From where does one purchase foreign exchange?
           From authorised dealers or money changers.

Who are authorized dealers?
          Banks certified by the RBI to transact in foreign exchange and foreign securities are also referred to as authorized dealers.

How much currency is allowed for a business tour?
           USD 25,000 is permitted for a business tour to any country, with the exception of Nepal and Bhutan. Requirements in excess of this amount require permission of the RBI. No foreign exchange is permissible for journey to Nepal and Bhutan.

Can additional foreign exchange be taken for a medical trip abroad?
           Upto USD 100,000 is allowed for medical treatment overseas. Requirements over and above this will be sanctioned on the basis of an approximation by a doctor or hospital in India or overseas.

How much forex is permitted for studies abroad?
           Since students studying abroad are treated as NRIs, all rules applicable to NRIs apply to them as well .They are also entitled to receive forex upto USD 100,000 from relatives towards the cost of their studies.

How much foreign exchange is permitted for persons traveling abroad for employment?
          Upto USD100, 000 is allowed from any authorised dealer on the basis of self-declaration.

How much foreign currency can an emigrant take?
           Upto USD100, 000 on self- declaration basis is permitted to meet initial expenses in the adopted country. No foreign exchange remittance outside India is permitted to earn points or credits for immigration. Such outward remittances have to be supported by the RBI.

How much foreign currency can be sent as a gift to a person residing overseas?
           One can send upto USD 5,000 a year, though amount exceeding this requires permission from the RBI.

How much foreign exchange can be carried by a person visiting India?
           Unlimited foreign exchange is allowed .In case the total value of cash instruments – currency notes and travellers cheques - exceeds USD 10,000; a Currency Declaration Form has to be presented to the customs officials on arrival at the airport.

Can a non-resident accept local hospitality from a resident?
           Yes.

Can resident Indians open foreign currency accounts in India?
           Yes, EEFC Accounts and RFC Accounts can be kept by resident Indians.

Can resident Indians hold possessions outside India?
           Yes, as per Section 6 of the Foreign Exchange Management Act, 1999, if such assets were purchased, held or owned during their residence outside India or inherited from a person who was resident outside India.

Can an individual repatriate funds a second time during a calendar year?
          Repatriation is allowed only upto a limit of USD 25,000 in a calendar year, and no further remittances are permitted, even if the same funds have been remitted back to India.

How are shares transferred from NRIs to Resident Indians and vice versa?
Transfer from Non-Resident to Non-Resident:
Transfer by way of sale: A person resident outside India can sell his shares or convertible debentures in the following manner:

• The sale can take place provided the receiver does not have any venture in India in the same business
• A NRI may sell the shares and convertible debentures possessed by him  only to another NRI.
• An NRI can sell his shares through an authorised broker in India

Transfer by way of Gift: NRIs can gift to resident Indians as under:

• Any person be located in outside India, can present stocks or convertible debentures to any person resident outside India; provided the receiver does not have an existing tie up in India in the same business.
• A NRI may gift his shares and/ or convertible debentures to another NRI only
• Any person residing overseas may gift shares and/or convertible debentures to a person resident in India.

Transfer from Resident to Non-Resident:
Transfer by sale- General Permission
           A resident Indian may sell shares and convertible debentures of any Indian company whose business falls under the Automatic Route, to any person living outside India subject to the sectoral limits.

• Any Indian company that proposes to sell shares or convertible debentures should not be involved in extending any financial service;
• The sale should not fall within the ambit of the provisions of SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997; and
• Pricing procedures, documentation and reporting requirements for such a deal must be as per requirements of the RBI.

Transfer by way of gift:
           An Indian resident who proposes to gift to a person resident outside India is required to make an application to the Central Office of Foreign Exchange Department, Reserve Bank with details of
1) Name and address of the involved parties – transferor and transferee
2) Relationship between the two, and
3) Reasons for gifting

What procedure is to be followed in case the transfer does not fall into any of the above categories?
           In such cases, an application to the RBI has to be made with

• A copy of FIPB approval.
• Consent/approval letter from transferor and transferee stating the number of shares, name of company in which investment is to be made and the rate at which the transfer is to be made.
• Details of equity participation in the company by residents and non-residents.
• All approvals and copies of FC-GPR from RBI pertaining to existing shares of the non-residents.
• In case the seller is an NRI or an OCB, the copies of RBI approvals of the shares held on repatriation or non-repatriation basis.
• In case the shares by the non-resident are under the SEBI Takeover Regulations, an Open Offer document filed with SEBI
• A Chartered Accountant needs to certify the value of shares in a Fair Valuation Certificate as per guidelines
• If the shares are unlisted, the fair value has to be calculated as per the former Controller of Capital Issue/s.

