Fema queries

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CS Jignesh Mistry (Querist)
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12 October 2011 hi,
our company want to receive foreign funds from its parent company for working capital requirements and for 6 to 12months only. can any one guide me how can we raise this funds.

we have knowledge of:
1. under FDI policy the funds can be raised by issuing equity shares/ preference/debentures. (company dont want to issue any of these)

2. it does not fall under ECB guidelines, since funds can not be raised for working capital requirements.

3. it does not fall under trade credits since it is not trade transaction for imports.

apart from above 3options can any expert have other options.

pls reply as it is urgent
thanks

Vishal D Shah

Vishal D Shah (Expert)
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13 October 2011 No other option. At most it can borrow from Indian bank which may be guaranteed from parent abroad.

CA. Anuj Gupta

CA. Anuj Gupta (Expert)
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13 October 2011 If the Indian company is incurring expenditure on working capital then it can bill the same to the foreign company and get the funds as income which can be set off against the expenses incurred.

There can be issue of service tax however if the services qualify for export of services ,it can escape the service tax also.

Anuj
+91-9810106211
femaquery@gmail.com

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