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NIA arrests six more people and conducts searches at 6 places in Kerala gold smuggling case        Union Minister observes fast as BJP seeks to step up pressure on Ker govt in gold smuggling case        Kerala crosses 25,000 COVID-19 cases as 1,169 test positive        Heavy rains forecast in Kerala this week; Low pressure likely in Bay of Bengal        Shah tests +ve for COVID-19, admitted to Medanta hospital in Gurugram        International passengers with negative COVID-19 test report can skip institutional quarantine: Govt        High time Mehbooba Mufti is released, says Rahul Gandhi        Death toll in Punjab spurious liquor tragedy rises to 104        Trump Says Federal Government Should Seek Death Penalty For Boston Bomber        Khamenei''s top aide praises Turkey''s Hagia Sophia move        IPL GC Meet: Final on Nov 10, Chinese sponsors intact, COVID replacements allowed        2nd ODI: Bairstow, Rashid shine in England''s 4-wicket win over Ireland        Kerala''s COVID-19 tally inching towards 25,000 mark, 1129 ccases, death toll climbs to 82        Kerala police SI dies of COVID-19; first from the force to succumb to the virus        If high command forgives rebels, I will welcome them back: Gehlot        Former SP leader and Rajya Sabha MP Amar Singh dies at 64        Wild fire: 200 homes evacuated in Southern California        Emirati nuclear plant successfully starts up first reactor        Ready to push for continued advancement of China-Nepal ties: Xi        Some 17,000 people hit streets of Berlin to protest COVID-19 measures        
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Business News
Govt considering to reintroduce restrictions on royalty payments
 
New Delhi: The government is considering to re-introduce restrictions on royalty payments for technology transfer in view of excessive outflow of such funds to overseas companies, sources said.

A proposal in this regard will soon be circulated by the Department for Promotion of Industry and Internal Trade (DPIIT) for inter-ministerial consultation, sources said.

According to the proposal, limits could be imposed on royalty payments in case of technology transfer or collaboration involving foreign entities either directly or indirectly through any firm in India.

A similar proposal was mooted by the department last year. That time it had proposed that royalty payments should be capped at 4 per cent of domestic sales and 7 per cent of exports for the first four years; and for the next three years the limit should be 3 per cent of local sales and 6 per cent of exports.

But the finance ministry had raised objections over the proposal saying it could send a negative signal to foreign investors.

The increase in outflow of these payments started after the government liberalised the FDI policy in 2009. It had removed the cap and permitted Indian companies to pay a royalty to their technical collaborators without seeking prior government approval.

Royalty is paid to a foreign collaborator for the transfer of technology, usage of brand or trademarks.

In April 2017, a surge in royalty outflow prompted the government to set up an inter-ministerial group to analyse payment norms and see whether there is excessive payout by Indian companies to foreign collaborators.

Proposing these restrictions, the department had argued that the curbs would help increase the profits of domestic companies, mainly in the automobile sector, prevent depletion of foreign exchange reserves, protect the interest of minority shareholders and increase revenue for the government.

Before 2009, royalty payments were regulated by the government and capped at 8 per cent of exports and 5 per cent of domestic sales in the case of technology transfer collaborations. They were fixed at 2 per cent of exports and 1 per cent of domestic sales for use of trademark or brand name.

Auto major Maruti Suzuki pays an average royalty of around 5.5 per cent of its net sales to its parent Suzuki.


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