What changed
Previously, AD Category-I banks could permit advance remittances up to USD 1 million without bank guarantee for imports. This circular raises that limit to USD 50 million specifically for scheduled airlines importing aircraft, helicopters, or aviation-related items, and removes the need for a bank guarantee or standby letter of credit.
What it means for you
This sector-specific liberalisation significantly eases cash flow for scheduled airlines by allowing larger advance payments to manufacturers without collateral. Banks must apply commercial judgment, conduct KYC/due diligence on both importer and overseas supplier, and ensure compliance with DGCA and Ministry of Civil Aviation approvals. The change reduces working capital strain for airlines but increases credit risk for banks, which must frame board-approved internal guidelines.
What you must do
- Verify that the airline importer holds a scheduled air transport service permit from DGCA.
- Conduct thorough KYC and due diligence on both the Indian importer and the overseas manufacturer.
- Ensure advance remittances are made directly to the manufacturer's account per the sale contract.
- Frame internal guidelines with board approval for handling such transactions.
- Confirm that physical import occurs within six months (three years for capital goods) and obtain an undertaking for documentary evidence within 15 days of the period end.
Who it affects
AD Category-I banks handling aviation import remittances, Scheduled airline companies importing aircraft, helicopters, or aviation-related goods, Overseas aircraft/helicopter manufacturers and suppliers
What is the new advance remittance limit for aircraft imports?
Scheduled airlines can now make advance remittances up to USD 50 million without a bank guarantee or standby letter of credit, per this circular.
What conditions must banks ensure before processing such remittances?
Banks must verify the airline's DGCA permit, conduct KYC/due diligence on both parties, ensure payment goes directly to the manufacturer, and confirm import timelines (6 months general, 3 years for capital goods).
Does this circular apply to all importers or only airlines?
It applies only to scheduled airlines permitted by DGCA for direct import of aircraft, helicopters, or aviation-related purchases. Other importers remain under the general USD 1 million limit.