BUSINESS
Procedures for Approvals of Foreign Technology Agreements
The Procedures for Approvals of Foreign Technology Agreements were presented by the Central Government in the Statement on Industrial Policy in 1991. The Sec 39C contains the clauses of the methods for better functioning of the Foreign Technology Agreements.
The transfer of foreign technology plays an important role in the Foreign Direct Investments. The Central government has allowed the transfer of technology in various industrial sectors. The economic policies elucidated the foreign exchange regulatory approvals for transfer of technology.
The Central Government presented the Statement on Industrial Policy in 1991, which provided simplified methods for the better governance of the Foreign Technology Agreements. The section dealing with the Foreign Technology Agreements is Sec 39C.
Approvals of Foreign Technology Agreements-At a glance
Procedures for Approvals of Foreign Technology Agreements helps in smooth settlement of the transfer of technical know how. With the introduction of the 1991 Economic Policy, foreign investments started inflowing in large amounts.The transfer of foreign technology plays an important role in the Foreign Direct Investments. The Central government has allowed the transfer of technology in various industrial sectors. The economic policies elucidated the foreign exchange regulatory approvals for transfer of technology.
The Central Government presented the Statement on Industrial Policy in 1991, which provided simplified methods for the better governance of the Foreign Technology Agreements. The section dealing with the Foreign Technology Agreements is Sec 39C.
Procedures for Approvals of Foreign Technology Agreements-Sec 39C
- The high priority industries would be given automatic approval under the norms of RBI, for foreign technology agreements, subject to a maximum limit of payments up to ` 1 crore.
- The royalty to be paid is restricted to 5 % in case of domestic sales, 8 % in case of exports and total payment should be 8 % on sales for a period of 10 years
- The royalty period should not exceed 7 years from the date of starting of the business or 10 years from the date mentioned in the agreement
- The royalty rates would be calculated in accordance with the standardized methods
- Industries apart from high priority ones would be allowed by the means of automatic approval in case no free foreign exchange is required in case of payments.
- Any other kinds of proposals would require particular approval under the general procedures
- Permissions pertaining to foreign testing of developed technological applications, employing foreign technicians
- The manufacturing and products should be compliant with the small scale industries
- In case of an extension of the foreign technology collaboration agreements which had been automatically approved earlier.
