The Reserve Bank of India (the "RBI") has introduced the Foreign Exchange Management (Export of Goods and Services) (Amendment) Regulations, 2021 (the "Amendment Regulations") through a notification1 dated January 08, 2021, and amended the Foreign Exchange Management (Export of Goods and Services) Regulations, 2015 (the "Principal Regulations"). The RBI aims to introduce certain exemptions related to the aviation sector through the Amendment Regulations by substituting the erstwhile Regulation 4(ea) of the Principal Regulations.
2. KEY CHANGE
The Amendment Regulations have substituted the erstwhile Regulation 4(ea) of the Principal Regulations by including the newly inserted Regulation 4(ea) which is as follows:
"(ea) re-export of leased aircraft/ helicopter and/or engines/auxiliary power units (APUs), either completely or in partially knocked down condition re-possessed by overseas lessor and duly de-registered by the Directorate General of Civil Aviation (DGCA) on the request of Irrevocable Deregistration and Export Request Authorisation (IDERA) holder under 'Cape Town Convention' or any other termination or cancellation of the lease agreement between the lessor and lessee subject to permission by DGCA/Ministry of Civil Aviation for such export/s."
Principal Regulation 4(e) provides that the export of aircraft, aircraft engines, spare parts for overhauling and any repairs undertaken in a territory outside India, are exempted from the requirement of declaring the export which is subject to re-import into India within a span of 6 (six) months from the date of their export, by the exporter. The Amendment Regulations now provide additional exemptions to the exporter from furnishing the declaration as required under the Principal Regulations, subject to fulfilment of certain conditions such as furnishing declaration of exports in case of re-export of the leased aircraft/ helicopter/ aircraft engines/ auxiliary power units to the overseas lessor.
The Amendment Regulations seem to have been issued as per the additional measures2 which are being taken by the RBI to facilitate external trade by improving ease of doing business, minimize procedural delays for exporters (especially in the light of the turbulent year due to COVID-19), and to revive growth.
3. INDUSLAW VIEW
The Amendment Regulations have now provided the required clarity that the export of leased aircraft and aircraft parts are now permitted in case such aircraft and aircraft parts are in a complete or partially knocked down condition. This will essentially help the export of helicopters in India which are imported in a knocked down condition, and thus reduce the total cost of purchase, which will ultimately enable the aviation sector in India to grow even further. The Amendment Regulations can also be seen as a measure to mitigate the impact caused by COVID-19 and to enable and promote ease of doing business in India.
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