The government has done away with permission required to transfer technology from foreign firms involving use of trademark, brand name as well as payment of royalty by collaborating Indian companies. The move is aimed at encouraging tie-ups between the domestic and foreign firms and seamless transfer of technical know how.
?Technical collaborations are commercial transactions. India needs to access the best of technologies available abroad. The caps were coming in this way. Hence we have liberalised the policy,? commerce ministry Anand Sharma said.
To monitor compliance of technology transfer with forex norms prescribed by Fema, a mechanism will be set in three months after consultations between department of industrial policy and promotion, department of economic affairs and the Reserve Bank of India (RBI).
The decision was approved by the Cabinet on Thursday and will allow all proposals on payments of royalty, fees for transfer of technology, payments for use of trademark and brand name in the automatic route. Thus, companies will not have to bother about the size or modalities of the technology transfer.
As per the old policy, automatic approval was only allowed if the technology transfer involved payment of fees up to $2 million, royalty of 5% on domestic sales and 8% for exports. For use of trademarks and brands, automatic route was restricted to royalty up to 2% of exports and 1% of exports. Above these limits, the proposals were screened by an inter-ministerial body called Project Approval Board (PAB), chaired by DIPP secretary.
?Today?s decision means that the PAB is not required any more and hence the regulatory framework has been done away with. This will reduce transaction costs associated with technology collaborations,? said a government official.
Between 1991 and 2009, 8,062 approvals have been granted for technology collaboration.