 allows import and export of gold and silver under the provisions of exports - import policy of the Government of India. The bringing in or taking out of personal jewellery by travellers would be regulated by customs: Act and Baggage rules. Import and. export of any Indian, currency or foreign exchange is prohibited except with the general or special permission of the Reserve Bank.

The important provisions include declaration of exports on prescribed forms, realisation of export proceeds in permitted methods, currencies prescribed period and prescribed manner. However, the provisions are discussed as follows:

Prohibition of Export

Export of all goods either directly or indirectly to any place outside India other than Nepal and Bhutan is prohibited unless the exporter furnishes to the authority a declaration in the prescribed form. It should be supported by such evidences as may be prescribed or so specified and true in all material particulars.

The prohibition shall not apply to the export of:

(1) Trade samples supplied free of payment.

(2) Personal effects of travellers, whether accompanied or unaccompanied.

(3) Ship's store, trans-shipment cargo and goods shipped under the orders of the Central Government in this behalf of or the military, naval or air force authorities in India for military, naval or air force requirements.

(4) Goods dispatched by air freight and accompanied by a declaration by the sender that they are more than ten thousand rupees in value and that dispatch does not involve any transaction in foreign exchange.

(5) Goods dispatched by air freight and covered by a certificate issued by an authorised dealer that their export does not involve any transaction in foreign exchange.

(6) Goods export of which in the opinion of Reserve Bank does not involve any transaction in foreign exchange.

Export Declaration

Every exporter must make a true declaration in the prescribed form. The declaration is mandatory and includes:

(1) the full export value of the goods; or

(2) if the full export value of the goods is not ascertainable at the time of export, the value which the exporter, having regard to the prevailing market conditions, expects to receive on the sale of goods in the overseas market.

The declaration should be supported by an affirmation by the exporters to realise the required export proceeds. Exporters affirmation has been mandatory made that the full export value declared is the same as contracted with the foreign importer. Any other invoicing or over-invoicing may attract penal provisions under the FERA act.

Permitted Methods

Export payment must be received in a currency appropriate to the country of final place of destination of the goods as declared on GR, etc. forms. Reserve Bank has granted permission for receiving payments for exports directly by exporters from their buyers.in. certain conditions. Authorised dealers should receive remittances from foreign countries (other than Nepal and Bhutan) or obtain reimbursement from their branches and correspondents in these countries against payments due for exports from India.

Permitted Currencies

The payment in foreign trade may be received or made in a foreign currency which is freely convertible. A freely convertible currency is permitted by the rules and regulations of the country concerned to be converted into major reserve currencies like US Dollar, Pound Sterling and for which a fairly active market exists for dealings against the major currencies. Authorised dealer may maintain balances and positions in any permitted currency and also in European Currency Unit (ECU) of the European Monetary System.

Prescribed Period

The amount representing the full export value of the goods exported shall be realised and be paid to the authorised dealer when it is due. The amount should be realised either on the due date for the payment or within six months from the date of shipment of the goods whichever is earlier. The period is extended to fifteen months where the goods are exported to a warehouse established outside India with the permission of the Reserve Bank. For exports to CIS countries and other East European countries Reserve Bank may permit realisation period upto 12 months. The Reserve Bank may extend the period of six months/twelve months or fifteen months if sufficient and reasonable causes are shown by the exporters.

Prescribed Manner

The manner in which the export proceeds are to’be realised include:

(1) Payment should be received through an authorised dealer except in cases where general specific permission has been granted by Reserve Bank to receive the payment directly.

(2) Payment should be received in permitted currency.

(3) Payment should be received as per approved methods of payment.

Authorised dealers maintained with correspondent banks in the other participants case for imports into India from any of the ACU countries (except Nepal).

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