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Foreign Technology Agreements |
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| Foreign technology agreements are allowed in all industries (including reserved industries and industries involving compulsory licensing). The approval is automatic for agreements involving: |
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Lump sum fee not exceeding US $ 2 million, and royalties up to 5% on domestic sales and up to 10% on export sales; |
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A total payment ceiling of 8% of total sales over a 10-year period from the date of agreement, or 7 years from the start of commercial production, whichever is earlier. |
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In all other cases, specific approval is required.
Extension/revalidation of existing or earlier technology agreements are not automatic, and require fresh approval on specific merit, based on the satisfactory absorption of earlier know how.
For the purpose of remittances, royalties are calculated on the basis of a standard formula (royalties are calculated on net sales after deductions of imported raw materials, duties and cost of standard bought out components).
For agreements in which no technology transfer is envisaged, payment of marketing royalties- for use of brand name/ licence- up to 1% of sales is also allowed under the automatic route. |
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ICREON