Payment of Guarantee Fee - overseas

[Pradeep Kaushik]

Dear All,   We are 100% Subsidery of a Korean Company.   We are proceeding our ECB activities under Automatic Route.   In this regards, please let us know:   1. Can our parent Company in Korea, make Guarantee for us to avail the ECB from Exim Bank Korea. 2. Can we pay the Gurantee fee to our parent Company, will be a part of 'All in Cost'. 3. If any balance remains in our ECB funds after making all our capex, what will be the use for the Balance Funds in ECB. 4. Is Guarantee fee payment to Foreing companies, is prohibited under FEMA    Please provide us the relevant clause in FEMA/ECB Master Circular in this regard.   Your early reply will be highly obliged.   Best Regards Pradeep kaushik

[YAGAY andSUN]

Sorry, I could not find any reply to your queries.  Please check with your Authorised Dealer or with RBI.

AI Summary

Guarantee fee to foreign parent raises questions on inclusion in all-in-cost and permissibility under ECB/FEMA rules. Queries address whether a foreign parent may guarantee an ECB for its Indian subsidiary, whether the guarantee fee payable to the parent qualifies as part of the all-in-cost for the ECB, whether payment of such fees to a foreign company is prohibited under FEMA/ECB rules, and what uses are permissible for any residual ECB funds after capital expenditure. No authoritative reply or statutory citation is provided; the lone suggestion is to consult the Authorised Dealer or the Reserve Bank.