Foreign Technology Agreements in India

The Foreign Technology Agreements in India plays an important part in the technological development of the Indian industries. The agreements are permitted through Government approval or by RBI governed automatic route.

Foreign Technology Agreements-Glimpses

Foreign Technology Agreements in India caters to the growth of the technology in the Indian industries. The primary purpose of the agreement is to induce the required amount the technological development and promotion of technologically advanced industries. The foreign technology is transferred from foreign sources such as research and development agencies, foreign parent companies, and other sources to the Indian counterparts. The transfer of foreign technology takes places by the means of foreign direct investments and foreign technology collaboration agreements.

Foreign Technology Agreements in India permits transfer of technology by the means of Government approval or through the automatic route delegated by RBI.

Automatic Approval-Foreign Technology Agreements in India

• The RBI grants automatic approval by the means of the regional offices to Indian industries for foreign technology collaboration


• The payments pertaining to the technology transfer should not exceed US$ 2 million


• 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 paid is 1 % in case of domestic sales and 2 % in case of exports as granted under automatic route for use of the trademark foreign collaborator


• The royalty paid is 5 % in case of domestic sales and 8 % in case of exports as granted under automatic route for wholly owned subsidiaries

Government Approval-Foreign Technology Agreements in India

Government approval is required in the following cases -

• Proposals which requires licensing
• The manufacturing and products should be compliant with the small scale industries
• Proposals which involves previous trademark agreement, joint ventures, technology transfer, etc
• In case of an extension of the foreign technology collaboration agreements which had been automatically approved earlier
• Proposals with no parity with the norms of the automatic approval

Last Updated on 05/08/2011