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RBI eases forex norms further

BS Banking Bureau in Mumbai

Indian travellers going abroad can now make hotel reservations and buy Euro Rail tickets outside their basic travel quota, which was recently doubled from $5,000 to $10,000.

This is the outcome of the Reserve Bank of India further liberalising on Wednesday remittance norms for foreign exchange for tours and travels.

The central bank has also allowed Indian companies to make bids in foreign currency for projects to be executed in the country, for which global bids have been invited. Companies can also advertise overseas even if they do not have export earnings.

It said that resident Indians are permitted to incur liabilities in foreign exchange and to make or to receive payments in foreign exchange, in respect of global bids where the central government had authorised such projects to be executed in India. Authorised dealers can sell foreign exchange to the resident Indian company which has been awarded the contract.

Also, 100 per cent export oriented units and units in export processing zones have been permitted to sell goods manufactured by them to other 100 per cent EOUs/EPZ units against payment in foreign exchange.

The RBI also added that if the concerned authorities permit EOUs, units in EPZs, Electronics Hardware Technology Parks and Software Technology Parks to sell goods to buyers in the domestic tariff area against payment in free foreign exchange, authorised dealers may sell foreign exchange to the buyers of such goods in the DTA, without prior approval of the Reserve Bank.

"Remittance towards the cost of advertisement in print media, radio, etc., outside India or on the internet, may be allowed by authorised dealers," the RBI added.

This announcement will open the doors for Indian corporates which were seeking RBI approval to air TV commercials on private foreign channels. The Foreign Exchange Management Act demands that a company wishing to air its commercials on these channels need to show export earnings for the last two years. A senior insurance official said that this notification makes things more transparent and simplier.

"We do not need to undertake accounting jugglery to get RBI approval". Of late, insurance companies have been sponsoring various cricket matches to make their presence felt in the country.

On Indians going overseas, the RBI said: "The cost of passes, collected in Indian rupees need not be adjusted in the travellers' entitlement of foreign exchange for private visits." Similarly, overseas hotel reservations made in rupees will be excluded from the basic travel quota.

In essence, this means that an Indian traveller can now use his BTQ for other expenses like food and shopping, while stay and travel can be paid for in Indian rupees outside the $10,000 limit.

The RBI has also said that purchase of overseas pre-paid telephone cards in rupees need not be adjusted in the travellers' entitlement of foreign exchange for private visits.

The central bank has also allowed tour operators to remit the cost of rail/road/water transportation charges outside India without its prior approval, net of commission/mark up, due to the Indian agent.

The RBI has also allowed agents in India of the overseas organisations issuing pre-paid telephone cards to remit the sale proceeds, net of their commission, to the issuers.

For consolidated tours arranged by travel agents in India for foreign tourists visiting India and neighbouring countries like Nepal, Bangladesh and Sri Lanka a part of the foreign exchange received has been required to be remitted from India to these countries for services rendered by travel agents and hoteliers against advance payments/reimbursement through an authorised dealer.

The RBI has now allowed such remittances after verification by authorised dealers that the amount being remitted to the neighbouring country does not exceed the amount actually remitted to India. However, it has said that the country of residence of beneficiary is not Pakistan.

The central bank has also allowed authorised dealers to sell foreign exchange for payment of fees to schools and educational institutions under the administrative control of foreign embassies.

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