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FEM (Current Account Transactions) Rules, 2000 — Schedule II (Prior Government Approval)

# Schedule II — Transactions Requiring PRIOR GOVERNMENT APPROVAL

Unlike Schedule I (outright prohibition) and Schedule III (limit-based with RBI as approver), Schedule II identifies transactions where the drawal of foreign exchange requires prior approval of a specific Ministry/Department of the Government of India.

## The Schedule II Table

Purpose of RemittanceApproving Ministry/Department
Cultural ToursMinistry of Human Resources Development (Department of Education and Culture)
Advertisement in foreign print media by a State Government or its PSUs (exceeding US$ 10,000), other than for promotion of tourism, foreign investments, or international biddingMinistry of Finance, Department of Economic Affairs
Payment of import through ocean transport by a Govt. Department or PSU on c.i.f. basis (i.e., other than f.o.b./f.a.s.)Ministry of Surface Transport (Chartering Wing)
Multi-modal transport operators making remittance to their agents abroadRegistration Certificate from the Director General of Shipping
Hiring charges of transponders by TV Channels & Internet service providersMinistry of Information and Broadcasting / Ministry of Communication and Information Technology
Container detention charges exceeding the rate prescribed by Director General of ShippingMinistry of Surface Transport (DG of Shipping)
Remittance of prize money / sponsorship of sports activity abroad by a person other than International/National/State Level sports bodies, if amount exceeds US$ 100,000Ministry of Human Resource Development (Department of Youth Affairs and Sports)
Membership of P & I ClubMinistry of Finance (Insurance Division)

## Trigger Thresholds to Remember

  • Advertisement in foreign print media (State Govt/PSU): approval triggered when exceeds US$ 10,000.
  • Sports prize money/sponsorship: approval triggered when exceeds US$ 100,000 (and remitter is not an International/National/State Level sports body).
  • For the remaining items, the trigger is the purpose itself, not an amount.

## Mapping Ministries to Subject-Matter

  • Surface Transport / DG Shipping → all sea/ocean/shipping items (ocean transport imports, multi-modal transport, container detention).
  • HRD → culture (cultural tours) and sports (prize money / sponsorship).
  • Finance (Economic Affairs) → State Govt foreign advertisements.
  • Finance (Insurance Division) → P & I Club membership.
  • I&B / Communications → transponder hire by TV / ISP.

Worked example

### Example 1

Example: A State Government PSU wants to advertise in a UK newspaper for general marketing (not tourism/investment/international bidding) at a cost of US$ 15,000.

  • Amount exceeds US$ 10,000 threshold, and the purpose is not among the exemptions.
  • Prior approval of the Ministry of Finance, Department of Economic Affairs is required.

### Example 2

Example: A private sports academy wants to remit US$ 1,20,000 as sponsorship for a tournament abroad.

  • The academy is not an International/National/State Level sports body, and the amount exceeds US$ 1,00,000.
  • Prior approval of MHRD (Department of Youth Affairs and Sports) is required.

### Example 3

Example: A TV channel wishes to remit hiring charges for a transponder.

  • Irrespective of amount, prior approval of Ministry of I&B / Ministry of Communications and IT is required.

⚠️ Common exam mistakes

  • Routing Schedule II items to the RBI. Schedule II requires Government Ministry approval, not RBI approval — this is its defining feature.
  • Forgetting that the US$ 10,000 advertisement threshold applies only to State Governments and their PSUs — not private parties — and excludes tourism/foreign investment/international bidding promotion.
  • Mixing up Surface Transport's roles — it appears for ocean transport (c.i.f. imports), multi-modal transport agents, and container detention charges. Three distinct shipping-related triggers.
  • Treating the US$ 100,000 sports threshold as applying to all sports remittances. It applies only when the remitter is NOT an International/National/State Level sports body.
  • Assuming the c.i.f. ocean-transport approval applies to private importers. It applies only to Government Departments or PSUs.
Reference: Schedule II — Foreign Exchange Management (Current Account Transactions) Rules, 2000
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