Salient Features of from Master Circular on Export of Goods and Services RBI/2007-2008/25 Master Circular No/ 09 /2007-08 July 2, 2007

Salient Features of from Master Circular on Export of Goods and Services RBI/2007-2008/25 Master Circular No/ 09 /2007-08 July 2, 2007

The circular is organized into five parts as under:
Part 1 : Introduction
Part 2 : General guidelines for exports
Part 3 : Operational guidelines for the AD Banks.
Part 4 : Annex (notifications and the forms for exports)
Foreign Exchange Management (Current Account Transactions) Rules, 2000
Notification No.FEMA 23 /2000-RB dated 3rd May 2000
Forms
Part 5 : List of all circulars consolidated in the master circular.

Issued with sunset clause of one year.

· The Directorate General of Foreign Trade (DGFT) regulates export trade.
· AD Banks may conduct export transactions in conformity with the Foreign Trade Policy in vogue and the Rules framed by the Government of India and the Directions issued by Reserve Bank from time to time.
· Notification No. FEMA 23/2000-RB dated May 3, 2000 on Foreign Exchange Management (Export of Goods and Services) Regulations, 2000
· Rules notified by the Government of India, Ministry of Finance, vide Notification No.G.S.R.381 (E) dated May 3, 2000
· Regulation 4 of the Foreign Exchange Management (Guarantees) Regulations, 2000, notified vide Notification No. FEMA-8/2000-RB dated 3rd May 2000,
· There is no restriction on invoicing of export contracts in Indian Rupees in terms of the Rules, Regulations, Notifications and Directions framed under the Foreign Exchange Management Act 1999.
· Para 2.40 of the Foreign Trade Policy states “All export contracts and invoices shall be denominated either in freely convertible currency or in Indian Rupees but export proceeds shall be realized in freely convertible currency.

GR Exemption: Regulation 4 of Notification No. FEMA 23/2000-RB dated May 3, 2000
Grant of GR waiver export of goods free of cost, for export promotion up to 2 per cent of the annual average Max 5 lakhs (Rs 10 lac for status holders )
Export of goods not involving any foreign exchange transaction directly or indirectly requires the waiver of GR/PP procedure from the Reserve Bank.

Full export value of the goods exported shall be received through an AD Banks in the manner specified in the Foreign Exchange Management (Manner of Receipt & Payment) Regulations, 2000 notified vide Notification No. FEMA 14/2000-RB dated May 3, 2000

However, in case of export of goods to Nepal, where the importer has been permitted by the Nepal Rashtra Bank to make payment in free foreign exchange, such payments shall be routed through the ACU mechanism.

Participants in international exhibition/trade fair have been granted general permission vide Regulation 7(7) of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB dated May 3, 2000 for opening a temporary foreign currency account abroad.

Reserve Bank may consider applications in Form EFC from exporters having good track record for opening a foreign currency account with banks in India and outside India

An Indian entity can also open, hold and maintain a foreign currency account with a bank outside India, in the name of its overseas office/branch, by making remittance for the purpose of normal business operations of the said office / branch or representative subject to conditions stipulated in Regulation 7 of Notification No. FEMA 10/2000-RB dated May 3rd, 2000

A unit located in a Special Economic Zone (SEZ) may open, hold and maintain a Foreign Currency Account with an AD Banks in India subject to conditions stipulated in Regulation 6 (A) of Notification No. FEMA 10/2000

Project / service exporter may open, hold and maintain foreign currency account with a bank outside or in India, subject to the standard terms and conditions in the Memorandum PEM issued vide AP (Dir Series) Circular No. 32 dated October 28, 2003.

A person resident in India may open with, an AD Banks in India, an account in foreign currency called the Exchange Earners’ Foreign Currency (EEFC) Account, in terms of Regulation 4 of the Foreign Exchange Management (Foreign Currency Account by a Person Resident in India) Regulations, 2000 notified under Notification No. FEMA 10/2000-RB dated May 3, 2000 as amended from time to time
All categories of foreign exchange earners are allowed to credit up to 100 per cent of their foreign exchange earnings to their EEFC Accounts,
Account maintained only in the form of non-interest bearing current account and no credit facilities, either fund-based or non-fund based, shall be permitted against the security of balances held
Eligible credits represent inward remittance received through normal banking channel, other than the remittance received pursuant to any undertaking given to the Reserve Bank or which represents foreign currency loan raised or investment received from outside India or those received for meeting specific obligations by the account holder, Payments received in foreign exchange by a unit in
Domestic Tariff Area (DTA) for supplying goods to a unit in Special Economic Zone out of its foreign currency account.
Exporters may extend trade related loans / advances to overseas importers out of their EEFC balances without any ceiling subject to compliance of provisions of Notification No. FEMA 3/2000-RB
Exporters may repay packing credit advances whether availed in rupee or in foreign currency from balances in their EEFC account and / or rupee resources to the extent exports have actually taken place.

Setting up Offices Abroad and Acquisition of Immovable Property for
Overseas Offices AD Banks may allow remittances towards initial expenses up to fifteen per cent of the average annual sales/income or turnover during the last two financial years or up to twenty-five per cent of the net worth, whichever is higher and For recurring expenses, remittances up to ten per cent of the average annual sales/income, subject to certain terms conditions and obligations. Remittances also allowed to acquire immovable property outside India for its business and for residential purpose of its staff
Software exporter company/firm may repatriate to India 100 per cent of the contract value of each ‘off-site’ contract.
In case of companies taking up on site contracts, they should repatriate the profits of such on site contracts after the completion of the said contracts.
An audited yearly statement showing receipts expenses and repatriation thereon may be sent to the AD Banks.

Advance Payments against Exports Regulation 16 of FEMA 23 dated May 3, 2000, where an exporter receives advance payment (with or without interest), from a buyer outside India, the exporter shall ensure that, shipment of goods is made within one year from the date of receipt, interest, if any, payable on the advance payment does not exceed LIBOR+ 100 basis points, documents covering the shipment are routed through the AD Bank through whom the advance payment is received;
Provided that in the event of the exporter's inability to make the shipment, partly or fully, within one year from the date of receipt of advance payment, no remittance towards refund of unutilised portion of advance payment or towards payment of interest, shall be made after the expiry of the said period of one year, without the prior approval of the Reserve Bank.
Where the export agreement provides for shipment of goods extending beyond the period of one year from the date of receipt of advance payment, the exporter shall require the prior approval of the Reserve Bank.
Allowed to purchase of foreign exchange from the market for refunding advance payment credited to EEFC account only after utilising the entire balances held in the exporter’s EEFC accounts maintained at different branches/banks.
Guarantees for Export Advance. Is subject to DBOD No.DirBC.72/13.03.00/06-07

GR Approval for Trade Fair :Organisations participating in Trade Fair/Exhibition abroad can take/export goods for exhibition and sale outside India without the prior approval of the Reserve Bank of India.
Permissible to `gift' unsold goods up to the value of USD 5000 per exporter, per
exhibition/trade fair.
Exporter shall produce relative Bill of Entry within one month of re-import into India of the unsold items.
Sale proceeds of the items sold are repatriated to India in accordance with the Foreign Exchange Management ( Realisation, Repatriation, and Surrender
of Foreign Exchange) Regulations, 2000.
Exporter shall report to the AD Banks the method of disposal of all items exported, as well as the repatriation of proceeds to India.
Such Transactions are subject to 100 per cent audit by the Bank’s internal inspectors/auditors.

GR approval for Export of Goods for re-imports. AD Banks may grant GR approval in cases where goods are being exported for re-import after repairs / maintenance / testing / calibration etc. subject to the condition that the exporter shall produce relative Bill of Entry within one month of re-import of the exported item from India, and if destroyed during testing, AD banks may obtain a certificate issued by the testing agency that the goods have been destroyed during testing,

Part Drawings / Undrawn balances. If it is the practice to leave a small part of the invoice value undrawn for payment after adjustment due to differences in weight, quality, etc. to be ascertained after arrival for inspection, or
analysis of the goods. In such cases, AD Banks may negotiate the bills, provided:
undrawn balance is up to a maximum of 10 per cent of the full export value,
undertaking is obtained from the exporter on the duplicate of GR/SDF/PP forms that he will surrender/account for the balance proceeds of the shipment within the period prescribed for realisation.
AD Banks, exporter should ensure repatriation of at least 90 per cent of the value declared on GR/PP/SDF form, or the amount for which the bill was drawn whichever is more within a period of one year from the date of shipment.

Consignment Exports
AD Banks, while forwarding shipping documents to his overseas branch/correspondent, should instruct the latter to deliver them only against trust receipt/undertaking to deliver sale proceeds by a specified date within the period prescribed for realization of proceeds of the export, even if, a bill for part of the estimated value is drawn in advance against the exports.
Agents/consignees may deduct from sale proceeds of the goods expenses normally incurred towards receipt, storage and sale of the goods, such as landing charges, warehouse rent, handling charges, etc. and remit the net proceeds
account sales received from the Agent/Consignee should be verified by the AD Banks. Deductions in Account Sales should be supported by bills/receipts in
original except in case of petty items like postage/cable charges, stamp duty, etc
Freight and marine insurance must be arranged in India.
Banks may approve export of books on consignment basis allowing for realisation of export proceeds up to 360 days from the date of shipment.
Reserve Bank will permit a longer period up to twelve months for realisation of export proceeds for exports on consignment basis made to CIS countries and East European countries financed in any permitted currency.

Opening/Hiring of Ware houses abroad
AD Banks may grant permission for opening / hiring warehouses abroad, initially for a period of one year, subject to:
Export outstanding does not exceed 5 per cent of exports made during the previous financial year. Minimum export turnover of USD 100,000/- during the last financial year. Period of realisation should be 180 days for non-status holder exporters and 12 months for status holder
All transactions should be routed through the designated branch of the AD Bank
AD Banks granting such permission/approvals should maintain a proper record of the approvals granted.

Direct dispatch of documents by the exporter
AD Banks should dispatch shipping documents to their overseas branches / correspondents expeditiously.
May dispatch shipping documents direct to the consignees or their agents where:
Advance payment or an irrevocable letter of credit has been received for the full value of the export shipment and the underlying sale contract/letter of credit provides for dispatch of documents direct to the consignee
The exporter is a regular customer and the AD Banks is satisfied, of standing and track record, arrangements made for realisation of export proceeds,
Documents if accompanied with a declaration by the exporter that they are not more than Rs. 25,000/- in value and not declared on GR/SDF/PP/SOFTEX form.
AD Banks may also permit `Status Holder Exporters' (as defined in the Foreign Trade Policy), and units in Special Economic Zones (SEZ) to dispatch the export documents to the consignees outside India provided ., proceeds are repatriated through the AD Banks named in the GR Form. duplicate copy of the GR form is submitted to the AD Banks for monitoring purposes, by the exporters within 21 days from shipment.

Invoicing of Software Exports
For long duration contracts involving series of transmissions, the exporters should bill their overseas clients periodically, i.e., at least once a month or on
reaching the ‘milestone’ as provided in the contract , and last invoice / bill should be raised not later than 15 days from the date of completion of the contract
Contracts involving only ‘one-shot operation’, the invoice/bill should be raised within 15 days from the date of transmission.
Exporter should submit declaration in Form SOFTEX in triplicate in respect of export of computer software and audio / video / television software to the designated official concerned of the Government of India at STPI / EPZ /FTZ /SEZ for valuation / certification not later than 30 days from the date of invoice / the date of last invoice raised in a month.
Designated officials may also certify the SOFTEX Forms of EOUs

Shut out Shipments and Short Shipments
When part of a shipment covered by a GR form already filed with Customs is short-shipped, the exporter must give notice of short-shipment to the Customs
In case of delay in obtaining certified short-shipment notice from the Customs,
exporter should give an undertaking to the AD, along copy of short shipment notice filed with customs, that he will furnish it as soon as received.
Where a shipment has been entirely shut out and there is delay in making arrangements to re-ship, the exporter will give notice in duplicate to the Customs attaching thereto the unused duplicate copy of GR form and the shipping bill. Customs will certify the copy of the notice as correct and forward it to the Reserve Bank together with unused duplicate copy of the GR form. the original
GR form received earlier from Customs will be cancelled. If the shipment is made subsequently, a fresh set of GR form should be completed.

