Startech Pvt. Ltd., an Indian company, is planning to remit USD 12 million to a consultancy firm based in Germany for advisory services related to a…

CA Intermediate · Corporate and Other Laws · RTP · January 2026
Startech Pvt. Ltd., an Indian company, is planning to remit USD 12 million to a consultancy firm based in Germany for advisory services related to a new highway infrastructure project in India. The company has also engaged another foreign consultancy for a software upgrade on a different project and wants to remit USD 900,000 for that service. Both payments are to be made from India. With reference to the Foreign Exchange Management, 1999, determine whether Startech Pvt. Ltd. can freely remit these amounts or if any approval is required for these transactions.

Suggested Answer and Working Notes:

As per Schedule III of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, remittances by persons other than individuals shall require prior approval of the Reserve Bank of India in the following cases- Remittances exceeding USD 10,000,000 per project for any consultancy services in respect of infrastructure projects and USD 1,000,000 per project, for other consultancy services procured from outside India. In this scenario: The proposed remittance of USD 12 million for consultancy on a highway infrastructure project exceeds the USD 10 million threshold. Therefore, Startech Pvt. Ltd. must seek prior approval from the RBI for this payment. The remittance of USD 900,000 for software consultancy on a different project does not exceed USD 1 million, so no RBI approval is required for this transaction.

Topics: The Foreign Exchange Management Act, 1999

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