What changed
Earlier, AD Category-I banks could permit advance remittance up to USD 1 million without bank guarantee for imports. Now, for rough diamonds from six specified mining companies (including Diamond Trading Co., Rio Tinto, BHP Billiton, Endiama, Alrosa, Gokharan), there is no limit on advance remittance without bank guarantee or standby LC for private importers. Public sector entities still need a Ministry of Finance waiver for advances of USD 100,000 or more.
What it means for you
Banks can now process larger advance payments for rough diamond imports without collateral, reducing transaction costs for the gems and jewellery sector. This facilitates faster procurement from major global suppliers, boosting India's diamond processing industry. However, banks must still conduct thorough KYC and due diligence on both importer and overseas supplier, and report any advance of USD 5 million or more to RBI half-yearly.
What you must do
- Verify the importer is a recognized rough diamond processor on the GJEPC-approved list with a good export track record.
- Ensure advance remittances are made directly to the beneficiary company's account per the sale contract, avoiding numbered accounts.
- Conduct KYC and due diligence on both the Indian importer and the overseas mining company.
- Follow up for submission of Bill of Entry or import documents within regulatory timelines.
- Report all advances of USD 5 million or more to RBI's Trade Division within 15 days after each half-year end (September and March).
Who it affects
AD Category-I banks handling import payments, Private sector rough diamond importers and processors, Gems and Jewellery Export Promotion Council (GJEPC), Public sector entities importing rough diamonds (subject to additional conditions)
Is there any limit on advance remittance for rough diamond imports under this circular?
For private sector importers buying from the six named mining companies, there is no upper limit. For public sector entities, advances of USD 100,000 or more require a specific waiver from the Ministry of Finance.
What reporting is required for large advance remittances?
AD Category-I banks must report all advances of USD 5 million or more to RBI's Trade Division on a half-yearly basis (as at end-September and end-March) within 15 calendar days after each half-year.
Can we process advance remittances for rough diamonds from any supplier?
No, the unlimited facility applies only to the six specified mining companies: Diamond Trading Co. (UK), Rio Tinto (UK), BHP Billiton (Australia), Endiama (Angola), Alrosa (Russia), and Gokharan (Russia). For other suppliers, the earlier USD 1 million cap with conditions may still apply.