09 january 2007

rbi eases project, service exports norms
mumbai: the reserve bank of india has simplified the procedures for project and service exports, such as deployment of temporary cash surpluses and inter-project transfer of machinery and funds.

these measures will provide more flexibility to exporters. the rbi said that the measures were subject to monitoring by banks. exporters will now be allowed to use the machinery or equipment used for a turnkey or construction abroad, for executing a contract in another country.

currently, exporters are required to dispose of the equipment, machinery, vehicles purchased abroad or arrange their import into india after completion of the contracts. if it has to be used for another overseas project, the market value should be recovered from the second project.

under the modified procedures, the rbi has permitted exporters to deploy their temporary cash surpluses, generated outside india, in instruments such as deposits with overseas branches or subsidiaries of a bank in india, a triple `a' rate short term paper abroad, including treasury bills and other monetary instruments with a maturity or remaining maturity of one year or less.