Can the savings and income earned in India be repatriated?
           Yes, except where NRIs invest expressly in non-repatriable schemes. Dividends earned on foreign investments can be remitted without restriction.

Can Foreign Currency Convertible Bonds (FCCBs) be issued by Indian companies?
          Yes, in compliance with the Scheme for Issue of Foreign Currency Convertible Bonds and Ordinary Shares (Through Depository Receipt Mechanism),1993 provided the External Commercial Borrowing guidelines of the RBI are adhered to.

Can Preference Shares be used as a route to foreign investment?
          Yes. Proposals for such investments, which are considered as part of share capital, are filtered either through the automatic route or FIPB depending on the specific case.
 
Can investment be made by NRIs in unlisted shares issued by an Indian company?
          Yes.

Is a foreigner allowed to establish a partnership/proprietorship concern in India?
No. Only NRIs/PIOs are allowed to set up a partnership or proprietorship business in India on a non-repatriation basis.

Can rights shares issued by Indian companies be offered to foreigners at a discount?
          Yes, provided the rights shares are offered at par to residents as well.
Foreign Technical Collaboration

How are payments made for foreign technology transfer under the Automatic Route of RBI?
          Such payments are subject to:

• A maximum of US$2 million;
• Royalty upto 5 % for domestic sales and 8 % for exports, with no bar on the duration of the payments.
• The royalty limits are exclusive of taxes and are calculated as per standard conditions.
• The royalty is worked on the basis of the net ex-factory sale price of the product.
• Payments are made through authorised banks

What is to be done in cases where the Automatic Route of RBI for technology transfer does not apply?
          The Ministry of Commerce, Department of Industrial Policy and Promotion, is referred to in such cases.

What is the procedure for foreign firms to establish a Liaison office in India?
          RBI approval is required to set up office in India by a foreign company.

How does a foreign company obtain RBI sanction to start a Liaison Office in India?

• The Liaison Office operates as a channel of communication between its overseas Head Office and parties in India. No business activity in India is permitted, and neither can it earn any income in India. The liaison office meets its expenses through inward remittances of foreign exchange from its Head Office abroad.
• To open a liaison office, an submission in form FNC-1 along with relevant documents is made to
  Foreign Investment Division,
  Foreign Exchange Department, Reserve Bank of India,
  Central Office, Mumbai.
• Consent to set up a liaison office at the outset is given for 3 years, which can be subsequently extended by the RBI’s Regional Office
• An annual Activity Certificate from a Chartered Accountant has to be presented at the Regional Office of the RBI, verifying that the Liaison Office is engaged in  only those activities which are allowed by the RBI.

How is a Project Office set up?

• Foreign companies have been granted General Permission by the RBI to open Project Offices in India provided they have secured a contract for a project from an Indian company
• the project is funded wholly by remittance from overseas; or
• the project is funded by a bilateral or multilateral International Financing Agency; or
• the project has been agreed to by a suitable authority; or
• The Indian company awarding the contract has been extended a Term Loan by a financing institution
• In case the above conditions are not met, or if the foreign company is established in Pakistan, Bangladesh, Sri Lanka, Afghanistan, Iran or China, such requests are sent to the Central Office of the Foreign Exchange Department of the RBI at Mumbai for sanction.

How is a Branch office set up?
           RBI permits foreign companies in the manufacturing and trading business to set up Branch Offices in India:

• To represent its parent company to conduct business in India
• To undertake research work in its area of business
• To trade on a wholesale basis
• To encourage possible technical and financial tie-ups between Indian companies and overseas companies.
• Offering professional or consultancy services
• Offering IT and software services
• Giving technical sustenance to the products supplied by the parent company.

          Branch offices are not permitted to carry out manufacturing, processing and trading activities on their own. An Activity Certificate from a Chartered Accountant has to be submitted annually to the Central Office of FED. For annual remittance of income, Branch Offices may submit required documents to a bank.

          The track record of the Applicant Company, its existing trade relations with India and financial position of the company are taken into account by the RBI while scrutinizing the application.