Fema / rbi / ecb
Querist : Anonymous
Have following query on a transaction between foreign Parent Company(PC) situated in USA and Indian (100%) Subsidiary (IS).
The PC has directly made the payments to the vendors and employees (salary) of the IS in India during the financial year.
Ideally, the PC should transfer the money to the account of IS as share application or otherwise and upon receipt of such money, IS should utilize it for the purpose of release of payments to its suppliers / employees as the case may be.
In the above instance, due to payments being released by the PC to the suppliers/employees of IS in India, any provisions from FEMA/RBI perspective need to complied with. Whether this will be treated as loan attracting ECB provisions?
Regards,
Querist : Anonymous
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