Repatriation and Foreign Remittances
Foreign capital 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 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 remittances
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 remissible 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.