Counter-Trade Arrangement
Proposals involving adjustment of value of goods imported into India against value of goods exported from India in terms of an arrangement voluntarily entered into between the Indian party and the overseas party through an Escrow Account opened in India in U.S. dollar requires approval of Reserve Bank
imports and exports under the arrangement should be at international prices in conformity with the Foreign Trade Policy Application for permission for opening an Escrow Account may be made by the overseas exporter/organisation through his AD. No interest will be payable on balances standing to the credit of the Escrow Account but the funds temporarily rendered surplus may be held in a short-term deposit up to a total period of three months in a year. No fund based / or non-fund based facilities would be permitted against the balances in the Escrow Account.

Export of Goods on Lease, Hire, etc
Prior approval of the Reserve Bank is required for export of machinery, equipment, etc., on lease, hire, etc., basis under agreement with the overseas lessee against collection of lease rentals/hire charges and ultimate re-import.

Export on Elongated Credit Terms
Exporters intending to export goods on elongated credit terms may submit their proposals giving full particulars through their banks for consideration to RBI

Export of goods by units in SEZs
Units in SEZ are permitted to undertake job work abroad and export goods from that country itself subject to : Processing / manufacturing charges are suitably loaded in the export price and are borne by the ultimate buyer ; exporter has made satisfactory arrangements for realisation of full export
Banks may permit units in DTA to purchase foreign exchange for making payment for goods supplied to them by units in SEZ

Project Exports . Service Exports .
Export of engineering goods on deferred payment terms and execution of turnkey projects and civil construction contracts abroad are collectively referred to as ‘Project Exports’.
exporters offering deferred payment terms to overseas buyers and undertaking turnkey/civil construction contracts abroad are required to obtain the approval of the AD Banks/ Exim Bank/Working Group at post-award stage before ndertaking execution as per Memorandum on Project Exports October 2003 and A.P.(DIR Series) No.26 dated January 8,2007
Exporters may use the machinery / equipment for performing any other contract secured by them in any country subject to the satisfaction of the sponsoring AD
Exporters may open, maintain and operate one or more foreign currency account/s in a currency/currencies of their choice with inter-project transferability of funds in any currency or country.
Project / Service exporters may deploy their temporary cash surpluses, generated outside India, in investments in short-term paper abroad including treasury bills and other monetary instruments rated at least A-1/AAA
by S&P with a maturity or remaining maturity of one year or less, or deposits with branches / subsidiaries outside India of an AD
Software exporter repatriate the profits on-site contract after completion of the contract as per AP DIR Circular No.33 dated February 28, 2007

Export of Currency
Any export of Indian currency of value exceeding Rs.5000/- except to the extent permitted under any general permission granted under the Regulations, will require prior RBI permission as per Foreign Exchange Management (Export and Import of Currency) Regulations, 2000 notified vide Notification No. FEMA 6/RB-2000 dated 3rd May 2000

Forfaiting
Exim Bank and ADs have been permitted to undertake forfaiting, for financing of export receivables. Remittance of commitment fee / service charges, etc., payable by the exporter may be done in advance in one lump sum or at monthly intervals

Exports to neighboring countries by Road, Rail or River
Procedure filing original copies of GR/SDF forms where exports are by road, rail or river transport:
In case of exports by barges/country craft/road transport, exporter or his agent at the Customs station at the border through which the vessel or vehicle has to pass before crossing over to the foreign territory should present the form. Customs staff has been posted at certain designated railway stations will collect the GR/SDF forms for goods loaded at these stations so that the goods may move straight on to the foreign country without further formalities at the border. Or exporters must arrange to present GR/SDF forms to the Customs Officer at the Border Land Customs Station

Border Trade with Myanmar
As per Agreement on Border Trade between India and Myanmar People living along both sides of the India-Myanmar border are permitted to exchange certain
specified locally produced commodities under the barter trade arrangement or in in freely convertible currency AP.DIR (Series) Circular No.17 dated October 16, 2000.

Repayment of State Credits
Export of goods and services against repayment of state credits granted by erstwhile USSR will continue to be governed by the extant directions issued by Reserve Bank, as amended from time to time.
Counter trade proposals Romania involving adjustment of value of exports from India against value of imports made into India require RBI approval

GR/SDF/PP/SOFTEX procedure
Regulation 6 of Foreign Exchange Management (Export of Goods and Services)
Regulations, 2000 notified vide Notification No. FEMA.23/2000-RB dated 3rd May 2000
GR forms should be completed by the exporter in duplicate and both the copies submitted to the Customs at the port of shipment along with the shipping bill.
Customs will give the number having ten numerals denoting the code number of the port of shipment, the calendar year and a six digit running number and certify the value declared by the exporter on both the copies of the GR form and will also record the assessed value and return the duplicate copy of the form to the exporter and retain the original for transmission to RBI . Exporters should submit the duplicate copy of the GR form again to Customs along with the cargo to be shipped, After examination of the goods and certifying the quantity passed , Customs will return it to the exporter for submission to the AD
Within twenty-one days from the date of export, exporter should lodge the duplicate copy together with relative shipping documents and an extra copy of the invoice with the AD Banks named in the GR form.
After the documents have been negotiated / sent for collection, the AD Banks should report the transaction to Reserve Bank in statement ENC under cover of appropriate R-Supplementary Return
In the case of exports made under deferred credit arrangement or to joint ventures abroad against equity participation or under rupee credit agreement, the number and date of Reserve Bank approval and/or number and date of the relative RBI circular should be recorded at the appropriate place on the GR form.
Where Duplicate copy of GR form is misplaced or lost, AD Banks may accept another copy of duplicate GR form duly certified by Customs.

The manner of disposal of PP forms is the same as that for GR forms. Postal Authorities will allow export of goods by post only if the original copy of the form has been countersigned by an AD. Banks will countersign the forms after
ensuring that the parcel is being addressed to their branch or correspondent bank in the country of import.

In cases where ECGC initially settles the claims of exporters in respect of exports insured with them and subsequently receives the export proceeds from the buyer/ buyer’s country through the efforts made by them, the share of exporters in the amount so received is disbursed through the bank which had handled the shipping documents. In such cases, ECGC will issue a certificate to the bank which had handled the relevant shipping documents after full proceeds have been received. The certificate will indicate the number of declaration form, name of the exporter, name of the AD Banks, date of negotiation, bill number, invoice value and the amount actually received by ECGC.

Random verification
AD Banks should ensure, by random check of the relevant duplicate GR /SDF /PP forms by their internal / concurrent auditors, that non-realisation or short realisation allowed, if any, is within the powers delegated to them or has been duly approved by Reserve Bank, wherever necessary.

Certification for EEFC Credits
Where a part of the export proceeds are credited to an EEFC account, the export declaration (duplicate) form may be certified as under: "Proceeds amounting to …… representing ….. per cent of the export realisation credited to the EEFC account maintained by the exporter with ….. "

Consolidation of Air Cargo
Airline company’s Master Airway Bill will be issued to the Consolidating Cargo Agent. The Cargo agent in turn will issue his own House Airway Bills (HAWBs) to individual shippers. Banks may negotiate HAWBs only if the relative letter of credit specifically provides for negotiation of these documents in lieu of Airway
Bills issued by the airline company. Banks accept Forwarder’s Cargo Receipts
(FCR) issued by steamship companies or their agents (instead of 'IATA' approved agents), in lieu of bills of lading, for negotiation / collection of
shipping documents, only if the relative letter of credit specifically provides for negotiation of this document, in lieu of bill of lading.

Delay in submission of shipping documents by exporters
where exporters present documents pertaining to exports after the prescribed period of twenty-one days from date of export, Authorised Dealers Banks may handle them without prior approval of Reserve Bank, provided they are satisfied with the reasons for the delay.

Check-list for Scrutiny of Forms Banks to ensure :
The number on the duplicate copy of a GR form is the same as that recorded on the Bill of Lading/Shipping Bill and the duplicate has been duly verified and authenticated by appropriate Customs authorities.
Shipping Bill No. on the SDF form should be the same as on the Bill of Lading
In the case of CIF /CFR contracts where the freight is sought to be paid at destination, that the deduction made is only to the extent of freight declared on GR/SDF form or the actual amount of freight indicated on the Bill of Lading/Airway Bill, whichever is less.
Accept the Bill of Lading/Airway Bill issued on ‘freight prepaid’ basis where the sale contract is on f.o.b., f.a.s. etc. basis provided the amount of freight has been included in the invoice and the bill.
Documents submitted do not reveal any material inter se discrepancies in regard to description of goods exported, export value or country of destination.
Where the marine insurance is taken by the exporters on buyer’s account to verify, that the actual amount paid is received from the buyer through invoice and the bill.
Negotiate the documents, if presented by a person other than the exporter who has signed GR/PP/SDF /SOFTEX Form for the export consignment concerned, after ensuring compliance with Regulation 12 of Foreign Exchange Management (Export of Goods and Services) Regulations, 2000
To accept the variations in the value declared to the customs authorities and that is reflected on the export documents which stem from the terms of contract, on production of documentary evidence after verifying the arithmetical accuracy of the calculations and on conforming the terms of underlying contracts due to freight increase, quality analysis of samples, penalty for late shipment,
To accept for negotiation or collection the bills for exports by sea or air, which fall short of the value, declared on GR/SDF forms on account of trade discount, only if it has been declared on relative GR/SDF form and accepted by Customs.

Return of Documents to Exporters
The duplicate copies of GR/SDF/PP forms and shipping documents, once submitted to the AD Banks for negotiation, collection, etc., should not ordinarily be returned to exporters, except for rectification of errors and resubmission.

Handing Over Negotiable Copy of Bill of Lading to Master of Vessel/Trade
Representative
AD Banks may deliver one negotiable copy of the Bill of Lading to the Master of the carrying vessel or trade representative for exports to certain landlocked
countries if the shipment is covered by an irrevocable letter of credit and the documents conform strictly to the terms of the Letter of Credit which, inter alia, provides for such delivery.

Export Bills Register
Banks should maintain for all types of export Transactions, Export Bills Register, in physical or electronic form, and are given bill numbers on a financial
year basis. Details of GR/SDF/PP form number, due date of payment, the fortnightly period of R Supplementary Return with which the ENC statement covering the transaction was sent to Reserve Bank, should be available.



Follow-up of Overdue Bills
Banks should closely watch realisation of bills and in cases where bills remain outstanding, beyond the due date for payment or six months from the date of export, the matter should be promptly taken up with the concerned exporter.
If the exporter fails to realize or within six months or seek extension the matter should be reported to the RO concerned of the Reserve Bank stating, where possible, the reason for the delay in realising the proceeds.
Banks should follow up export outstandings with exporters systematically and vigorously so that action against defaulting exporters does not get delayed. Any laxity will be viewed seriously by RBI leading to the invocation of the penal provision under FEMA
Exporters who have been certified as `Status Holder' in terms of Foreign Trade Policy , 100 per cent Export Oriented Units (EOUs) and units set up under Electronic Hardware Technology Parks (EHTPs), Software Technology Parks (STPs) and Biotechnology Parks (BTPs) are permitted to realise and repatriate the full value of export proceeds within a period of 12 months from the date of shipment
Twelve months or extended period thereof for realisation of export proceeds is no longer applicable for units located in Special Economic Zones
Banks should furnish to the RO concerned of the Reserve Bank, on half-yearly basis, a consolidated statement in Form XOS giving details of all export bills outstanding beyond six months from the date of export. submitted in triplicate within fifteen days from the close of the relative half-year.

