FEMA - Import of Rough, Cut and Polished Diamonds
AS of now, Banks were permitted to approve Suppliers' and Buyers' Credit (Trade Credit), including the usance period of Letters of Credit for import of Rough, Cut and Polished Diamonds for a period not exceeding 90 days from the date of shipment.
Taking into consideration the representations received from the diamond importers and the GJEPC, it has been decided, in consultation with the Government of India, that the Clean Credit i.e. credit given by a foreign supplier to its Indian customer/buyer, without any Letter of Credit (Suppliers' Credit)/Letter of Undertaking (Buyers' Credit)/Fixed Deposits from any Indian financial institution for import of Rough, Cut and Polished Diamonds, may be permitted for a period not exceeding 180 days from the date of shipment. The revised directions will come into force with immediate effect.
The Circular further says that the directions have been issued under Section 10 (4) and Section 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.
Incidentally, only a week ago, the RBI had in Circular 151/RBI., Dated: June 30, 2014 [See DDT 2386 /01.07.2014] mentioned -
3. Reserve Bank of India has reviewed the policy relating to issue of instructions under Foreign Exchange Management Act, 1999 (FEMA), clarifying tax issues. It has now been decided that Reserve Bank of India will not issue any instructions under the FEMA, in this regard. It shall be mandatory on the part of Authorised Dealers to comply with the requirement of the tax laws, as applicable.
A P (DIR Series) CIRCULAR NO 02/RBI Dated: July 7, 2014