Our Bureau

Mumbai , Jan 8

The Reserve Bank of India today 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, first announced in the Mid-Term Review of Annual Policy Statement for 2006-07, will provide more flexibility to exporters. The RBI has 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.

New norms

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.

Now, exporters are required to approach the RBI for overseas deployment of their temporary cash surpluses.

The apex bank has also permitted exporters to open, maintain and operate one or more foreign currency account in a currency of their choice with inter-project transferability of funds in any currency or country.