Reduction in Value
Reduction in Invoice Value on Account of Prepayment of Usance Bills- Occasionally, exporters may approach AD Banks for reduction in invoice value on account of cash discount to overseas buyers for prepayment of the usance bills. Banks may allow cash discount to the extent of amount of proportionate interest on the unexpired period of usance, calculated at the rate of interest stipulated in the export contract or at the prime rate/LIBOR of the currency of invoice
If, after a bill has been negotiated or sent for collection, its amount is to be reduced for any reason, AD Banks may approve such reduction, if satisfied about genuineness of the request, provided: reduction does not exceed 25 per cent
of invoice, does not relate to export of commodities subject to floor price stipulations, exporter is not on the exporters’ caution list of Reserve Bank, exporter is advised to surrender proportionate export incentives availed of, if any.
If customer is in export business for more than three years, reduction in invoice value may be allowed, without any percentage ceiling if the export outstandings do not exceed 5 per cent of the average annual export realization during the preceding three financial years

Export Claims
AD Banks may remit export claims on application, provided the relative export proceeds have already been realised and repatriated to India and the exporter is not on the caution list of Reserve Bank and the exporter should be advised to surrender proportionate export incentive

Change of buyer/consignee
Prior approval of Reserve Bank is not required if, after goods have been shipped, they are to be transferred to a buyer other than the original buyer in the event of default by the latter, provided the reduction in value, if any, involved does not exceed 25 per cent and the realisation of export proceeds is not delayed beyond the period of six months

Extension of time and Self write-off by the exporters
For export proceeds due within the prescribed period during a financial year all exporters (other than Status Holder exporters) have been allowed to write off
(including reduction in invoice value) outstanding export dues and extend the prescribed period of realisation beyond 180 days or further period as applicable, provided aggregate value of such export bills written-off (including reduction in invoice value) and bills extended for realization does not exceed 10 per cent of the export proceeds due during the financial year and not a subject of investigation by Regulatory / Investigating Agencies. Within a month from the lose of the financial year, exporters should submit a statement (Annex 3), giving details of export proceeds due, realised and not realised to the AD Banks concerned.

Banks will be required to verify and satisfy that in cases where the 10 per cent limit of self extension, write-off (including reduction in invoice value) and non-realisation has been breached, the exporter has sought necessary approval for write-off, reduction in invoice value or extension of time, as the case may be, for the excess over the 10 per cent limit before the end of the financial year, failing which, the AD Banks may inform the exporter about the withdrawal of this facility of self write-off / extension of time, within a month, under advice to the Regional Office concerned of the Reserve Bank.

Extension of Time by AD Bank
where an exporter has not been able to realise proceeds of a shipment made within the period prescribed, for reasons beyond his control, but expects to be able to realise proceeds if extension of the period is allowed to him, necessary application (in duplicate) should be made to the Regional Office concerned of Reserve Bank in form ETX through his AD Banks with appropriate documentary evidence

ADs permited to extend the period of realisation of export proceeds beyond 6 months from the date of export, up to a period of six months, at a time, irrespective of the invoice value of the export subject to the following conditions.
Export transactions covered by the invoices are not under investigation, AD is satisfied that the exporter has not been able to realise export proceeds for reasons beyond his control, exporter submits a declaration that the export proceeds will be realised during the extended period, While considering extension beyond one year from the date of export, the total outstanding of the exporter does not exceed USD one million or 10 per cent of the average export realizations during the preceding three financial years,
All the export bills outstanding beyond six months from the date of export may be reported in XOS statement. date up to which extension has been granted may be indicated in the 'Remarks' column.

Write off by AD Banks
If not been able to realise the outstanding export dues despite best efforts, may
approach the AD Banks, who had handled the relevant shipping documents, with appropriate supporting documentary evidence with a request for write off of the
unrealised portion, provided, relevant amount has remained outstanding for one year or more; aggregate amount of write off allowed by the AD Banks during a financial year does not exceed 10 per cent of the total export proceeds realized by the concerned exporter through the concerned AD, Satisfactory documentary evidence is furnished by exporter having made all efforts to realize, case is not the subject matter of any pending civil or criminal suit. exporter has not come to the adverse notice of the Enforcement Directorate, exporter has surrendered proportionate export incentives,
OR overseas buyer has been declared insolvent and a certificate from the official liquidator or buyer is not traceable over a reasonably long period or goods exported have been auctioned or destroyed by the Port/Customs/Health authorities Or unrealised amount represents the balance due in a case settled through the intervention of the Indian Embassy, Foreign Chamber of Commerce or similar Organisation. Or represents the undrawn balance of an export bill (not exceeding 10 per cent of the invoice value) remained outstanding and turned out to be unrealizable or cost of resorting to legal action would be disproportionate to the unrealised amount or Bills were drawn for the difference between the letter of credit value and actual export value or between the provisional and the actual freight charges but the amount have remained unrealised consequent on dishonour of the bills by the overseas buyer

“In terms of A. P. (DIR Series) Circular No.30 dated April 4, 2001." Banks should certify the duplicate form as under: "Write off of ……… (Amount in words and figures) permitted in terms of extant Directions to AD Banks." Date , Stamp & Signature of AD Banks Where there is no further amount to be realized against the GR/SDF/PP form

Status holders exporters, as defined under in the Foreign Trade Policy, and manufacturer exporters exporting more than 50 per cent of their production,and recognised as such by DGFT, may be permitted to " write off" outstanding export dues, cumulatively , to the extent of 5 per cent of their average annual realisation during the preceding three financial years or 10 per cent of the export proceeds due during the financial year, whichever is higher
The exporter should submit Chartered Accountant’s certificate indicating, export realisation in the preceding three financial years and also the amount of "write off" already availed of during the year, if any. relevant GR/SDF Nos. to be written off, Bill No., invoice value, commodity exported, country of Export, export benefits, if any, availed of by the exporter have been surrendered.

The following do not qualify for the "write off" facility:
Exports made to countries with externalization problem i.e. where the overseas buyer has deposited the value of export in local currency but the amount has not been allowed to be repatriated GR/SDF forms which are under investigation by agencies like, Enforcement Directorate, Directorate of Revenue Intelligence, Central Bureau of Investigation, etc.

Banks may forward a statement in form EBW to the Regional Office of Reserve Bank every half year indicating details of write offs etc.
Banks are to put in place a system under which their internal inspectors or auditors carryout random sample check of outstanding export bills written off.

Write off in cases of Payment of Claims by ECGC
Banks shall, on an application received from the exporter supported by documentary evidence from the ECGC confirming that the claim in respect of the outstanding bills has been settled by them, write off the relative export bills and delete them from the XOS statement, not be restricted to the limit of 10 per cent, but claims settled in rupees by ECGC should not be construed as export realisation

Write off in other cases
Cases which are not covered by the above instructions will require prior approval from RBI

Shipments Lost in Transit
When shipments from India for which payment has not been received either by negotiation of bills under letters of credit or otherwise are lost in transit, the AD Banks must ensure that insurance claim is made as soon as the loss is known.
The duplicate copy of GR/SDF/PP form should be forwarded to Reserve Bank with following particulars: a. Amount for which shipment was insured. b. Name and address of the insurance company. c. Place where the claim is payable.
Where the claim is payable abroad, the AD Banks must arrange to collect the full amount of claim due on the lost shipment, through the medium of his overseas branch/correspondent and release the duplicate copy of GR/SDF/PP form only after the amount has been collected certificate for the amount of claim received should be furnished on the reverse of the duplicate copy.
Banks should ensure that amounts of claims on shipments lost in transit which are partially settled directly by shipping companies/airlines under carrier’s liability abroad are also repatriated to India by exporters.

'Netting off' of export receivables against import payments - Units in Special Economic Zones (SEZs)
Banks may allow requests received from exporters for 'netting off' of export receivables against import payments for SEZ units
The 'netting off' of export receivables against import payments is in respect of the same Indian entity and the overseas buyer / supplier (bilateral netting) and the netting may be done as on the date of balance sheet of the unit in SEZ.
The details of export of goods are documented in GR (O) forms / DTR as the case may be while details of import of goods / services are recorded through A1 / A2 form as the case may be.
Both the transactions of sale and purchase in 'R' Returns under FET-ERS are reported separately
The relative GR / SDF forms will be treated as complete by the designated AD Banks only after the entire proceeds are adjusted / received.
The export / import transactions with ACU countries are kept outside the arrangement.
All the relevant documents are submitted to the concerned AD Banks who should comply with all the regulatory requirements relating to the transactions.

Agency Commission on Exports
Banks may allow payment of commission, either by remittance or by deduction from invoice value subject to Amount of commission has been declared on GR/SDF/PP/SOFTEX form and accepted by the Customs authorities or Ministry of Information Technology, Government of India / EPZ authorities as the case may be. and after satisfying the reasons adduced by the exporter for not declaring commission on Export Declaration Form, provided a valid agreement / written understanding between the exporters and/or beneficiary for payment of commission exists. And relative shipment has already been made.

Banks may allow payment of commission by Indian exporters, in respect of their exports covered under counter trade arrangement through Escrow Accounts designated in U.S. Dollar, subject to , commission is not payable to Escrow. Account holders themselves and commission should not be allowed by deduction from the invoice value.

Payment of commission is prohibited on exports made by Indian Partners towards equity participation in an overseas joint venture / wholly owned subsidiary as also exports under Rupee Credit Route except commission up to 10 per cent of invoice value of exports of tea & tobacco.

Refund of Export Proceeds
Banks may allow refund of export proceeds of goods exported from India and being re-imported into India on account of poor quality.

Banks are required to : i. exercise due diligence regarding the track record of the exporter; ii. verify the bonafides of the transactions iii. obtain from the exporter a certificate issued by DGFT / Custom authorities that no incentives have been availed / have been surrendered , undertaking from the exporter that the goods will be re-imported within three months, procedures as applicable to normal imports are adhered

Exporters’ Caution List
Banks will also be advised whenever exporters are cautioned in terms of provisions contained in Regulation 17 of "Export Regulations". Notification No.FEMA 23 /2000-RB dated 3rd May 2000
Exporters concerned to produce evidence of having received an advance payment or an irrevocable letter of credit in their favour covering the full value of the proposed exports only then banks may approve GR/SDF/PP forms and where usance bills are to be drawn for the shipment provided the relative letter of credit covers the full export value and also permits such drawings and the usance bill mature within six months from the date of shipment.
Banks should obtain prior approval of the Reserve Bank for issuing guarantees for caution-listed exporters.

Salient Features of from Master Circular on Import of Goods and Services

Salient Features of from Master Circular on Import of Goods and Services
RBI/2007-2008/24 Master Circular No. / 08 /2007-08 July 2, 2007

The circular is organised into five parts as under :
Part I : Introduction
Part II : General guidelines for imports.
Part III: Operational guidelines for imports.
Part IV : Annex (notifications and the forms for imports)
Part V : List of all circulars consolidated in the Master Circular.

And will stand withdrawn on July 1, 2008

Import trade is regulated by the Directorate General of Foreign Trade (DGFT) under the Ministry of Commerce & Industry
imports into India are in conformity with the
Foreign Trade Policy
Foreign Exchange Management (Current Account Transactions) Rules, 2000
Government of India Notification No. G.S.R.381 (E) dated May 3, 2000
Provisions of Uniform Customs and Practices for Documentary Credits (UCPDC), for LCs
Provisions of Research & Development Cess Act, 1986 may be ensured for import of drawings and designs.
Compliance with the provisions of Income Tax Act, wherever applicable.
adhere to "Know Your Customer" (KYC) guidelines issued by Reserve Bank (Department of Banking Operations & Development)

Form A-1
Applications by persons, firms and companies for making payments, exceeding USD 500 or its equivalent, towards imports into India must be made on the appropriate Form A-1.
Remittances not involving movement of goods will be covered by A-2

Import Licenses
Excepting for goods included in the negative list requiring licence under the Foreign Trade Policy no Licence is required
While opening letters of credit, the ‘For Exchange Control purposes’ copy of the licence should be called for and special conditions, if any, attached to such licences should be adhered to.
Banks preserve the Licence copies for verification by the internal auditors or inspectors.

