Circular No. A.P. (DIR Series) Circular No. 11, Dated: 01.10.2025
1. Introduction
The Reserve Bank of India (RBI) has announced revisions to the guidelines governing Merchanting Trade Transactions (MTT). This change reflects the central bank’s commitment to facilitating smoother international trade operations while ensuring that regulations remain relevant in a dynamic global environment.
2. Key Change in Timeline
Under the revised framework, the RBI has extended the permissible time period for the outlay of foreign exchange from the earlier four months to six months. This extension provides businesses engaged in merchanting trade with additional flexibility in managing their payment obligations and cash flows.
3. Impact on Merchanting Trade
Merchanting Trade Transactions typically involve an intermediary in India who facilitates trade between two foreign parties without the goods entering Indian territory. By granting more time for foreign exchange outlay, the RBI aims to reduce operational stress for traders and help them better align payments with shipment schedules, thereby improving efficiency in global trade.
4. Continuity of Existing Provisions
It is important to note that apart from this specific revision, all other provisions outlined in the earlier circular dated January 23, 2020, will remain unchanged. This ensures continuity in the regulatory framework while introducing only the necessary adjustment to address the evolving needs of international trade participants.
5. Conclusion
In conclusion, the RBI’s decision to revise MTT guidelines by extending the foreign exchange outlay timeline to six months is a pragmatic step that balances regulatory compliance with trade facilitation. Effective immediately, the updated instructions are expected to ease compliance burdens, enhance liquidity management, and support India’s role as a trusted facilitator in global trade networks.
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