Review of Policy on Foreign Technology Collaborations
The Union Cabinet today approved a proposal of the Department of Industrial Policy & Promotion, Ministry of Commerce & Industry to permit all payments for royalty, lumpsum fee for transfer of technology, payments for use of trademark/brand name on the automatic route without any restrictions, and subject to FEMA (Current Account Transaction) Rules, 2000. To get the information about the nature/details of technology and the amount paid for it, a suitable post reporting requirement would be devised within three months in consultation with Department of Economic Affairs and Reserve Bank of India.
Hitherto, automatic approval was permitted for foreign technology transfers involving payment of lumpsum fee of US$ 2 million and royalty of 5% on domestic sales and 8% on exports. Beyond these limits, prior permission of the Government of India (Project Approval Board) was required. In addition, where there is no technology transfer involved, royalty upto 2% for exports and 1% for domestic sales is allowed under automatic route on use of trademarks and brand names of the foreign collaborator. 8062 approvals have been granted for technology collaborations since 1991 to June 2009.
With the Government's further liberalization, the move is expected to freely promote the transfer of state of art technology into the country.