Obligation of Purchaser of Foreign Exchange
Section 10(6) of the Foreign Exchange Management Act, 1999 (FEMA), any person acquiring
foreign exchange is permitted to use it either for the purpose mentioned in the declaration made by him to an AD bank under Section 10(5) of the Act or to use it for any other purpose for which acquisition of foreign exchange is permissible under the said Act
Where foreign exchange acquired has been utilised for import of goods into India, the AD should ensure that the importer furnishes evidence of import viz., Exchange Control copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., and that value of goods are equivalent to the value of remittance.
Payment for import can also be made by way of credit to non-resident account of the overseas exporter maintained with a bank in India and as per Notification No.FEMA14/2000-RB dated 3rd May 2000,

Time Limit for Settlement of Import Payments

· Remittances against imports should be completed not later than six months from the date of shipment, except in cases where amounts are withheld towards guarantee of performance, banks may permit settlement of import dues delayed due to disputes, financial difficulties,
· Deferred payment arrangements, including suppliers and buyers credit, providing for payments beyond a period of six months from date of shipment up to a period of less than three years, are treated as trade credits for which the procedural guidelines laid down in the Master Circular for External Commercial Borrowings and Trade Credits may be followed.
· Remittances against import of books may be allowed without restriction as to time limit,
· Bank may allow payment of interest on usance bills or overdue interest at maximum of 6 months LIBOR 50 / 125 basis points


Import of Foreign Exchange / Indian Rupees
No person shall, without the general or special permission of the Reserve Bank, import or bring into India, any foreign currency. Importing currency, including cheques, is governed by clause (g) of sub-section (3) of Section 6 of the Foreign Exchange Management Act, 1999, and the Foreign Exchange Management (Export and Import of Currency) Regulations 2000 and Notification No. FEMA 6/RB- 2000 dated May 3, 2000

Import of Indian currency and currency notes
person resident in India who had gone out of India on a temporary visit, may bring into India at the time of his return from any place outside India (other than from Nepal and Bhutan), currency notes of Government of India and Reserve Bank notes up to an amount not exceeding Rs.5,000/- per person.
Person may bring into India from Nepal or Bhutan, currency notes of Government of India and Reserve Bank notes other than notes of denominations of above Rs.100 in either case.

Import of foreign exchange into India
A person may – (i) send into India without limit foreign exchange in any form other than currency notes, bank notes and travelers cheques; (ii) bring into India from any place outside India, without limit foreign exchange (other than unissued notes), which shall be subject to the condition that such person makes, on arrival in India, a declaration to the Custom authorities in Currency Declaration Form (CDF) (shall not be necessary to make such Declaration by such person if aggregate value of the foreign exchange at any one time does not exceed USD10,000 and/or the aggregate value of foreign currency does not exceed USD 5,000 )


PART III Operational Guidelines for Imports

Advance Remittance for import of goods:
bank may allow advance remittance for import of goods without any ceiling subject to
If the amount of advance remittance exceeds USD 100,000 or its equivalent, an unconditional, irrevocable standby Letter of Credit or a guarantee from an international bank of repute
situated outside India guarantee of AD bank in India, issued against the counter-guarantee
of an international bank
Importer (other than a Public Sector Company or a Department/Undertaking of the Government of India/State Governments) is unable to obtain bank guarantee from overseas suppliers and the A D bank is satisfied about the track record and bonafides of the importer, bank guarantee / standby Letter of Credit banks may frame their own internal guidelines to deal with such cases and may not be insisted upon for advance remittances up to USD 1,000,000
A Public Sector Company or a Department/Undertaking of the Government of India / State Government/s which is not in a position to obtain a guarantee from an international bank of
repute against an advance payment, is required to obtain a specific waiver for the bank guarantee from the Ministry of Finance for remittance exceeding USD 100, 000.
The remittance is made directly to the supplier or manufacturer of the goods and not to any third party or to a numbered account.
Physical import of goods into India is made within six months (three years in case of capital goods) from the date of remittance and the importer gives an undertaking to furnish documentary evidence of import within fifteen days from the close of the relevant period
In the event of non-import of goods, AD bank should ensure that the amount of advance remittance is repatriated to India or is utilised for any other purposes for which release of exchange is permissible under the FEMA,

Advance Remittance for Import of Rough Diamonds
AD bank are permitted to allow advance remittance without any limit and without bank guarantee or standby letter of credit, by an importer (other than a Public Sector Company or a
Department / Undertaking of the Government of India / State Government/s), for import of rough diamonds into India from the under noted mining companies, viz. a) Diamond Trading Company Pvt. Ltd., UK, b) RIO TINTO, UK, c) BHP Billiton, Australia, d) ENDIAMA, E. P. Angola, e) ALROSA, Russia, and f) GOKHARAN, Russia, provided., importer should be a recognized processor of rough diamonds as per a list to be approved by Gems and Jewellery Export Promotion Council, bank should undertake the transaction based on their commercial judgment and after being satisfied about the bonafides of the transaction; Advance payments should be made strictly as per the terms of the sale contract and should be made directly to the account of the company concerned, KYC and due diligence exercise should be done by the AD bank for the Indian importer entity and the overseas company; AD bank should follow up submission of the Bill of Entry / documents evidencing import of rough diamonds into the country by the importer, AD banks are required to submit a report of all such advance remittances made without a bank guarantee or standby letter of credit, where the amount of advance payment is equivalent to or exceeds USD 5,000,000/- (USD Five million only), to The Chief General Manager, Reserve Bank of India, Foreign Exchange Department, Trade Division, Central Office, Amar Bhawan, Sir. P. M. Road, Fort, Mumbai – 400 001, on a half yearly basis,


Advance Remittance for Import of Aircrafts, Helicopters and other Aviation Related purchases
Airline companies whom the Directorate General of Civil Aviation has permitted to operate as a schedule air transport service, can make advance remittance without bank guarantee, up to USD 50 million for direct import of each aircraft, helicopter and other aviation related purchases, banks should undertake the transactions based on their commercial judgment and after being satisfied about the bonafides of the transaction, KYC and due diligence exercise for Indian importer entity and the overseas manufacturer. bank may frame their own internal guidelines to deal with such cases, with the approval of their Board of Directors. In the case of a Public Sector Company or a Department / Undertaking of Central / State Governments, the AD Category - I bank shall ensure that the requirement of bank guarantee has been specifically waived by the Ministry of Finance. Physical import of goods into India is made within six months (three years in case of capital goods) from the date of remittance and the importer gives an undertaking to furnish documentary evidence. Bank ensure that the requisite approval of the Ministry of Civil Aviation / DGCA / other agencies in terms of the extant Foreign Trade Policy has been obtained
In the event of non-import of aircraft and aviation sector related products, AD Category - I bank should ensure that the amount of advance remittance is immediately repatriated to India.

It is clarified that where advance is paid as milestone payments, the date of last remittance made in terms of the contract will be reckoned for the purpose of submission of documentary evidence of import.

Interest on Import Bills
Bank may allow payment of interest on usance bills or overdue interest for a period of less than three years from the date of shipment at the prescribed rates. The current all-in-cost
ceilings, over 6 months LIBOR of respective currency of credit , are as under: Maturity period Up to one year 50 basis points and Maturity period More than one year but less than three years 125 basis points
In case of pre-payment of usance import bills, remittances may be made only after reducing the proportionate interest for the unexpired portion of usance at the rate at which interest has been claimed or LIBOR of the currency in which the goods have been invoiced, whichever is applicable. remittances may be allowed after deducting the proportionate interest for the
unexpired portion of usance at the prevailing LIBOR

Remittances against Replacement Imports
Where goods are short-supplied, damaged, short-landed or lost in transit and the Exchange Control copy of the import licence has already been utilised to cover the opening of a letter of
credit against the original goods which have been lost, the original endorsement to the extent of the value of the lost goods may be cancelled by the AD bank and fresh remittance for replacement imports may be permitted without reference to Reserve Bank, provided the insurance claim relating to the lost goods has been settled in favour of the importer and ensure that the consignment being replaced is shipped within the validity period of the licence.

Guarantee for Replacement Import
In case replacement goods for defective import are being sent by the overseas supplier before the defective goods imported earlier are reshipped out of India, AD banks may issue guarantees at the request of importer client for dispatch/return of the defective goods


Import of Equipment by Business Process Outsourcing (BPO) Companies for their overseas sites
Banks may allow remittances towards the cost of equipment to be imported and
installed at their overseas sites in connection with the setting up of their International Call Centres (ICCs) subject to : BPO company should have obtained necessary approval from the Ministry of Communications and InformationTechnology, remittance should be allowed based on commercial judgment, the bonafides of the transactions and strictly in terms of the contract, remittance is made directly to overseas supplier, obtain a certificate as evidence of import from the Chief Executive Officer (CEO) or auditor of the importer company that the goods for which remittance was made have actually been imported and installed at overseas sites.

Receipt of import documents by the importer directly from overseas suppliers
Import bills and documents should be received from the banker of the supplier by the banker of the importer in India.
AD should not, make remittances where import bills have been received directly by the importers from the overseas supplier, except in the following cases: value of import bill does not exceed USD 100,000, bills received by wholly-owned Indian subsidiaries of foreign companies from their principals. bills received by Status Holder Exporters, Export Oriented Units / Units in Free Trade Zones, Public Sector Undertakings and Limited Companies

Receipt of import documents by the AD Bank directly from overseas suppliers
At the request of importer clients, AD bank may receive bills directly from the overseas supplier, provided the AD is fully satisfied about the financial standing/status and track record of the importer customer. AD bank should obtain a report on each individual overseas supplier from the overseas banker or a reputed credit agency. (Need not be obtained in cases where the invoice value does not exceed USD 100,000)

Evidence of Import - Physical Imports
Where value of foreign exchange remitted / paid for import into India exceeds USD 100,000 or its equivalent, it is obligatory for AD, to ensure that the importer submits; Exchange Control copy of the Bill of Entry for home consumption, Exchange Control copy of the Bill of Entry for warehousing, in case of 100% Export Oriented Units, Customs Assessment Certificate or Postal Appraisal Form, as declared by the importer to the Customs Authorities
In respect of imports on D/A basis, AD should insist on production of evidence of import at the time of effecting remittance of import bill. if importers fail to produce documentary evidence due to genuine reasons such as non-arrival of consignment, delay in delivery/customs clearance of consignment, etc., bank may, allow reasonable time, not exceeding three months from the date
of remittance, to the importer to submit the evidence of import.

Evidence of import in lieu of Bill of Entry
AD bank may accept, in lieu of Exchange Control copy of Bill of Entry for home consumption, a certificate from the Chief Executive Officer (CEO) or auditor of the company that the goods for which remittance was made have actually been imported into India provided ; amount remitted is less than USD 1,000,000 , company listed on a stock exchange in India and whose net worth is Rs.100 crores + , importer is a public sector company or an undertaking of the Government, autonomous bodies, including scientific bodies/academic institutions, such as Indian Institute of Science / Indian Institute of Technology, etc. whose accounts are audited by the Comptroller and Auditor General of India (CAG).

Evidence of Import - Non Physical Imports
For Software or data through internet / datacom channels and drawings and designs through e-mail / fax, a certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer, may be obtained, and importers to keep Customs
Authorities informed of the imports made.

Issue of acknowledgement
bank should acknowledge receipt of evidence of import e.g. Exchange Control copy of the Bill of Entry, Postal Appraisal Form or Customs Assessment Certificate, etc., from importers by issuing acknowledgement slips containing all relevant particulars relating to the import transactions.

Verification & Preservation
Internal inspectors or auditors (including external auditors appointed by AD bank) should carry out verification of the documents evidencing import, e.g. Exchange Control copies of Bills of Entry or Postal Appraisal Forms or Customs Assessment Certificates, and preserved by bank for a period of one year from the date of its verification or if applicable till clearance from the investigating agency concerned.

