Alpha Infra Ltd., a company engaged in infrastructure development, proposes to hire a foreign consultancy firm for a large highway project and plans…

CA Intermediate · Corporate and Other Laws · MTP · May 2026
Alpha Infra Ltd., a company engaged in infrastructure development, proposes to hire a foreign consultancy firm for a large highway project and plans to remit USD 12,000,000 towards consultancy fees. Examine, with reference to the provisions of FEMA, 1999 read with Rules, whether such remittance require prior approval of the Reserve Bank of India.

Suggested Answer and Working Notes:

As per the provisions of the Foreign Exchange Management Act, 1999 read with Schedule III of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, the following remittances by persons other than individuals shall require prior approval of the Reserve Bank of India. 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. Explanation-For the purposes of this sub-paragraph, the expression "infrastructure' shall mean as defined in explanation to para 1 (iv) (A)(a) of Schedule I of FEMA Notification 3/2000-RB, dated the May 3, 2000. Alpha Infra Ltd. proposes to remit USD 12,000,000 for consultancy services in respect of an infrastructure project. Since, the amount exceeds USD 10,000,000, prior approval of Reserve Bank of India is required.

Topics: The Foreign Exchange Management Act, 1999

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