Clarity on payment in foreign currency to foreign contractor executing Turnkey Contract in India, FEMA

[rakesh kumar]

Sir , My clarification is related to payment in Turnkey contract to be executed in India by Foreign Company . The contract will be a Work contract under GST regime .The Customer is an Indian customer and he would be required to make payment to the foreign contractor.For execution of the project – the foreign contractor shall set up a “Project office” in India [Liaison office or Branch may not work in the current fact pattern].The foreign contractor shall be supplying a turnkey project to the customer wherein the contractor shall buy all equipment/services and then resell/rebill to Indian customer.The payment is to be made in India – as the foreign contractor would use the money to pay off the foreign/other vendors. The invoices shall be raised from the Project office of the foreign contractor in foreign currency. I require following clarification:

1. As it is a work contract and invoices will be raised from project office located in the Rajasthan (India), where contract is to be executed . Whether Foreign contractor can raise invoices in foreign currency under work contract ( Any relevant circular of RBI in this regard )
2. Whether Customer has to full fill certain formalities for releasing the foreign currency payment under work contract .