Follow up for Import Evidence
If Documentary evidence of import not submitted within 3 months from the date of remittance involving foreign exchange exceeding USD100, 000, the AD bank should rigorously follow-up for the next 3 months, including issuing registered letters to the importer.
Bank should forward a statement on half-yearly basis in form BEF (Annex 1) furnishing details of import transactions, exceeding USD 100,000 in respect of which importers have defaulted in submission of appropriate document evidencing import within 6 months from the date of remittance, to the Regional Office of Reserve Bank
Banks need not follow up submission of evidence of import involving amount of USD 100,000 or less provided they are satisfied about the genuineness of the transaction and the bonafides of the remitter, based on suitable policy framed by the bank's Board of Directors

Issue of Bank Guarantee
Banks are permitted to issue guarantee on behalf of their importer customers in terms of Notification No. FEMA 8/2000-RB dated May 3, 2000,

Import Gold/Platinum/Silver by Nominated Banks/Agencies on consignment basis
Gold, platinum and silver may be imported by the nominated agencies/banks on consignment basis where the ownership will remain with the supplier and the importer (consignee) will be acting as an agent of the supplier (consignor). Remittances towards the cost of import shall be made as and when sales take place and in terms of the provisions of agreement entered into

Import Gold/Platinum/Silver by Nominated Banks/Agencies on unfixed price basis
The nominated agency/bank may import gold, platinum and silver on outright purchase basis subject to the condition that although ownership of the gold shall be passed on to the importer at the time of import itself, the price of gold shall be fixed later, as and when the importer sells the gold to the users.

Direct Import of Gold/Platinum/Silver by Nominated Banks/Agencies
Bank can open Letters of Credit and allow remittances on behalf of EOUs, units in SEZs in the Gem & Jewellery sector and nominated agencies, for direct import of gold, subject to, strictly in accordance with the Foreign Trade Policy. , Suppliers’ and Buyers’ Credit, including the usance period, should not exceed 90 days, Banker's prudence should be strictly exercised for all transactions, due diligence is undertaken and all Know-Your-Customer (KYC) norms and the Anti- Money-Laundering guidelines, the credentials of the supplier should also be ascertained before opening the LCs and The financial standing, line of business and the net worth of the importer customer should be commensurate with the volume of business turnover and all documents pertaining to such transactions must be preserved for at least five years.
Banks undertaking gold import transactions are required to submit as per the format , a monthly statement thereof, to the Trade Division, FED RBI Mumbai

Gold Loans
Nominated agencies / approved banks can import gold on loan basis for on lending to exporters of jewellery under this scheme.
EOUs and units in SEZ who are in the Gem and Jewellery sector can import gold on loan basis for manufacturing and export of jewellery on their own account only.
The maximum tenor of gold loan would be as per the Foreign Trade Policy (I year)
bank may open Standby Letters of Credit (SBLC), for import of gold on loan basis, where ever required, as per FEDAI guidelines dated April 1, 2003.
SBLC can be opened only on behalf of entities permitted to import gold on loan basis and in favour of internationally renowned bullion banks only.
Banks must maintain adequate documentation with them to uniquely link all imports with the SBLC issued for the import of gold on loan basis


Import factoring
bank may enter into arrangements with international factoring companies of repute, preferably members of Factors Chain International and have to ensure compliance with the extant foreign exchange and any other guidelines/directives

Merchanting Trade
bank may take necessary precautions in handling bonafides merchanting trade transactions or intermediary trade transactions to ensure that: goods involved in the transactions are permitted to be imported into India, all rules, regulations and directions applicable to export (except Export Declaration Form) and import (except Bill of Entry) are complied with for the export leg and import leg, respectively, the entire merchant trade transaction is completed within a period of 6 months, do not involve foreign exchange outlay for a period exceeding three months. And Where the payment for export leg of the transaction precedes banks should ensure that the liability for the import leg of the transaction is extinguished by the payment received for the export leg.
Short-term credit either by way of suppliers' credit or buyers' credit is not available for merchanting trade or intermediary trade transactions.

Shipping Glossary/Nautical Terms

A
Above board - On or above the deck, in plain view, not hiding anything.
Act of Pardon / Act of Grace - A letter from a state or power authorising action by a privateer. Also see Letter of Marque.
Abaft - Towards the stern, relative to some object ("abaft the fore hatch")
Abaft the beam - A relative bearing of greater than 90 degrees from the bow. e.g. "two points abaft the port beam."
Abandon Ship - An imperative to leave the vessel immediately, usually in the face of some imminent danger.
Abeam - 'On the beam', a relative bearing at right angles to the centerline of the ship's keel.
Abel Brown - A sea song (shanty) about a young sailor trying to sleep with a maiden. [1].
Aboard - On or in a vessel. - Close aboard means near a ship.
Absentee pennant - Special pennant flown to indicate absence of commanding officer, admiral, his chief of staff, or officer whose flag is flying (division, squadron, or flotilla commander).
Accommodation ladder - A portable flight of steps down a ship's side.
Admiralty - a high naval authority in charge of a state's Navy or a major territorial component. In the Royal Navy (UK) the Board of Admiralty, executing the office of the Lord High Admiral, promulgates Naval law in the form of Queen's (or King's) Regulations and Admiralty Instructions.
Admiralty law - Body of law that deals with maritime cases. In UK administered by the Probate, Divorce and Admiralty Division of the High Court of Justice.
Adrift - Afloat and unattached in any way to the shore or seabed. It may also imply that a vessel is not anchored and not under control, therefore goes where the wind and current take her, (Loose from moorings, or out of place).
Advance note - A note for one month's wages issued to sailors on their signing a ship's articles.
Aft - Towards the stern (of the vessel)
Afternoon watch - The 1200-1600 watch.
Aground - Resting on or touching the ground or bottom.
Ahead - Forward of the bow.
Ahoy - A cry to draw attention. Term used to hail a boat or a ship, as "Boat ahoy!"
Aid to Navigation - (ATON) Any device external to a vessel or aircraft specifically intended to assist navigators in determining their position or safe course, or to warn them of dangers or obstructions to navigation.
All hands - Entire ship's company, both officers and enlisted personnel.
All night in - Having no night watches.
Aloft - Above the ship's uppermost solid structure; overhead or high above.
Alongside - By the side of a ship or pier.
Amidships (or midships) - In the middle portion of ship, along the line of the keel.
Anchor - An object designed to prevent or slow the drift of a ship, attached to the ship by a line or chain; typically a metal, hook like, object designed to grip the bottom under the body of water.
Anchorage - A suitable place for a ship to anchor. Area of a port or harbor.
Anchor's aweigh - Said of an anchor when just clear of the bottom.
Anchor ball - Black shape hoisted in forepart of a ship to show that ship is anchored in a fairway.
Anchor buoy - A small buoy secured by a light line to anchor to indicate position of anchor on bottom.
Anchor cable - Wire or line running between anchor and ship.
Anchor chain - Heavy stud-linked chain running between anchor and ship.
Anchor detail - Group of men who handle ground tackle when the ship is anchoring or getting underway.
Anchor light - White light displayed by a ship at anchor. Two such lights are displayed by a ship over 150 feet in length.
Anchor watch - Making sure that the anchor is holding and the vessel is not drifting. Important during rough weather and at night. Most marine GPS units have an Anchor Watch alarm capability.
Arc of Visibility - The portion of the horizon over which a lighted aid to navigation is visible from seaward.
Armament - A ship's weapons.
Articles of War - Regulations governing the military and naval forces of UK and USA; read to every ship's company on commissioning and at specified intervals during the commission.
Ashore - On the beach, shore or land.
Astern - Toward the stern; an object or vessel that is abaft another vessel or object.
ASW - Anti-submarine warfare.
Athwart, athwartships - At right angles to the fore and aft or centerline of a ship
Avast - Stop! Cease or desist from whatever is being done.
Awash - So low in the water that the water is constantly washing across the surface.
Aweigh - Position of an anchor just clear of the bottom.
Aye, aye - Reply to an order or command to indicate that it first heard, and second is understood and will be carried out. ("Aye, aye, sir" to officers)
Azimuth compass - An instrument employed for ascertaining the sun's magnetic azimuth. The azimuth of an object is its bearing from the observer measured as an angle clockwise from true north.
Azimuth circle - Instrument used to take bearings of celestial objects.

B
Back and fill - To use the advantage of the tide being with you when the wind is not.
Backstays - Long lines or cables, reaching from the rear of the vessel to the mast heads, used to support the mast.
Baggywrinkle - A soft covering for cables (or any other obstructions) that prevents sail chafing from occurring.
Bank (sea floor) - A large area of elevated sea floor
Bar - Large mass of sand or earth, formed by the surge of the sea. They are mostly found at the entrances of great rivers or havens, and often render navigation extremely dangerous, but confer tranquility once inside. See also: Touch and go, grounding. Alfred Lord Tenneyson's poem 'Crossing the bar' an allegory for death.
Bar pilot - A bar pilot guides ships over the dangerous sandbars at the mouth of rivers and bays.
Beacon - A lighted or unlighted fixed aid to navigation attached directly to the earth’s surface. (Lights and daybeacons both constitute beacons.)
Beam - The beam of a ship is its width at the widest point, or a point alongside the ship at the mid-point of its length.
Bear - Large squared off stone used for scraping clean the deck of a sailing man-of-war.
Bear down - Turn away from the wind, often with reference to a transit.
Bearing - The horizontal direction of a line of sight between two objects on the surface of the earth.
Before the mast - Literally, the area of a ship before the foremast (the forecastle). Most often used to describe men whose living quarters are located here, officers being housed behind (abaft) the mast and enlisted men before the mast. This was because the midships area where the officers were berthed is more stable, being closer to the center of gravity, and thus more comfortable. It is less subject to the up and down movement resulting from the ship's pitching.
Belaying pins - Bars of iron or hard wood to which running rigging may be secured, or belayed.
Berth - A bed on a boat, or a space in a port or harbour where a vessel can be tied up.
Between the Devil and the deep blue sea - See Devil seam.
Bilged on her anchor - A ship that has run upon her own anchor.
Bimini - Weather-resistant fabric stretched over a stainless steel frame, fastened above the cockpit of a sailboat or flybridge of a power yacht which serves as a rain or sun shade.
Bimmy - A punitive instrument
Binnacle - The stand on which the ship's compass is mounted.
Binnacle list - A ship's sick list. The list of men unable to report for duty was given to the officer or mate of the watch by the ship's surgeon. The list was kept at the binnacle.
Bitt, plural Bitts - Posts mounted on the ship's bow, merely comprising two wooden uprights supporting a crossbar, for fastening ropes or cables; also used on various ships to tie boys over for painful (posterior) discipline, more informally then kissing the gunner's daughter.
Bitter end - The anchor cable is tied to the bitts, when the cable is fully paid out, the bitter end has been reached. The last part of a rope or cable.
Bloody - An intensive derived from the substantive 'blood', a name applied to the Bucks, Scrowers, and Mohocks of the seventeenth centuries.
Blue Peter - A blue and white flag hoisted at the foretrucks of ships about to sail.
Boat - A craft or vessel designed to float on, and provide transport over, water.
Boatswain or bosun - A non-commissioned officer responsible for the sails, ropes and boats on a ship who issues "piped" commands to seamen.
Bollard - From 'bol' or 'bole', the round trunk of a tree. A substantial vertical pillar to which lines may be made fast. Generally on the quayside rather than the ship.
Bombay runner - Large cockroach.
Bonded Jacky - A type of tobacco or sweet cake.
Booby - A type of bird that has little fear and therefore is particularly easy to catch, hence booby prize.
Booby hatch - A sliding hatch or cover.
Boom - A spar used to extend the foot of a sail.
Booms - Masts or yards, lying on board in reserve.
Boom vang (vang) - A sail control that lets one apply downward tension on the boom, countering the upward tension provided by the mainsail. The boom vang adds an element of control to mainsail shape when the mainsheet is let out enough that it no longer pulls the boom down. Boom vang tension helps control leech twist, a primary component of sail power.
Buoy - A floating object of defined shape and color, which is anchored at a given position and serves as an aid to navigation.
Bow - The front of a ship.
Bow-chaser, chase or chase-piece - A long gun with a relatively small bore, placed in the bow-port to fire directly ahead. Used especially while chasing an enemy vessel to damage its sails and rigging. (quoted from A Sea of Words)
Bowline - A type of knot, producing a strong loop of a fixed size, topologically similar to a sheet bend. Also a rope attached to the side of a sail to pull it towards the bow (for keeping the windward edge of the sail steady).
Bowse - To pull or hoist.
Bowsprit - A spar projecting from the bow used as an anchor for the forestay and other rigging.
Boy seaman - a young sailor, still in training
Brail - To furl or truss a sail by pulling it in towards the mast, or the ropes used to do so.
Brake - The handle of the pump, by which it is worked.
Brass monkeys or brass monkey weather - Very cold weather, origin unknown. A widely circulated folk etymology claiming to explain what a brass monkey is has been discredited by several people including Snopes [2] and the Oxford English Dictionary.
Bridge - A structure above the weather deck, extending the full width of the vessel, which houses a command centre, itself called by association, the bridge.
Bring to - Cause a ship to be stationary by arranging the sails.
Broaching-to - A sudden movement in navigation, when the ship, while scudding before the wind, accidentally turns her leeward side to windward, also use to describe the point when water starts to come over the gunwhale due to this turn.
Buffer - The chief bosun's mate (in the Royal Navy), responsible for discipline.
Bulkhead - An upright wall within the hull of a ship.
Bull of Barney - A beast mentioned in an obscene sea proverb.
Bulwark - The extension of the ship's side above the level of the weather deck.
Bumboat - A private boat selling goods.
Bumpkin - An iron bar (projecting out-board from a ship's side) to which the lower and topsail brace blocks are sometimes hooked. Chains supporting/stabilising the bowsprit.
Bunked - One's afflicted disposition after being talked to by a driveling idiot.
Buntline - One of the lines tied to the bottom of a square sail and used to haul it up to the yard when furling.
Bunting Tosser - A signalman who prepares and flys flag hoists.
Buoyed Up - Lifted by a buoy, especially a cable that has been lifted to prevent it from trailing on the bottom.
By and Large - By means into the wind, while large means with the wind. By and large is used to indicate all possible situations "the ship handles well both by and large".
By the board - Anything that has gone overboard.

