Mumbai: Relaxing the special economic zones (SEZ) norms, the Reserve Bank of India (RBI) has allowed domestic companies to make payments to units in special economic zones in foreign currency for the services delivered by them.

Earlier this facility was allowed only for payments made towards goods.

"... it has been decided to allow ADs (banks) to sell foreign exchange to a unit in the domestic tariff area (DTA) for making payment in foreign exchange to a unit in the SEZ for the services rendered by it (a unit in SEZ) to a DTA unit," the central bank said in a notification released today.

The move assumes significance as the tax-free zones are losing sheen because of withdrawal of tax incentives.

To attract investments in these zones, the Commerce Ministry is expected to soon announce some more incentives for SEZs to be set up in backward areas of the country.

However, RBI said that such payments would be authorized for only those services which are mentioned in the Letter of Approval issued to the SEZ unit.

Also to promote rising software exports, RBI in a separate notification said it has simplified the procedure for exporting goods and services by all the Software Technology Parks of India (STPIs) from five STPIs allowed earlier.

Earlier, only five STPIs-Bangalore, Hyderabad, Chennai, Pune and Mumbai came under this facility.

Moreover, to ensure larger flow of credit to trade and industry in Jammu and Kashmir, RBI has extended credit relaxations to borrowers in the state until March 31, 2014.

"It has been decided that the concessions/credit relaxations to borrowers/customers in the State of Jammu and Kashmir...will continue to be operative up to March 31, 2014."

(Agencies)

Latest News from Business News Desk