FOC material

[Amit Apshankar]

I want openion on below case under FEMA

If overseas parent commpany send raw material for export purpose only to it's subsadiry located in India on FOC basic . Indain subsadiary by using these raw material manufacturer finished product which is later export to parent company . In time of relaisation of export earning parnt comapny deduct raw material cost and realise remaing amount..

During the course of operation Indain subsadiry used some FOC material (supply by parent company) for its domestic sale ,and also paid the amount to sister cocern on that poration. 

This transaction is vaild under the frame work of the FEMA.

AMIT

[YAGAY and SUN]

Under FEMA, such transactions are not allowed.  Such transactions would land you in deep trouble.  DRI can investigate such transactions which voilates the provisions of FEMA.

AI Summary

FEMA compliance: supply of free of cost imported raw material used domestically breaches rules and risks investigation
Supply of free of cost raw materials by an overseas parent for purported export manufacture, followed by domestic diversion or deduction of raw material cost from export realisation, raises FEMA compliance issues and may contravene FEMA provisions; such transactions can invite investigation by enforcement agencies like the DRI.