C
Cabin - an enclosed room on a deck or flat.
Cabin boy - attendant on passengers and crew
Cable - A large rope. Also a measure of length or distance - (UK) 1/10 nautical mile, approx. 600 feet; (USA) 120 fathoms, 720 feet (219 m); Other countries use different values.
Canister - a type of anti personnel canon load in which lead balls or other loose metallic items were enclosed in a tin or iron shell. On firing the shell would disintegrate releasing the smaller metal objects.
Cape Horn fever - The name of the fake illness a malingerer is pretending to suffer from.
Capsize - When a ship or boat lists too far and rolls over, exposing the keel. On large vessels, this often results in the sinking of the ship.
Capstan - A rotating wheel mounted vertically, used to wind in anchors or other heavy objects; and sometimes to administer flogging over.
Captain's daughter - The cat o' nine tails, which in principle is only used on board on the captain's (or a court martial's) personal orders
Careening - Cause the ship to tilt on its side, usually to clean or repair the hull below the water line.
Cat - 1. To prepare an anchor, after raising it by lifting it with a tackle to the Cat Head, prior to securing (fishing) it alongside for sea. (An anchor raised to the Cat Head is said to be catted). 2. The Cat o' Nine Tails (see below). 3. A cat-rigged boat or catboat.
Catamaran - A vessel with two hulls.
Catboat - A cat-rigged vessel with only one sail, usually on a gaff.
Cat o' nine tails - A short nine-tailed whip kept by the bosun's mate to flog sailors (and soldiers in the Army).
Cat Head - A beam extending out from the hull used to support an anchor when raised in order to secure or 'fish' it.
Centreboard - A removable keel used to resist leeway.
Chafing - Wear on line or sail caused by constant rubbing against another surface.
Chafing Gear - Material applied to a line or spar to prevent or reduce chafing. See Baggywrinkle.
Chain shot - Cannon balls linked with chain - used to damage rigging and masts.
Chain-wale or channel - A broad, thick plank that projects horizontally from each of a ship's sides abreast a mast, distinguished as the fore, main, or mizzen channel accordingly, serving to extend the base for the shrouds, which supports the mast.
Chase guns - Cannons mounted on the bow or stern. Those on the bow could be used to fire upon a ship ahead, while those on the rear could be used to ward off pursuing vessels.
Chine - A relatively sharp angle in the hull, as compared to the rounded bottoms of most traditional boat hulls.
Chock-a-block - Rigging blocks that are so tight against one another that they cannot be further tightened.
Clean bill of health - A certificate issued by a port indicating that the ship carries no infectious diseases.
Clean slate - At the helm, the watch keeper would record details of speed, distances, headings, etc. on a slate. At the beginning of a new watch the slate would be wiped clean.
Cleat - A stationary device used to secure a rope aboard a vessel.
Clew-lines - Used to truss up the clews, the lower corners of square sails.
Club Hauling The ship drops one of its anchors at high speed to turn abruptly. This was sometimes used as a means to get a good firing angle on a pursuing vessel.
Coaming - The raised edge of a hatchway used to help keep out water.
Compass - Navigational instrument that revolutionised travel.
Corrector - a device to correct the ship's compass.
Courses - The mainsail, foresail, and the mizzen.
Coxswain or cockswain - The helmsman or crew member in command of a boat.
As the crow flies - A direct line between two points (which might cross land) which is the way crows travel rather than ships which must go around land.
Crow's nest - Specifically a masthead constructed with sides and sometimes a roof to shelter the lookouts from the weather, generally by whaling vessels, this term has become a generic term for what is properly called masthead. See masthead.
Cuddy - A small cabin in a boat.
Cunningham - A line invented by Briggs Cunningham, used to control the shape of a sail.
Cunt splice - A join between two lines, similar to an eye-splice, where each rope end is joined to the other a short distance along, making an opening which closes under tension.
Cuntline - The "valley" between the strands of a rope or cable. Before serving a section of laid rope e.g. to protect it from chafing, it may be "wormed" by laying yarns in the cuntlines, giving that section an even cylindrical shape.
Cut and run - When wanting to make a quick escape, a ship might cut lashings to sails or cables for anchors, causing damage to the rigging, or losing an anchor, but shortening the time needed to make ready by bypassing the proper procedures.
Cut of his jib - The "cut" of a sail refers to its shape. Since this would vary between ships, it could be used both to identify a familiar vessel at a distance, and to judge the possible sailing qualities of an unknown one.

D
Daggerboard - A type of centerboard that is removed vertically.
Daybeacon - An unlighted fixed structure which is equipped with a dayboard for daytime identification.
Dayboard - The daytime identifier of an aid to navigation presenting one of several standard shapes (square, triangle, rectangle) and colors (red, green, white, orange, yellow, or black).
Decks - the structures forming the approximately horizontal surfaces in the ship's general structure. Unlike flats, they are a structural part of the ship.
Deckhead - The under-side of the deck above. Sometimes panelled over to hide the pipe work. This panelling, like that lining the bottom and sides of the holds, is the ceiling.
Deadeye - A round wooden blank which serves a similar purpose to a block in the standing rigging of large sailing vessels.
Deadrise - The design angle between the keel (q.v.) and horizontal.
Derrick - A lifting device composed of one mast or pole and a boom or jib which is hinged freely at the bottom.
Devil seam - The curved seam in the deck planking closest to the side of the ship, next to the scuppers. A sailor slipping on the deck would be "between the Devil and the deep blue sea".
Devil to pay - 'Paying' the Devil is sealing the devil seam. It is a difficult and unpleasant job (with no resources) because of the shape of the seam (closest to the hull).
Directional Light - A light illuminating a sector or very narrow angle and intended to mark a direction to be followed.
Dog watch - A short watch period, generally half the usual time (eg a two hour watch between two four hour ones). Such a watch might be included in order to slowly rotate the system over several days for fairness, or to allow both watches to eat their meals at approximately normal times.
Dolphin - A structure consisting of a number of piles driven into the seabed or riverbed in a circular pattern and drawn together with wire rope.
Downhaul - A line used to control either a mobile spar, or the shape of a sail.
Draft - The depth of a ship's keel below the waterline.
Draught - See draft.
Dressing down - Treating old sails with oil or wax to renew them, or a verbal reprimand.
Driver - The large sail flown from the mizzen gaff.

E
Earrings - Small lines, by which the uppermost corners of the largest sails are secured to the yardarms.
Embayed - The condition where a sailing vessel is confined between two capes or headlands, typically where the wind is blowing directly onshore.
Extremis – (also known as “in extremis”) the point under International Rules of the Road (Navigation Rules) at which the privileged (or stand-on) vessel on collision course with a burdened (or give-way) vessel determines it must maneuver to avoid a collision. Prior to extremis, the privileged vessel must maintain course and speed and the burdened vessel must maneuver to avoid collision.

F
Fathom - A unit of length equal to 6 feet, roughly measured as the distance between a man's outstretched hands.
Fender - An air or foam filled bumper used in boating to keep boats from banging into docks or each other.
Figurehead - symbolic image at the head of a traditional sailing ship or early steamer.
Fireship - A ship loaded with flammable materials and explosives and sailed into an enemy port or fleet either already burning or ready to be set alight by its crew (who would then abandon it) in order to collide with and set fire to enemy ships.
First rate - The classification for the largest sailing warships of the 17th through 19th centuries. They had 3 masts, 850+ crew and 100+ guns.
Fish - 1. To repair a mast or spar with a fillet of wood. 2. To secure an anchor on the side of the ship for sea (otherwise known as "catting".)
First Lieutenant - In the Royal Navy, the senior lieutenant on board; responsible to the Commander for the domestic affairs of the ship's company. Also known as 'Jimmy the One' or 'Number One'. Removes his cap when visiting the mess decks as token of respect for the privacy of the crew in those quarters. Officer i/c cables on the forecastle.
First Mate - The Second in command of a ship
Flag hoist - A number of signal flags strung together to convey a message, e.g. 'England expects...'.
Flank - The maximum speed of a ship. Faster than "full speed".
Flatback -A Great Lakes slang term for a vessel without any self unloading equipment.
Fluke - The wedge-shaped part of an anchor's arms that digs into the bottom.
Fly by night - A large sail used only for sailing downwind, requiring little attention.
Foot - The bottom of a sail.
Footloose - If the foot of a sail is not secured properly, it is footloose, blowing around in the wind.
Footrope - Each yard on a square rigged sailing ship is equipped with a footrope for sailors to stand on while setting or stowing the sails
Forecastle - A partial deck, above the upper deck and at the head of the vessel; traditionally the sailors' living quarters.
Founder - To fill with water and sink → Wiktionary
Fore - Towards the bow (of the vessel).
Foremast jack - An enlisted sailor, one who is housed before the foremast.
Forestays - Long lines or cables, reaching from the front of the vessel to the mast heads, used to support the mast.
Freeboard - The height of a ship's hull (excluding superstructure) above the waterline. The vertical distance from the current waterline to the lowest point on the highest continuous watertight deck. This usually varies from one part to another.
Furl - To roll or wrap a sail around the mast or spar to which it is attached.

G
Gaff - The spar that holds the upper edge of a sail. Also a long hook with a sharp point to haul fish in.
Galley - the kitchen of the ship
Garbled - Garbling was the (illegal) practice of mixing cargo with garbage.
Global Positioning System - (GPS) A satellite based radionavigation system providing continuous worldwide coverage. It provides navigation, position, and timing information to air, marine, and land users.
Grapeshot - Small balls of lead fired from a cannon, similar to shotgun shot on a larger scale. Used to hurt people, rather than cause structural damage.
Grog - Watered-down Pusser's rum - half a gill with equal part of water issued to all seamen over twenty. (CPOs and POs were issued with neat rum) From the British Admiral Vernon who, in 1740, ordered the men's ration of rum to be watered down. He was called "Old Grogram" because he often wore a grogram coat), and the watered rum came to be called 'grog'. Often used (illegally) as currency in exchange for favours in quantities prescribed as 'sippers' and 'gulpers'. Additional issues of grog were made on the command 'splice the mainbrace' for celebrations or as a reward for performing especially onerous duties. The RN discontinued the practice of issuing rum in 1970.
Groggy - Drunk from having consumed a lot of grog.
Gunner's daughter - see Kissing the G.'s D.
Gunwale - Upper edge of the hull.

