The Supreme Court-appointed Special Investigation Team (SIT) to trace sources of black money and suggest remedial action has directed the Enforcement Directorate (ED) to take necessary action under FEMA against 788 companies for failure to comply with Reserve Bank of India's directives on repatriation of export realisation.
Of these, 216 companies have defaulted on repatriation of import proceeds before 1 March 2016 while 572 companies have defaulted since 1 March 2016.
Explorers have to bring in export proceeds of more than Rs100 crore pending for realisation for more than a year.
As per RBI regulations, all exporters have to bring foreign exchange into the country as export proceeds within one year of the date of exports. RBI maintains data on whether a particular exporter has brought export proceeds into the country.
Not bringing export proceeds is a violation of Foreign Exchange Management Act (FEMA) as it amounts to illicitly parking funds abroad.
Further, exporters can claim duty drawback on exports made with respect to taxes paid on inputs to exports. Any exporter can claim duty drawback only if the exporter has brought export proceeds into the country.
It is important for Directorate of Revenue Intelligence (DRI) also to have this data so that they could cross check the data and see if any exporter who has not brought in export proceeds has claimed duty drawback or not. The country thus loses on two counts – first by not getting proceeds of exports for exports made and second by wrongful claim of duty drawback.
The SIT had asked RBI to give details of exports made where exports proceeds were yet to be utilised even after a period of more than one year. In response, RBI provided data on export outstanding for shipping bills prior to 1 March 2014, which is pending for more than one year as well as data on export outstanding for shipping bills on or after 1 March 2014 pending for more than one year.
The data was reviewed at a meeting of the SIT held on 12 and 13 July 2016.
RBI may immediately develop an institutional mechanism and IT system to not only immediately red flag those cases where exports have been outstanding in violation of FEMA guidelines but share the complete data with Enforcement Directorate and Directorate of Revenue Intelligence on a monthly basis.