What changed
Previously, refund of export proceeds required evidence that goods were re-imported into India due to poor quality. Now, AD Category-I banks can consider refund requests before re-import, provided the exporter gives an undertaking that re-import will happen within three months of remittance.
What it means for you
This liberalisation gives banks more flexibility to handle refunds for defective exports, reducing delays for exporters. Banks must tighten due diligence and documentation to prevent misuse, as refunds are now allowed without immediate re-import proof. The three-month re-import undertaking is a key compliance point.
What you must do
- Update internal procedures to allow refund requests without prior re-import evidence for poor-quality goods.
- Verify exporter track record and transaction bonafides before approving refunds.
- Obtain a DGFT/Customs certificate confirming no incentives availed or surrendered for the export.
- Get a written undertaking from the exporter that goods will be re-imported within three months of remittance.
- Ensure all normal import procedures are followed for the re-imported goods.
Who it affects
AD Category-I banks handling export proceeds, Exporters dealing with poor-quality goods re-imports, DGFT and Customs authorities for certificate issuance
Can we process refunds for any export, or only for poor-quality goods?
Only for goods exported from India and being re-imported into India on account of poor quality. Other reasons are not covered by this circular.
What if the exporter fails to re-import within three months?
The circular does not specify penalties, but banks must ensure the undertaking is enforced. Non-compliance may require reporting to RBI or DGFT.
Do we need to verify the DGFT certificate ourselves?
Yes, you must obtain and verify the certificate from DGFT or Customs that no incentives were availed or surrendered. This is a mandatory step before processing the refund.