H
Halyard or Halliard - Originally, ropes used for hoisting a spar with a sail attached; today, a line used to raise the head of any sail.
Hammock - Canvas sheets, slung from the deckhead in messdecks, in which seamen slept. "Lash up and stow" a piped command to tie up hammocks and stow them (typically) in racks inboard of the ship's side to protect crew from splinters from shot and provide a ready means of preventing flooding caused by damage.
Hand Bomber - A ship who's boilers are fueled by coal shoveled in by hand.
Hand over fist - To climb steadily upwards, from the motion of a sailor climbing shrouds on a sailing ship (originally "hand over hand").
Hank - A fastener attached to the luff of the headsail that attaches the headsail to the forestay. Typical designs include a bronze or plastic hook with a spring-operated gate, or a strip of cloth webbing with a snap fastener.
Harbor - A harbor or harbour, or haven, is a place where ships may shelter from the weather or are stored. Harbours can be man-made or natural.
Haul wind - To point the ship so as to be heading in the same direction as the wind, to maximise speed.
Hawse-hole - A hole in a ship's bow for a cable, such as for an anchor, to pass through.
Hawsepiper - An informal maritime industry term used to refer to a merchant ship’s officer who began his or her career as an unlicensed merchant seaman and did not attend a traditional maritime college/academy to earn the officer license.
Head - The toilet or latrine of a vessel, which for sailing ships projected from the bows
Head of navigation - A term used to describe the farthest point above the mouth of a river that can be navigated by ships.
Headsail - Any sail flown in front of the most forward mast.
Heave - A vessel's transient up-and-down motion.
Heaving to - To stop a sailing vessel by lashing the helm in opposition to the sails. The vessel will gradually drift to leeward, the speed of the drift depending on the vessel's design.
Heave down - Turn a ship on its side (for cleaning).
Helmsman - A person who steers a ship
Hogging or hog - The distortion of the hull where the ends of the keel are lower than the center.
Hold - In earlier use, below the orlop deck, the lower part of the interior of a ship's hull, especially when considered as storage space, as for cargo. In later merchant vessels it extended up through the decks to the underside of the weather deck.
Holiday - A gap in the coverage of newly applied paint, slush, tar or other preservative.
Holystone - A chunk of sandstone used to scrub the decks. The name comes from both the kneeling position sailors adopt to scrub the deck (reminiscent of genuflection for prayer), and the stone itself (which resembled a Bible in shape and size).
Horn - A sound signal which uses electricity or compressed air to vibrate a disc diaphragm.
Horse - Attachment of sheets to deck of vessel ('Main-sheet horse).
Hounds - Attachments of stays to masts.
Hull - The shell and framework of the basic flotation-oriented part of a ship
Hydrofoil - A boat with wing-like foils mounted on struts below the hull.

I
Icing - A serious hazard where cold temperatures (below about -10°C) combined with high wind speed (typically force 8 or above on the Beaufort scale) result in spray blown off the sea freezing immediately on contact with the ship
In the offing - In the water visible from on board a ship, now used to mean something imminent.
Inboard-Outboard drive system - A larger Power Boating alternative drive system to transom mounted outboard motors.

J
Jack - Either a flag, or a sailor. Typically the flag was talked about as if it were a member of the crew.
Jacklines or Jack Stays - Lines, often steel wire with a plastic jacket, from the bow to the stern on both port and starboard. The Jack Lines are used to clip on the safety harness to secure the crew to the vessel while giving them the freedom to walk on the deck.
Jack Tar - A sailor dressed in 'square rig' - (now) with square collar - (formerly) with tarred pigtail.
Jib - A triangular staysail at the front of a ship.

K
Killick - A small anchor. A fouled killick is the substantive badge of non-commissioned officers in the RN. Seamen promoted to the first step in the promotion ladder are called 'Killick'. The badge signifies that here is an Able Seaman skilled to cope with the awkward job of dealing with a fouled anchor.
Keel - The central structural basis of the hull
Keelhauling - Maritime punishment: to punish by dragging under the keel of a ship.
Kelson - The timber immediately above the keel of a wooden ship.
Kissing the gunner's daughter - bend over the barrel of a gun for punitive spanking with a cane or cat
Know the ropes - A sailor who 'knows the ropes' is familiar with the miles of cordage and ropes involved in running a ship.

L
Ladder - On board a ship, all "stairs" are called ladders, except for literal staircases aboard passenger ships. Most "stairs" on a ship are narrow and nearly vertical, hence the name. Believed to be from the Anglo-Saxon word hiaeder, meaning ladder.
Laker -Great Lakes slang for a vessel who spends all its time on the 5 Great Lakes.
Land lubber - A person unfamiliar with being on the sea.
Lanyard - A rope that ties something off.
Larboard - The left side of the ship (archaic, see port)- cf. starboard.
Large - See By and large.
Lateral System - A system of aids to navigation in which characteristics of buoys and beacons indicate the sides of the channel or route relative to a conventional direction of buoyage (usually upstream).
Lay - To come and go, used in giving orders to the crew, such as "lay forward" or "lay aloft". To direct the course of vessel. Also, to twist the strands of a rope together.
Lay down - To lay a ship down is to begin construction in a shipyard.
League - A unit of length, normally equal to three nautical miles.
Leech - The aft or trailing edge of a fore-and-aft sail; the leeward edge of a spinnaker; a vertical edge of a square sail. The leech is susceptible to twist, which is controlled by the boom vang and mainsheet.
Lee side - The side of a ship sheltered from the wind (cf. weather side).
Lee shore - A shore downwind of a ship. A ship which cannot sail well to windward risks being blown onto a lee shore and grounded.
Leeway - The amount that a ship is blown leeward by the wind. See also weatherly.
Leeward - In the direction that the wind is blowing towards.
Let go and haul - An order indicating that the ship is in line with the wind.
Let the cat out of the bag - To break bad news (the "cat o' nine tails" being taken out of the bag by the bosun was bad news, announcing a flogging).
Letter of marque and reprisal - A warrant granted to a privateer condoning specific acts of piracy against a target as a redress for grievances.
Lifeboat - A small steel or wood boat located near the stern of a vessel. Used to get the crew to safety if something happens to the mothership.
Line - the correct nautical term for the majority of the cordage or "ropes" used on a vessel. A line will always have a more specific name, such as mizzen topsail halyard, which describes its use.
Liner - Ship of The Line: a major warship capable of taking its place in the main (battle) line of fighting ships. Hence modern term for most prestigious passenger vessel: Liner.
List - The vessel's angle of lean or tilt to one side, in the direction called roll.
Loaded to the gunwales - Literally, having cargo loaded as high as the ship's rail; also means extremely drunk.
Loggerhead - An iron ball attached to a long handle, used for driving caulking into seams and (occasionally) in a fight. Hence: 'at loggerheads'.
Lubber's line - A vertical line inside a compass case indicating the direction of the ship's head.
Luff - 1. The foreward edge of a sail. 2. To head a sailing vessel more towards the direction of the wind.
Luffing 1. When a sailing vessel is steered more to windward. 2. Loosening a sheet past optimal trim. 3. The flapping of the sail(s) which results.
Lying ahull - Waiting out a storm by dousing all sails and simply letting the boat drift.

M
Mainbrace - The brace attached to the mainmast.
Mainmast (or Main) - The tallest mast on a ship.
Mainsheet - Sail control line that allows the most obvious effect on mainsail trim. Primarily used to control the angle of the boom, and thereby the mainsail, this control can also increase or decrease downward tension on the boom while sailing upwind, significantly affecting sail shape. For more control over downward tension on the boom, use a boom vang.
Man of war - a warship from the age of sail
Man overboard! - A cry let out when a seaman has gone overboard
Marina - a docking facility for small ships and yachts.
Marines Soldiers afloat. Royal Marines formed as the Duke of York and Albany's Maritime Regiment of Foot in 1664 with many and varied duties including providing guard to ship's officers should there be mutiny aboard. Sometimes thought by seamen to be rather gullible - hence 'tell it to the marines' who might believe your tall tale.
Mast - A verticle pole on a ship which supports sails or rigging.
Masthead - A small platform partway up the mast, just above the height of the mast's main yard. A lookout is stationed here, and men who are working on the main yard will embark from here. See also Crow's Nest.
Master - Either the commander of commercial vessel, or a senior officer of a naval sailing ship in charge of routine seamanship and navigation but not in command during combat.
Master-at-Arms - A non-commissioned officer responsible for discipline on a naval ship. Standing between the officers and the crew, commonly known in the Royal Navy as 'the Buffer'.
Mess - An eating place aboard ship. A group of crew who live and feed together,
Mess deck catering - A system of catering in which a standard ration is issued to a mess supplemented by a money allowance which may be used by the mess to buy additional victuals from the Pusser's stores or elsewhere. Each mess was autonomous and self-regulating. Seaman cooks, often members of the mess, prepared the meals and took them, in a tin canteen, to the galley to be cooked by the ship's cooks. As distinct from 'cafeteria messing' where food is issued to the individual hand - now the general practice.
Midshipman - A non-commissioned officer below the rank of Lieutenant. Usually regarded as being "in training" to some degree. Also known as 'Snotty'. 'The lowest form of animal life in the Royal Navy' where he has authority over and responsibility for more junior ranks, yet, at the same time, relying on their experience and learning his trade from them.
Mizzenmast (or Mizzen) - The third mast on a ship.
Mizzen staysail - Sail on a ketch or yawl, usually lightweight, set from, and forward of, the mizzen mast while reaching in light to moderate air.
Moor - to attach a boat to a mooring buoy or post. Also, to a dock a ship.

N
Navigation rules - Rules of the road that provide guidance on how to avoid collision and also used to assign blame when a collision does occur.
Nipper - Short rope used to bind a cable to the "messenger" (a moving line propelled by the capstan) so that the cable is dragged along too (Used because the cable is too large to be wrapped round the capstan itself). During the raising of an anchor the nippers were attached and detached from the (endless) messenger by the ship's boys. Hence the term for small boys: 'nippers'.
No room to swing a cat - The entire ship's company was expected to witness floggings, assembled on deck. If it was very crowded, the bosun might not have room to swing the 'cat o' nine tails' (the whip).

O
Oilskin Foul-weather gear worn by sailors.
Oreboat -Great Lakes Term for a vessel primarily used in the transport of iron ore.
Orlop deck The lowest deck of a ship of the line. The deck covering in the hold.
Outhaul - A line used to control the shape of a sail.
Overbear - To sail downwind directly at another ship, stealing the wind from its sails.
Overhaul - Hauling the buntline ropes over the sails to prevent them from chaffing.
Overhead - The "ceiling," or, essentially, the bottom of the deck above you.
Overreach - When tacking, to hold a course too long.
Over the barrel - Adult sailors were flogged on the back or shoulders while tied to a grating, but boys were beaten instead on the posterior (often bared), with a cane or cat, while bending, often tied down, over the barrel of a gun, known as (kissing) the gunner's daughter.
Overwhelmed - Capsized or foundered.
Ox-Eye - A cloud or other weather phenomenon that may be indicative of an upcoming storm.

