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Our Bureau

Machinery movement easier; surplus cash can be retained abroad

Mumbai, Oct. 31

The Reserve Bank of India (RBI) has proposed greater flexibility to project and service exporters in their overseas transactions.

The central bank has proposed that large project and service exporters, with satisfactory track record, may operate one foreign current account with inter-project transferability of funds or machinery in any country.

In other words, companies engaged in overseas projects can now freely shift machinery from one project to another. Earlier, they had to get various clearances for shifting machinery from one location to another.

Cash surpluses

The RBI has also said that project and service exporters, with good track records, may park their temporary cash surpluses in short term bank deposits or AAA-rated short-term paper abroad.

"Exporters will now be able to get some returns on their cash surpluses generated by execution of overseas projects, without having to transfer the surpluses back to India. This will give a significant boost to project exporters," says Mr Yogen Lal, Chief Operating Officer of Unity Infraprojects.

In another move, the RBI has proposed withdrawal of the stipulation regarding recovery of market value of machinery from the transferee project.

"However, such transfer of machinery should be reported to and monitored by the authorised dealer bank or approving authority."

Some industry players were guarded in their views on the liberalised procedures in project and service exports. "One has to see the fine print to actually access the scope of the proposed easing of norms. For instance, one would have to study the precise definition of exporters with satisfactory track record, as mentioned in the policy," an official of a major construction company said.

More Stories on : Overseas Investments | Forex | Exports & Imports | Credit Policy

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