The Reserve Bank of India (RBI) has clarified the conditions under which Export Declaration Form (EDF) waiver may be granted for exports of goods made free of cost by eligible exporters. The clarification, issued through A.P. (DIR Series) Circular No. 53 dated 3 March 2016, aligns banking procedures with the prevailing Foreign Trade Policy framework.
Background of the EDF / GR Waiver Facility
Under the foreign exchange regulatory framework, exporters are generally required to submit export declarations (earlier GR forms, now EDF) evidencing receipt of export proceeds. Recognising export promotion requirements, RBI had earlier enabled a GR/EDF waiver for exports undertaken free of cost, subject to specified limits.
This facility was originally introduced through A.P. (DIR Series) Circular No. 94 dated 26 April 2003 and was later extended to Status Holder exporters under the Handbook of Procedures, Vol. I of the Foreign Trade Policy 2004-2009.
Free-of-Cost Exports by Status Holders – Original Norm
As per the earlier framework, Status Holders were permitted to export freely exportable goods free of cost for export promotion purposes, subject to an annual ceiling of:
- ₹10 lakh, or
- 2% of the average annual export realisation of the preceding three licensing years,
whichever was higher.
Authorised Dealer (AD) Category-I banks were permitted to grant EDF waiver based on this threshold.
Revised Annual Limit Notified by Government of India
The Government of India, through Notification No. 9/2015-2020 dated 4 June 2015, revised the above limit applicable to Status Holders. Under the revised norm:
- Status Holders are entitled to export freely exportable items on a free-of-cost basis,
- Subject to an annual limit of ₹10 lakh or 2% of the average annual export realisation of the preceding three licensing years,
- Whichever is lower.
This change effectively tightens the permissible ceiling for free-of-cost exports undertaken for promotional purposes.
RBI Direction to Authorised Dealer Banks
In light of the revised Foreign Trade Policy provision, the RBI has advised AD Category-I banks to:
- Consider and process requests from Status Holder exporters for EDF waiver,
- Ensure that such waiver is granted strictly in accordance with the revised annual limit, i.e., ₹10 lakh or 2% of average export realisation of the preceding three licensing years, whichever is lower.
Banks are also required to bring the contents of this circular to the notice of their exporter constituents.
Legal Authority and Regulatory Basis
The directions contained in the circular have been issued by the Reserve Bank of India under:
- Section 10(4) and
- Section 11(1)
of the Foreign Exchange Management Act, 1999 (FEMA).
The clarification is issued without prejudice to any other approvals or permissions that may be required under applicable laws.
Key Takeaways for Exporters and Banks
- EDF waiver for free-of-cost exports remains available only to Status Holders.
- The revised ceiling is restrictive, based on the lower of ₹10 lakh or 2% of past export realisations.
- AD banks must verify eligibility and compliance before granting the waiver.
The facility is intended strictly for export promotion, not for routine commercial exports.
RBI/2015-16/332
A.P. (DIR Series) Circular No.53
March 03, 2016
To, All Category – I Authorised Dealer Banks
Grant of EDF Waiver for Export of Goods Free of Cost
Attention of Authorised Dealers is invited to A.P. (DIR Series) Circular No. 94 dated April 26, 2003 in terms of which GR waiver to exporters for export of goods free of cost had been enabled. The facility had been extended to the Status Holders vide para 2.52.1 of Handbook of Procedures- Vol-I of Foreign Trade Policy 2004-2009, in terms of which Status Holders shall be entitled to export freely exportable items on free of cost basis for export promotion subject to an annual limit of Rs 10 lakh or 2% of average annual export realization during preceding three licensing years, whichever is higher.
2. Government of India vide amendment Notification No. 9/2015-2020 dated June 4, 2015, has notified that the Status Holders shall be entitled to export freely exportable items on free of cost basis for export promotion subject to an annual limit of Rs 10 lakh or 2% of average annual export realization during preceding three licensing years whichever is lower. AD Category – I banks may, therefore, consider requests from Status Holder exporters for grant of Export Declaration Form (EDF) waiver, for export of goods free of cost based on the revised norm.
3. Authorised Dealers may bring the contents of this circular to the notice of their constituents concerned.
4. The directions contained in this circular have been issued under Section 10(4) and Section 11(1) of the FEMA, 1999 (42 of 1999) and are without prejudice to permissions/ approvals, if any, required under any other law.