P
Parrel - A movable loop, used to fasten the yard to its respective mast.
Part brass rags - Fall out with a friend. From the days when cleaning materials were shared between sailors.
Pay - Fill a seam (with caulking or pitch); see 'The Devil to Pay', or to lubricate the running rigging: 'pay' with slush (qv) or protect from the weather by covering with slush.
Paymaster - The officer responsible for all money matters in RN ships including the paying and provisioning of the crew, all stores, tools and spare parts.
Pilot - Navigator. A specially knowledgeable person qualified to navigate a vessel through difficult waters, e.g harbour pilot etc.
Pipe (Bos'n's) - or a Bos'n's Call - A whistle used by Boatswains (bosuns or bos'ns) to issue commands. Consisting of a metal tube which directs the breath over an aperture on the top of a hollow ball to produce high pitched notes. The pitch of the notes can be changed by partly covering the aperture with the finger of the hand in which the pipe is held. The shape of the instrument is similar to that of a smoking pipe.
Pipe down - A signal on the bosun's pipe to signal the end of the day, requiring lights (and smoking pipes) to be extinguished and silence from the crew.
Piping the side - A salute on the bos'n's pipe(s) performed in the company of the deck watch on the starboard side of the quarterdeck or at the head of the gangway, to welcome or bid farewell to the ship's Captain, senior officers and honoured visitors.
Pitch - A vessel's motion, rotating about the beam axis, so the bow pitches up and down.
Pontoon - A flat-bottomed vessel used as a ferry or a barge or float moored alongside a jetty or a ship to facilitate boarding.
Poop deck - A high deck on the aft superstructure of a ship.
Pooped - 1. Swamped by a high, following sea. 2. Exhausted.
Port - Towards the left-hand side of the ship facing forward (formerly Larboard). Denoted with a red light at night.
Press gang - Formed body of personnel from a ship of the Royal Navy (either a ship seeking personnel for its own crew or from a 'press tender' seeking men for a number of ships) that would identify and force (press) men, usually merchant sailors into service on naval ships usually against their will.
Preventer (Gybe preventer, Jibe preventer) - A sail control line originating at some point on the boom leading to a fixed point on the boat's deck or rail (usually a cleat or pad eye) used to prevent an accidental jibe while sailing downwind.
Privateer - A privately-owned ship authorised by a national power (by means of a Letter of Marque) to conduct hostilities against an enemy. Also called a private man of war.
Prow - a poetical alternative term for bows.
Pusser - Purser, the one who is buys, stores and sells all stores on board RN ships, including victuals, rum and tobacco. originally a private merchant, latterly a warrant officer.

Q
Queen's (King's) Regulations - The standing orders governing the Royal Navy of UK issued in the name of the current Monarch.
Quayside - Refers to the dock or platform used to fasten a vessel to

R
Radar - An electronic system designed to transmit radio signals and receive reflected images of those signals from a "target" in order to determine the bearing and distance to the "target".
Radar reflector - A special fixture fitted to a vessel or incorporated into the design of certain aids to navigation to enhance their ability to reflect radar energy. In general, these fixtures will materially improve the visibility for use by vessels with radar.
Range lights - Two lights associated to form a range (a line formed by the extension of a line connecting two charted points) which often, but not necessarily, indicates the channel centerline. The front range light is the lower of the two, and nearer to the mariner using the range. The rear light is higher and further from the mariner.
Ratlines - Rope ladders permanently rigged from bulwarks and tops to the mast to enable access to top masts and yards. Also serve to provide lateral stability to the masts.
Reach - A point of sail from about 60° to about 160° off the wind. Reaching consists of "close reaching" (about 60° to 80°), "beam reaching" (about 90°) and "broad reaching" (about 120° to 160°)
Reduced cat - A light version on the cat o'nine tails for use on boys; also called "boys' pussy".
Reef
1. Reef: To temporarily reduce the area of a sail exposed to the wind, usually to guard against adverse effects of strong wind or to slow the vessel.
2. Reef: Rock or coral, possibly only revealed at low tide, shallow enough that the vessel will at least touch if not go aground.
Reef points - Small lengths of cord attached to a sail, used to secure the excess fabric after reefing.
Reef-bands - Long pieces of rough canvas sewed across the sails to give them additional strength.
Reef-tackles - Ropes employed in the operation of reefing.
Rigging - The system of masts and lines on ships and other sailing vessels.
Roll - A vessel's motion rotating from side to side, about the fore-aft axis. List (qv) is a lasting tilt in the roll direction.
Rolling-tackle - A number of pulleys, engaged to confine the yard to the weather side of the mast; this tackle is much used in a rough sea.
the Ropes' refers to the lines in the rigging.
Rope's end A summary punishment device.
Rummage sale - A sale of damaged cargo (from French arrimage).
Running rigging - Rigging used to manipulate sails, spars, etc. in order to control the movement of the ship. Cf. standing rigging.

S
Sagging - When a trough of a wave is amidship.
Sail-plan - A set of drawings showing various sail combinations recommended for use in various situations.
Saltie - Great Lakes term for a vessel that sails the oceans.
Scandalize - To reduce the area of a sail by expedient means (slacking the peak and tricing up the tack) without properly reefing it.
Scud - A name given by sailors to the lowest clouds, which are mostly observed in squally weather.
Scudding - A term applied to a vessel when carried furiously along by a tempest.
Scuppers - An opening on the side rail that allows water to run off the deck.
Scuttle - A small opening, or lid thereof, in a ship's deck or hull. To cut a hole in, or sink something.
Scuttlebutt - A barrel with a hole in used to hold water that sailors would drink from. Also: gossip.
Sea anchor - A stabilizer deployed in the water for heaving to in heavy weather. It acts as a brake and keeps the hull in line with the wind and perpendicular to waves.
Seaman - generic term for sailor, or (part of) a low naval rank
Self-Unloader - Great Lakes slang term for a vessel with a conveyor or some other method of unloading the cargo without shoreside equipment.
Sennet whip - a summary punitive implement
Shakes - Pieces of barrels or casks broken down to save space. They are worth very little, leading to the phrase "no great shakes".
Sheer - The upward curve of a vessel's longitudinal lines as viewed from the side.
Sheet - A rope used to control the setting of a sail in relation to the direction of the wind.
Ship's bell - Striking the ship's bell is the traditional method of marking time and regulating the crew's watches.
Ship's company - The crew of a ship.
Shrouds- Standing rigging running from a mast to the sides of a ships.
Siren A sound signal which uses electricity or compressed air to actuate either a disc or a cup shaped rotor.
Skysail - A sail set very high, above the royals. Only carried by a few ships.
Skyscraper - A small, triangular sail, above the skysail. Used in light winds on a few ships.
Slush - Greasy substance obtained by boiling or scraping the fat from empty salted meat storage barrels, or the floating fat residue after boiling the crew's meal. In the Royal Navy the perquisite of the cook who could sell it or exchange it (usually for alcohol) with other members of the crew. Used for greasing parts of the running rigging of the ship and therefore valuable to the master and bosun.
Slush fund - The money obtained by the cook selling slush ashore. Used for the benefit of the crew (or the cook).
Son of a gun - The space between the guns was used as a semi-private place for trysts with prostitutes and wives, which sometimes led to pregnancies.
Spanker - A fore and aft, gaff-rigged sail on the aft-most mast of a square-rigged vessel.
Spar - A wooden pole used to support various pieces of rigging and sails.
Spindrift - Finely-divided water swept from crest of waves by strong winds.
Spinnaker - A large sail flown in front of the vessel while heading downwind.
Spinnaker pole - A spar used to help control a spinnaker or other headsail.
Splice - To join lines (ropes, cables etc.) by unravelling their ends and intertwining them to form a continuous line. To form an eye or a knot by splicing.
Standing rigging - Rigging which is used to support masts and spars, and is not normally manipulated during normal operations. Cf. running rigging.
Starboard - Towards the right-hand side of a vessel facing forward. Denoted with a green light at night.
Square meal - A sufficient quantity of food. Meals on board ship were served to the crew on a square wooden plate in harbour or at sea in good weather. Food in the Royal Navy was invariably better or at least in greater quantity than that available to the average landsman. However, while square wooden plates were indeed used on board ship, there is no established link between them and this particular term. The OED gives the earliest reference from the U.S. in the mid 19th century.
Stay - Rigging running fore (forestay) and aft (backstay) from a mast to the hull.
Staysail - A sail whose luff is attached to a forestay.
Steering oar or steering board - A long, flat board or oar that went from the stern to well underwater, used to control the vessel in the absence of a rudder.
Stem - the extension of keel at the forward of a ship.
Stern - The rear part of a ship, technically defined as the area built up over the sternpost, extending upwards from the counter to the taffrail.
Stern tube - the tube under the hull to bear the tailshaft for propulsion(usually at stern).
Stonnacky - a punitive device
Studding-sails (pronounced 'stunsail') - Long and narrow sails, used only in fine weather, on the outside of the large square sails.
Surge - A vessel's transient motion in a fore and aft direction.
Sway - A vessel's motion from side to side.
Swinging the compass - Measuring the accuracy in a ship's magnetic compass so its readings can be adjusted - often by turning the ship and taking bearings on reference points.
Swinging the lamp - Telling sea stories. Referring to lamps slung from the deckhead which swing while at sea. Often used to indicate that the story teller is exaggerating.
Swinging the lead - Measuring the depth of water beneath a ship using a lead-weighted sounding line. A sailor who was feigning illness etc to avoid a hard job was said to be 'swinging the lead'.

T
Tailshaft - a kind of metallic shafting (a rod of metal) to hold the propeller and connected to the power engine. When the tailshaft is moved, the propeller may also be moved for propulsion.
Taken aback - An inattentive helmsmen might allow the dangerous situation to arise where the wind is blowing into the sails 'backwards', causing a sudden (and possibly dangerous) shift in the position of the sails.
Taking the wind out of his sails - To sail in a way that steals the wind from another ship. cf. overbear.
Tally - The operation of hauling aft the sheets, or drawing them in the direction of the ship's stern.
Teazer - A rope used as a punitive device.
Three sheets to the wind - On a three-masted ship, having the sheets of the three lower courses loose will result in the ship meandering aimlessly downwind. Also, a sailor who has drunk strong spirits beyond his capacity.
Timoneer - From the French timonnier, is a name given, on particular occasions, to the steersman of a ship.
Toe the line or Toe the mark - At parade, sailors and soldiers were required to stand in line, their toes in line with a seam of the deck.
Togey - A rope used as a punitive device
Topsail - The second sail (counting from the bottom) up a mast. These may be either square sails or fore-and-aft ones, in which case they often "fill in" between the mast and the gaff of the sail below.
Topmast - The second section of the mast above the deck; formerly the upper mast, later surmounted by the topgallant mast; carrying the topsails.
Topgallant - the mast or sails above the tops.
Touch and go - The bottom of the ship touching the bottom, but not grounding.
Towing - The operation of drawing a vessel forward by means of long lines.
Travellers - Small fittings that slide on a rod or line. The most common use is for the inboard end of the mainsheet; a more esoteric form of traveller consists of "slight iron rings, encircling the backstays, which are used for hoisting the top-gallant yards, and confining them to the backstays".
Traffic Separation Scheme - Shipping corridors marked by buoys which separate incoming from outgoing vessels. Improperly called Sea Lanes.
Trick - A period of time spent at the wheel ("my trick's over").
Turtling - When a sailboat (in particular a dinghy) capsizes to a point where the mast is pointed straight down and the hull is on the surface resembling a turtle shell.

U
Under the weather - Serving a watch on the weather side of the ship, exposed to wind and spray.
Underway - A vessel that is not at anchor, or made fast to the shore, or aground.
Upper-yardmen - Specially selected personnel destined for high office.

W
Wales - A number of strong and thick planks running length-wise along the ship, covering the lower part of the ship's side.
Watch - A period of time during which a part of the crew is on duty. Changes of watch are marked by strokes on the ship's bell.
Watercraft - Water transport vessels. Ships, boats, personal water craft.
Weather gage - Favorable position over another sailing vessel to with respect to the wind.
Weather deck - Whichever deck is that exposed to the weather – usually either the main deck or, in larger vessels, the upper deck.
Weather side - The weather side of a ship is the side exposed to the wind.
Weatherly - A ship that is easily sailed and maneuvered; makes little leeway when sailing to windward.
Weigh anchor - To heave up (an anchor) preparatory to sailing.
Wells - Places in the ship's hold for the pumps.
White Horses – Waves in wind strong enough to produce foam or spray on the wave tops.
Wheelhouse - Location on a ship where the steering wheel is located, often interchanged with pilothouse and bridge.
Wide berth - To leave room between two ships moored (berthed) to allow space for maneuver.
Windage - Wind resistance of the boat.
Windbound - A condition wherein the ship is detained in one particular station by contrary winds.
Windward - In the direction that the wind is coming from.
Windlass - A winch mechanism, usually with a horizontal axis. Used where mechanical advantage greater than that obtainable by block and tackle was needed (such as raising the anchor on small ships).

Y
Yard - The horizontal spar from which a square sail is suspended.
Yardarm The very end of a yard. Often mistaken for a "yard", which refers to the entire spar. As in to hang 'from the yardarm' and the sun being 'over the yardarm' (late enough to have a drink).
Yaw - A vessel's motion rotating about the vertical axis, so the bow yaws from side to side.