Payment by subsidiary of parent company in foreign currency
SAPNA KANNAIDAS
(Querist) 16 May 2012
This query is : Resolved
An Indian Company "I" has purchased machinery from an Indian vendor. "A" is a foreign holding company of "I". A is also a holding company of "B" which in a third country. Now, B is paying for the machinery purchased, in foreign currency. However, the vendor is reluctant to accept it from "B" as according to him there is no direct relationship between "I" and "B".
Can "I" issue an undertaking to the Vendor that we "I" and "B" are subsidiaries of the same holding company and due to this relationship, B can pay to the vendor for the machine cost?
Pls advise. Is there any other solution to this?
Regards,
Sapna Kannaidas
M V Gupta
(Expert) 16 May 2012
Why not "I" get the money in foreign currency from B under whatever arrangement they may have with B, and then pay to the Indian vendor. FEMA is a complicate legislation and the Indian vendor is right in being apprehensive to accept the payment directly from B which is stranger to him and with whom he does not have any dealing.
Shonee Kapoor
(Expert) 17 May 2012
I endorse expert opinion.
Regards,
Shonee Kapoor
harassed.by.498a@gmail.com
