Govt eases foreign technology agreement policy

Taking a further step towards liberalising foreign technology agreement policy, government has taken a decision to allow all companies to make royalty payments without any restriction on the duration on the automatic approval route.

The royalty payments would be made at the rate of eight per cent on exports and five per cent on domestic sales while the ceiling on the payment of lumpsum fee would continue to apply in all cases.

Currently only wholly-owned subsidiaries are permitted to make payments of royalty of eight per cent on exports and five per cent on domestic sales to their offshore parent on automatic route without any restriction on duration of royalty payments.

Royalty payment by other companies are allowed for a period not exceeding seven years from the date of commencement of commercial production or 10 years from the date of agreement, whichever is earlier.

Now, companies, who have entered into foreign technology collaboration, irrespective of the extent of foreign equity, will have no restriction on duration.