RBI/2009-10/465
A. P. (DIR Series) Circular No. 52
May 13, 2010
To
All Category-I Authorised Dealer Banks
Madam / Sir,
Foreign Exchange Management Act (FEMA), 1999 -
Current Account Transactions – Liberalisation
Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to
Foreign Exchange Management (Current Account Transactions) Rules, 2000 notified
vide Notification No.G.S.R.381(E) dated 3rd May 2000, as amended from time to
time.
- In terms of Rule 4 of the Foreign Exchange Management (Current Account
Transactions) Rules 2000, prior approval of the Ministry of Commerce and
Industry, Government of India, is required for drawing foreign exchange for
remittances under technical collaboration agreements where payment of royalty
exceeds 5% on local sales and 8% on exports and lump-sum payment exceeds USD 2
million [item 8 of Schedule II to the Foreign Exchange Management (Current
Account Transactions) Rules, 2000]. The Government of India has reviewed the
extant policy with regard to liberalization of foreign technology agreement and
it was decided to omit item number 8 of Schedule II to the Foreign Exchange
Management (Current Account Transaction) Rules, 2000, and the entry relating
thereto.
- Accordingly, AD Category-I banks may permit drawal of foreign exchange by
persons for payment of royalty and lump-sum payment under technical
collaboration agreements without the approval of Ministry of Commerce and
Industry, Government of India.
- The amendment to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000, in this regard has been notified by the Government of
India vide Notification No.G.S.R.382 (E) dated May 5, 2010 (copy enclosed).
- AD Category-I banks may bring the contents of this circular to the notice of
their constituents and customers concerned.
- The directions contained in this Circular have been issued under Section
10(4) and 11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is
without prejudice to permissions / approvals, if any, required under any other
law.
Yours faithfully,
(Salim Gangadharan)
Chief General Manager-in-Charge