Taking foreign exchange liability of other company
This query is : Open
22 June 2013
We are in the business of manufacturing & marketing of artificial sweetener.In India we produced our product through a third party manufacturer, with whom we have yearly agreement. The third party manufacturer produced the product as per our formulation & procure raw material only from our approved supplier, but supplier give Invoices in the name of third party manufacturer.
As per our direction the manufacturer had imported some raw material from Europe, but in that case we have taken the responsibility to pay the exporter i.e. we pay to manufacturer & then they pay to the exporter, it is to mention that the exporter is one of our group company.
Now we are going to terminate our agreement with the manufacturer, regarding that I have few queries-
1.Can we take in our books the outstanding foreign exchange liability for the above mentioned transaction, if yes then how.
2.After transferring the liability in our books how we can pay them in Euro,as in this case Invoice in the name of manufacturer.
3.Is there any issue under FEMA Act.
As per our direction the manufacturer had imported some raw material from Europe, but in that case we have taken the responsibility to pay the exporter i.e. we pay to manufacturer & then they pay to the exporter, it is to mention that the exporter is one of our group company.
Now we are going to terminate our agreement with the manufacturer, regarding that I have few queries-
1.Can we take in our books the outstanding foreign exchange liability for the above mentioned transaction, if yes then how.
2.After transferring the liability in our books how we can pay them in Euro,as in this case Invoice in the name of manufacturer.
3.Is there any issue under FEMA Act.
23 June 2013
Such take over of Forex liability not permitted under FEMA .
23 June 2013
Kindly let me know then how we can overcome the situation, as we need to pay to the exporter after the termination of agreement with the manufacturer.
03 November 2013
Kindly let me know is there any way to overcome the situation.
06 November 2013
Can you provide further details as to where is your supplier is located? If you cancel ur agreement how the import will happen? whether you will manufacture? etc..
Elaborate the entire transaction of past and your proposed future structure.
thanks
Elaborate the entire transaction of past and your proposed future structure.
thanks
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