The Hindu Business Line : Curbs on FEMA transactions to go

THE Government has decided to remove a number of restrictions on current account transactions under the Foreign Exchange Management Act (FEMA) to bring down the transaction cost for citizens and corporates.

It has also decided to amend the Foreign Exchange (Compounding) Rules to empower the Reserve Bank of India (RBI) to "compound" offences of all sections of FEMA other than the provision relating to hawala transactions.

The Enforcement Directorate would retain the power to compound contravention of Section 3(a) of FEMA (dealing with hawala transaction).

As part of rationalisation and easing of current account transactions, the Finance Ministry has now said that remittances for personal health insurance from a company abroad are freely permitted without any prior approval of the Government.

Hitherto, remittance for securing insurance for health from a company abroad required prior approval of the Government.

Further, the Finance Ministry has decided that no prior approval of THE RBI would be required for remittances by artistes, e.g wrestlers, dancers, entertainers, etc.

An official release said that RBI approval would not be required for any short-term credit to overseas offices of Indian companies.

There will also be no ceiling on remittances for advertisement on foreign television.

The removal of this restriction would make non-exporters also eligible for the facility, the release added.

Commission to agents abroad for sale of residential flats/ commercial plots in India would no longer need RBI approval for amounts up to $25,000 dollars or five per cent of inward remittances, whichever is higher, per transaction.

The Finance Ministry has also said that there will be no restrictions on use of trademarks/franchise. However, the purchase of trademarks will continue to require RBI's prior approval.

Further, no RBI approval would be required for remittances of royalty and payment of lump-sum fee under the technical collaboration agreement.

Hitherto, remittances of royalty and payment of lumpsum fee under technical collaboration agreements not registered with the RBI required the prior approval of the Central bank.

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