Liberalisation of Current Account Transactions– No prior approval required for foreign exchange payment of royalty under technical collaboration agreements

May 13, 2010: 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. Accordingly, Reserve Bank of India has advised AD Category-I banks to 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.

This liberalisation of Current Account Transactions by Government of India will ease royalty payments & encourage technological collaborations.



RBI gives more power to banksfor ECB-February 2010 ...Click here

Special section on External Commercial Borrowings ...Click here

CLICK FOR MORE FEATURES & STORIES