The government proposes to take the following steps to liberalise capital account convertibility:
There will be full convertibility of deposit schemes for non-resident Indians. The existing Foreign Currency Non-Resident (B) scheme and the Non-Resident External (NRE) rupee scheme will continue to be repatriable.
The schemes, which do not offer full convertibility to NRIs, will be discontinued from 1 April 2002. The existing balances in the non-resident (non-repatriable) rupee accounts will be allowed to be credited on maturity to the convertible NRE account.
NRIs will be free to repatriate in foreign currency their current earnings in India such as rent, dividend, pension, interest and the like, based on an appropriate certification.
Indian companies wishing to invest abroad may now invest up to US $100 million on an annual basis through the automatic route, up from the existing limit of US $ 50 million.
Indian companies making overseas investment in joint ventures abroad by market purchases may now do so without prior approval up to 50 per cent of their net worth, up from the current limit of 25 per cent.
Corporates with proven track record will be allowed to contribute funds from their foreign exchange earnings for setting up chairs in educational institutions abroad and for other welfare measures, likely to benefit the community abroad, on a case by case basis by the RBI.
Indian mutual funds will now be allowed to invest in rated securities in countries with fully convertible currencies, within the existing limits. Earlier such investment was only permitted in ADR/GDRs issued by Indian companies in overseas markets.
Pre-payment of ECBs is permissible to the extent of balances available in EEFC accounts, which are currently restricted to 50 per cent of export proceeds.