Merchanting Trade Transactions under FEMA
When an Indian transactions goods from one foreign country to another foreign country it is known as Merchanting transactions.
- What are the conditions that are required to be fulfilled for Merchanting trade transactions?
- The supplier of goods will be resident in one foreign country;
- The buyer of goods will be resident in another foreign country;
- The merchant or the intermediary will be residents in India.
- What are the important guidelines that should be kept in mind while performing Merchanting Trade Transactions?
- Goods acquired shall not enter the Domestic Tariff Area.
- 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.
- 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.
- 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.
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