Marco F (Account) 14 July 2011

Remittance without Foreign Inward Remittance

An Indian Private Limited Company has 2 shareholders: one Indian (26 % owner of the shares) and the other a European private limited company (owner of the 74 % of the shares). The European company sent money to the Indian Company without obtaining FIRC. The European company would loan money and then convert it in capital share. But without FIRC it will be impossible. Is it possible to give back the money from Indian company to European company? How does it do? What is the proceeding? Then the European company will send other money with FIRC as capital increase.

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Amit Soni (Proprietor) 17 July 2011

Dear Marco,

If the business that you are going to start, falls in the automatic route of investment in India, Than you have to notify the same within 30 days of receipt of the same. Procedure for the investment through Automatic routes is as follows:

"The proposals for approval under the automatic route are to be made to the Reserve Bank

of India in the FC (RBI) form. In a major drive to simplify procedures for foreign direct investment

under the “automatic route”, RBI has given permission to Indian Companies to accept

investment under this route without obtaining prior approval from Reserve Bank of India.

However, investors are required to notify the concerned Regional Offices of RBI of receipt "

All the businesses excepting the below falls in automatic route:

LIST OF INDUSTRIES FOR WHICH INDUSTRIAL LICENSING IS COMPULSORY under Industries

(Development & Regulation) Act, 1951

1. Distillation and brewing of alcoholic drinks.

2. Cigars and cigarettes of tobacco and manufactured tobacco substitutes.

3. Electronic Aerospace and defence equipment: all types.

4. Industrial explosives including detonating fuses, safety fuses, gun powder, nitrocellulose and

matches.

5. Hazardous chemicals.

a. Hydrocyanic acid and its derivatives

b. Phosgene and its derivatives

c. Isocyanates and di-isocyanates of hydrocarbon, not elsewhere specified (example:

Methyl Isocyanate)

6. Drugs and Pharmaceuticals (according to modified Drug Policy issued in September, 1994

and subsequently amended in February, 1999)

Note: Manufacture of SSI reserved items by other industrial undertakings and location of industrial

undertakings in relaxation of the notified locational policy will attract compulsory licensing.

of inward remittances within 30 days of such receipt and will have to file the required

documents with the concerned Regional Office of the RBI within 30 days after issue of

shares to foreign investors. This facility is available to NRI/OCB investment also.

Hope this will satisfy your query. in case you want more info, email me (on csamit@live.com) the actual details of your transaction & brief story of the same.