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Remittance
of Royalties/Technical Fees
Reserve
Bank has granted general permission to Indian companies
for making payment of technical fee/royalty through
an authorized dealer designated for the purpose under
the technical collaboration agreement. Indian companies
who have obtained approval for technical collaboration,
may approach the designated authorized dealer for remittance
of technical fee/royalty in application Form A-2.
The
application should be supported by a certificate from
the company's auditors, in Form TCK/TCR and other documents
as specified in the form.
Standard
Conditions attached to Approval for Foreign Technology
Agreements
-
The
total non-resident share holding in the undertaking
should not exceed the percentage/s specified in
the approval letter.
-
The
royalty will be calculated on the basis of the net
ex-factory sale price of the product, exclusive
of excise duties, minus the cost of standard bought-out
components and the landed cost of imported components,
irrespective of the source of procurement, including
ocean freight, insurance, customs duties, etc. The
payment of royalty will be restricted to the licensed
capacity plus 25% in excess thereof for such items
requiring industrial license or on such capacity
as specified in the approval letter. This restriction
will not apply to items not requiring industrial
license. In case of production in excess of this
quantum, prior approval of Government would have
to be obtained regarding the terms of payment of
royalty in respect of such excess production.
-
The
royalty would not be payable beyond the period of
the agreement if the orders has not been executed
during the period of agreement. However, where the
orders themselves took a long time to execute, then
the royalty for an order booked during the period
of agreement, but executed after the period o f
agreement, would be payable only after a Chartered
Accountant certifies that the orders in fact have
been firmly booked and execution began during the
period of agreement, and the technical assistance
was available on a continuing basis even after the
period of agreement.
-
No
minimum guaranteed royalty would be allowed.
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The
lump sum shall be paid in three installments as
detailed below, unless otherwise stipulated in the
approval letter:-
-
First
1/3rd after the approval for collaboration proposal
is obtained from the Reserve Bank of India and
collaboration agreement is filed with the authorized
dealer in foreign exchange (bank).
-
Second
1/3rd on delivery of know-how documentation.
-
Third
and final 1/3rd on commencement of commercial
production, or four years after the proposal
is approved by the Reserve Bank of India and
agreement is filed with the authorized dealer
in foreign exchange, whichever is earlier.
-
The
lump sum can be paid in more than three installments,
subject to completion of activities as specified
above.
-
All
remittances to the foreign collaborator shall be
made as per the exchange rates prevailing on the
date of remittance.
The agreement shall be subject to Indian laws.
All payments under the agreement including Rupee
payments (if any) to be made in connection with
engagement/ deputation of foreign technical personnel
such as passage fare, living expenses, etc. of foreign
technicians, would be liable for the levy of cess
under the Research & Development Cess Act, 1986
and the Indian company while making such payments
should pay the cess prescribed under the Act.
A
return (in duplicate) in form TCD should be submitted
to the Regional Office of the Reserve Bank of India
in the first fortnight of January each year.
Hiring of Foreign Technicians
No
permission is necessary for hiring of foreign technicians
and no application need be made for this purpose in
respective of whether the hiring of foreign technicians
is under an approved collaboration agreement or not.
Foreign exchange will be released either against blanket
permits or in free foreign exchange as per RBI guidelines.
Deputation
of Indian Personnel for Training Abroad
For
deputing Indian personnel for training and other purposes
abroad, the entrepreneurs should approach the Reserve
Bank/Authorized Dealers as per RBI guidelines.
Foreign
Testing of Indigenous Raw Materials and Products and
Indigenously Developed Technology
Payments
are authorized by RBI/ Authorized Dealers either against
permits or in free foreign exchange, as per RBI guidelines.
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