Merchanting Trade Transactions under FEMA

When an Indian transactions goods from one foreign country to another foreign country it is known as Merchanting transactions.

  1. What are the conditions that are required to be fulfilled for Merchanting trade transactions?
  2. The supplier of goods will be resident in one foreign country;
  3. The buyer of goods will be resident in another foreign country;
  • The merchant or the intermediary will be residents in India.
  1. What are the important guidelines that should be kept in mind while performing Merchanting Trade Transactions?
  1. Goods acquired shall not enter the Domestic Tariff Area.
  2. The state of goods should not undergo any transformation or any change.
  • The AD bank should be satisfied with the bonafide of the transactions. Further, KYC and AML guidelines should be kept in mind while handling such Merchanting Trade Transactions.
  1. The Merchanting Trading Transactions shall be undertaken for the goods that are allowed for exports/imports under the prevailing Foreign Trade Policy (FTP) of India.
  2. The entire Merchanting trading transactions shall be finished within an overall period of nine months and there shall not be any outlay of foreign exchange beyond four months.

Read Also:-  Investment by an Indian Outside Resident  |  How to INVESTMENT in India

Our Corporate Professional Team is ever willing to provide assistance on any Legal issue concerning GST, Insolvency and Bankruptcy LawBusiness Model Advisory in India and Abroad, Customs Law, Corporate & Commercial Advisory, IPRs. Secretarial Compliances, Agreement Drafting & Negotiations, etc. you may write us at

Related Posts


We, the LegalLands LLP , are a family of exceptional professionals with expertise in the fields of law, taxation, business administration, consultation services, etc. We understand your problems and work to the best of our abilities, tailoring our knowledge and expertise to your specific interests and needs, to arrive at the best suitable solutions to your problems. Our aims are to cater to your needs rather than viewing these needs as opportunities to enrich ourselves at your cost!
We look forward to many more engagements with you which keep adding value to your lives.
Together and onwards we march on toward new milestones in our illustrious journey.


Managing Partner

Legallands LLP