Remittance exceeding USD 1,000,000 per project, for any consultancy service procured from outside India needs RBI prior approval.
Thus as per the above circular, the Authorised dealers are allowed to release 1 million US dollars for any foreign consultancy services and hence it falls under automatic approval of RBI if the remittance does not exceed USD 1 Million.
It is to be noted that there are no other preconditions attached to this and an Indian Company wish to pay a foreign consultant need not necessarily to have earnings in dollars or other foreign currencies. Even there is nil foreign currency income for a Indian company , it can pay to a foreign consultant up to USD 1 Million.
However , if a Indian company wants to pay more than USD 1 Million, then it has to get the prior approval from RBI by substantiating its foreign revenues.