New Delhi, Feb. 6: The government today took one more step towards capital account convertibility by allowing companies to remit money in dollars, euros or other foreign currencies for royalties, technical collaborations, use of trademarks, franchisee rights, short-term credit to overseas offices and advertisements on foreign televisions without prior permission.

Remittances for advertisement on foreign television to non-exporters have also been allowed without any ceiling.

The payment of commission to agents abroad for the sale of residential flats/commercial plots in India, as long as they are up to 5 per cent of the transaction or $25,000 (whichever is higher), can be made without prior RBI permission. Individuals also stand to gain from today’s relaxation of controls on foreign exchange remittances.

Health insurance covers bought in foreign currency from abroad and remittances by artistes like dancers, entertainers and sportspersons also will not require any prior permission.

Permissions in all these cases used to be granted by the central bank — the Reserve Bank of India (RBI).

At the same time, the BJP-led government has decided to transfer the powers to take action against most Fema violations from the Enforcement Directorate (ED) to the RBI. The ED will now only handle compounding of offences in case of hawala transactions.

Leading Supreme Court lawyer R. K. Anand said: “The government has taken this decision because the RBI is the enabling agency for most foreign exchange permissions and is in the best position to judge the gravity of offences. However, the policing on hawala issues have been left with the ED, which is obviously equipped to deal with it.”

The sudden decision to bring in another round of glasnost freeing controls on foreign exchange remittances stems from the huge inflow of foreign exchange, which has seen forex reserves rising to above $100 billion.“This move should be seen more as a part of a larger bid to cope with the pressure created by the huge influx of foreign exchange. It will create points from where the steam — if you can describe remittances as that — escapes,” said K. K. Sengupta, a leading merchant banker dealing with forex funding.

Soon after news of this measure hit the market, late dollar demand weakened the rupee, which closed at 45.27 to a dollar, a paise lower from yesterday’s closing, after hitting a high of 45.26.