India - Myanmar Border Trade - No more Barter System
IN Circular No.8 dated May 17, 1997 read with Circular No. 17 dated October 16, 2000, it has been stipulated that the border trade between Myanmar and India may be settled through barter system. Further, in terms of Regulation 3 and 5 of the Notification No. FEMA 14/2000-RB dated May 3, 2000, the trade transactions with Myanmar may be settled in any permitted currency in addition to the Asian Clearing Union mechanism.
Barter trade was initially permitted to facilitate exchange of locally produced commodities along the Indo-Myanmar border. As such, these transactions were not captured in the banking system or reflected in the trade statistics. However, over a period of time the trade basket has diversified and adequate banking presence is in place to support normal trade with Myanmar.
RBI has therefore decided, in consultation with Government of India, to do away with the barter system of trade at the Indo-Myanmar border and switch over completely to normal trade with effect from December 1, 2015. Hence instructions contained in Circular No. 17 dated October 16, 2000, stand withdrawn.
Accordingly, all trade transactions with Myanmar, including those at the Indo-Myanmar border with effect from December 1, 2015 would be settled in any permitted currency in addition to the Asian Clearing Union mechanism.
AP (DIR Series) Circular No. 26/RBI., Dated: November 05, 2015