What changed
Previously, SEZ units had no time limit for realizing and repatriating export proceeds (since 2003). Now, RBI has mandated a 12-month deadline from the date of export for full value repatriation. Any extension beyond this period requires RBI approval on a case-by-case basis.
What it means for you
Banks must update their monitoring systems to track SEZ export realization timelines and flag any overdue beyond 12 months. This aligns SEZ units with the general export realization period, reducing the earlier flexibility. Lenders should advise SEZ clients to adjust their cash flow and compliance processes accordingly.
What you must do
- Inform all SEZ exporter customers about the new 12-month repatriation deadline immediately.
- Update internal systems to track export realization dates for SEZ units and generate alerts for approaching deadlines.
- Advise clients to apply for RBI extension well before the 12-month period ends if delays are anticipated.
- Review existing SEZ export documentation to ensure compliance with the revised FEMA regulations.
Who it affects
All Category-I Authorised Dealer Banks, Units located in Special Economic Zones (SEZs), Exporters of goods, software, and services from SEZs
Does this circular apply to all exports from SEZs?
Yes, it applies to all exports of goods, software, and services made by units in SEZs. The full value must be realized and repatriated to India within 12 months from the date of export.
What happens if an SEZ unit cannot meet the 12-month deadline?
The unit must apply to the Reserve Bank of India for an extension. RBI will consider such requests on a case-to-case basis. Banks should guide clients to apply well in advance.
Is this change permanent?
The circular states the change is effective immediately and valid for one year, subject to review. Banks and SEZ units should stay alert for any further updates after the review period.