Leon Lacroix

Foreign Exchange Management Act or in short (FEMA) is an act that provides guidelines for the free flow of foreign exchange in India. It has brought a new management regime of foreign exchange consistent with the emerging frame work of the World Trade Organisation (WTO). Foreign Exchange Management Act was earlier known as FERA (Foreign Exchange Regulation Act), which has been found to be unsuccessful with the proliberalisation policies of the Government of India.

Export Credit Guarantee Corporation of India Limited, was established in the year 1957 by the Government of India to strengthen the export promotion drive by covering the risk of exporting on credit. Being essentially an export promotion organization, it functions under the administrative control of the Ministry of Commerce & Industry, Department of Commerce, Government of India.

It provides a range of credit risk insurance covers to exporters against loss in export of goods and services.

It offers guarantees to banks and financial institutions to enable exporters to obtain better facilities from them.

It provides Overseas Investment Insurance to Indian companies investing in joint ventures abroad in the form of equity or loan.

The United Nations Commission on International Trade Law (UNCITRAL) was established in 1966 and is a subsidiary organ of the United Nations General Assembly with a general mandate to promote the progressive harmonization and unification of international trade law. Since then, UNCITRAL has prepared a number of conventions, model laws and other instruments on the substantive regulation of trade transactions and on other aspects of business law that have an impact on international trade. UNCITRAL meets once a year, usually in summer, alternately in New York and Vienna.

The European Union directive implemented invoicing requirements that shall be followed by all EU member countries. The main information that the invoice should include are the same for every EU country.

Information required in all cases:

- Date of issue

- Unique sequential number identifying the invoice

- Supplier’s VAT identification number

- Customer’s VAT identification number (if the customer is liable for the tax on the transaction)

- Supplier’s full name & address

- Customer’s full name & address

- Description of quantity & type of goods supplied or type & extent of services rendered

- Date of transaction or payment (if different from invoice date)

- VAT rate applied

- VAT amount payable

- Breakdown of VAT amount payable by VAT rate or exemption

- Unit price of goods or services – exclusive of tax, discounts or rebates (unless included in the unit price)

This is absolutely OK to do so, as the export declaration to UK customs does allow for this. The only issue from the commercial point of view is the exchange rate as fluctuations can result in reduced profitability.

Also, receiving payments in US Dollars into your bank can carry charges, and this again may affect the profitability of the transaction.