Repatriation and Foreign Remittances
Foreign captial invested in India is allowed to be repatriated, alongwith
capital appreciation, if any, after the payment of taxes due on them. The
disinvestment is permitted in accordance with the terms of the letters of
approval granted at the time of approving the foreign collaboration. RBI
permits disinvestment nearly automatically through the stock exchanges for listed
shares at market prices. In the case of unlisted shares, the sale price is
required to be approved by RBI prior to disinvestment.
- Repatriation of sale proceeds
- RBI approval is required for repatriation of sale proceeds of assets held in
India. Repatriation in foreign exchange is permitted with prior RBI approval
subject to payment of applicable taxes.
- Royalties and technical know-how fees
- Indian companies that enter into technology transfer agreements with foreign
companies are permitted to remit payments towards know-how and royalty in terms
of the foreign collaboration agreement approved.
- Technical service fees
- Companies can hire the services of foreign technicians and make remttances for
technical service fees, subject to the terms approved by RBI.
- Interest
- Remittances towards interest on Government securities, bank deposits in India
and dividends on units of the Unit Trust of India to individuals permanently
resident outside India are possible on automatic basis provided certain
conditions are satisfied, and with RBI approval when they are not.
- Dividends
- Profits and dividends earned in India are repatriable after the payment of
taxes due on them. No permission of RBI is necessary for the remittance.
Authorised dealers have been delegated the powers to remit dividend.
In a limited list of 22 consumer goods industries (Appendix), repatriation of
dividends is subject to a requirement of dividend balancing against export
earnings for a period of seven years from commencement of production. Balancing
is not required beyond this period.
- Other remittances
- Remittances of profits by branches of companies incorporated outside India to
their Head Offices outside India are permissible with prior RBI approval.
Similarly, remittances of winding-up proceeds of representative offices in India
is permitted with prior RBI approval, after winding-up procedures are completed
and the net remittable surplus has been established.
In addition, sundry remittances are allowed for items like gifts, repair charges
for imported machinery, maintenance, legal expenses, etc.
Engagement of Foreign Technicians
Under the New Industrial Policy and subsequent circulars, Indian
Companies are permitted to engage services of foreign technicians
without seeking prior permission of the RBI irrespective of whether
such hiring is under an approved collaboration agreement or not, if
the terms of their engagement comply with the prescribed
parameters. Such relaxation of permission is only in cases where the
term of employment of the foreign technicians is less than three
months. In other cases, clearance of the Ministry of Home Affairs is
required.
Clearances are also no longer needed to appoint foreign nationals as
technical or managerial advisers of any company in India.
Centre for Monitoring Indian Economy, Bombay
Contact Addresses for More Information
Last updated: May 1995.