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November 2013

A. P. (DIR Series) Circular No. 53 dated 24th September, 2013

By Gaurang Gandhi, Chartered Accountant
Reading Time 1 mins
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Trade Credits for Import into India

Presently, companies in the infrastructure sector can, subject to certain terms and conditions, avail trade credit not exceeding INR1,237 million up to a maximum period of 5 years (from the date of shipment). However, the trade credit so availed must abinitio be contracted for a period not less than 15 months and should not be in the nature of shortterm roll overs.

This circular permits all companies in all sectors to avail trade credit not exceeding INR1,237 million up to a maximum period of 5 years for import of capital goods as classified by Director General of Foreign Trade (DGFT). Further the abinitio period of contract for availing the trade credit has been reduced from 15 months to 6 months. However, banks cannot issue Letters of Credit/Guarantees/Letter of Undertaking /Letter of Comfort in favour of overseas supplier, bank and financial institution for the extended period beyond three years.

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