Forward Contracts for the Customs Duty Component of Imports – RBI directions
The RBI has proposed to liberalise the procedure and provide greater flexibility to hedge the economic (currency indexed) exposure of importers in respect of customs duty payable on imports. Accordingly, importers will henceforth be permitted to book forward contract for the customs duty component of the import. These contracts shall be held till maturity and cash settlement would be made on the maturity date by cancellation of the contracts. Forward contracts covering such transactions once cancelled are not eligible for rebooking. However, in case of changes in the rate of customs duties, due to Government Notifications, importers may be allowed to cancel and/or rebook the forward contracts before maturities.
CIRCULAR NO. 21/RBI., Dated: December 13, 2006