India has relaxed its requirement for importers to put up bank guarantees or letters of credit (L/Cs) if they make advance payments for foreign goods or services. Now it appears that Indian buyers can make advance remittances of up to US$100,000 for imported goods.

The move is part of the Reserve Bank of India's (RBI's) plan to liberalise procedures for importers and imported goods.

Ceiling raised

Earlier this year the bank said it would loosen restrictions on importers making advance remittances provided they submit documentary evidence if the value of foreign exchange remitted or paid for an import into India exceeds US$25,000 or its equivalent.

Now the bank has now issued amendments to its notification in June stating that it will raise the ceiling under which guarantees are required for advance remittances from US$25,000 to US$100,000 or its equivalent for all imports.

Larger imports

Importers should still as a rule obtain a guarantee against the counter guarantee of an international bank of repute outside India for transactions in excess of US$100,000.

But according to RBI's June notification, it may be possible for authorised importers to make advance remittances of up to US$1 million without a standby L/C or a bank guarantee provided they are unable to obtain a guarantee from an overseas supplier and the bank's board of directors agrees to waive the guarantee requirements.

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