LIBERALISATION OF FOREIGN TECHNOLOGY AGREEMENT POLICY AND PROCEDURES
- PRESS NOTE
In pursuance of its
commitment to progressively liberalise the FDI regime, the Government
has reviewed its policy governing the payment of royalties under
Foreign Technology Collaboration.
Presently, wholly
owned subsidiaries are permitted to make payment of royalty up
to 8% on exports and 5% on domestic sales to their offshore parent
companies on the automatic route without any restriction on the
duration of the royalty payments. However, royalty payments by
other companies are allowed for a period not exceeding seven years
from the date of commencement of commercial production or ten
years from the date of agreement, whichever is earlier.
With a view to further
liberalising the foreign technology collaboration agreement policy
and extending a uniform policy dispensation, it has now been decided
that all companies, irrespective of the extent of foreign equity
in the shareholding, who have entered into foreign technology
collaboration agreements may henceforth be permitted on the automatic
approval route, to make royalty payments at 8% on exports and
5% on domestic sales without any restriction on the duration of
the royalty payments. The ceiling on payment of lumpsum fee/royalty
on the automatic route would continue to apply in all cases.