RBI/2004/74
A.P. (DIR Series) Circular No.76
February 24, 2004
To
All Authorised Dealers in Foreign Exchange
Madam/Sirs,
Foreign Exchange Management Act (FEMA), 1999 – Current Account
Transactions – Liberalisation
Attention of Authorised Dealers (ADs) is invited to Annexure
I of A.D. (M.A. Series) Circular No.11 dated May 16, 2000 with regard to
Rules relating to Current Account Transactions.
2. As a step towards further liberalisation, it has been
decided to remove the following restrictions on remittances by residents.
(i) Remittance for securing Insurance for Health
from a Company Abroad
In terms of item No.10 of Schedule II, payment for securing
insurance for health from a company abroad requires the approval of Ministry
of Finance (Insurance Division). It has since been decided that Government's
approval would not be required and Authorised Dealers(ADs) may freely allow
such remittances.
(ii) Remittance by Artiste
In terms of item No.1 of Schedule III remittance
by artistes e.g. wrestler, dancer, entertainer, etc., requires prior approval
of RBI. Henceforth, ADs may freely allow such remittances.
(iii) Commission to Agents abroad for Sale of Residential Flats/ Commercial
Plots in India
In terms of item No.11 of Schedule III, remittance by way of
commission to agents abroad for sale of residential flats/commercial plots in
India, exceeding 5 per cent of the inward remittance requires RBI's approval.
ADs may freely allow such remittances upto USD 25,000 or 5 per cent of the inward
remittance, per transaction, whichever is higher.
(iv) Short-term Credit to Overseas Offices of Indian
Companies
In terms of item No.12 of Schedule III, short term credit to
overseas offices of Indian companies requires prior approval of RBI. Henceforth,
ADs may allow such facility without RBI’s approval.
(v) Remittance for Advertisement on Foreign
Television Channels
In terms of item No.13 of Schedule III, RBI's prior approval
is required in cases where the export earnings of the advertiser are less than
Rs.10 lakhs during each of the preceding 2 years. Henceforth, ADs may freely
allow remittances for advertisement on foreign television channels.
(vi) Remittance of Royalty and Payment of lump- sum fee
In terms of item No.14 of Schedule III, RBI's prior approval
is required if the agreement for technical collaboration has not been registered
with RBI. Henceforth, ADs may allow remittances for royalty and payment of lump-sum
fee provided the payments are in conformity with the norms as per item No.8
of Schedule II i.e. royalty does not exceed 5 per cent on local sales and 8
per cent on exports and lump-sum payment does not exceed USD 2 million.
(vii) Remittance for Use and/or Purchase of Trademark/Franchise in India.
In terms of item No.16 of Schedule III, RBI's prior approval
is required for remittance towards use and/or purchase of trademark/franchise
in India. Henceforth, ADs may freely allow remittances for use of trade mark/franchise
in India. However, RBI's prior approval will continue to be required for remittance
towards purchase of trademark/franchise.
(viii) Remittance of Hiring Charges of Transponders.
In terms of item No.18 of Schedule III, RBI's prior approval
is required for remittance of hiring charges of transponders. This item stands
shifted to Schedule II of the Foreign Exchange Management (Current Account Transactions)
Rules, 2000 and henceforth, the proposal for hiring of transponders by TV Channels
and internet service providers will require prior approval of the Ministry of
Information & Broadcasting.
3. Necessary amendments to the Foreign Exchange Management
(Current Account Transactions) Rules, 2000 are being notified separately.
4. Authorised Dealers may bring the contents of this circular
to the notice of their constituents concerned.
5. The directions contained in this circular have been
issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act,
1999 (42 of 1999).