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Home / Foreign Technology Collaboration/Trademark Agreement

Foreign Technology Collaboration/Trademark Agreement

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With a view to injecting the desired level of technological dynamism in Indian industries, foreign technology induction is encouraged both through Foreign Direct Investments and through foreign technology collaboration agreements.

The  Foreign Technology Collaboration agreements pertain to provision of technology by a foreign entity to an Indian concern for agreed consideration, which can be of the following nature:

  • Initial lump-sum payment
  • Royalty
  • Fees for Technical Services
  • Payment for design & drawing
  • Payment for engineering services

Payment for hiring technicians, deputations of Indian technicians abroad and testing of indigenous raw material, products, indigenously developed technology in foreign countries are governed by separate Reserve Bank of India procedures.

Foreign technology collaborations/ trademark agreement are permitted either through the following routes:

Automatic Route
Approval Route

Automatic Route

Reserve Bank of India accords automatic approval to all industries for Foreign Technology Collaboration/ trademark agreement agreements subject to the following conditions:

  • The Foreign investor has no existing joint venture or technology transfer/trademark agreement in the same field provided that even in case of existing joint venture or technology transfer/trademark agreement, no approval is required in following conditions:
    1. Investment to be made by Venture Capital Fund registered with Securities and Exchange Board of India.
    2. Wherein existing joint venture investment by either of the parties is less than 3%
    3. Where the existing joint venture is defunct or sick.

    Provided the aforesaid said restriction is not applicable on foreign technology collaboration in Information Technology sector or in case of investments by multinational financial institutions.

RBI’s prior approval is required for remittance towards purchase of trade mark/franchise.All payment made under Foreign Technology Collaboration Agreement will be subject to the FEMA (Current Account Transactions) Rules 2000

Approval Route

Approval for Foreign Technology Collaboration/ trademark agreements will be required from Foreign Investment Promotion Boards, if any of the following conditions is satisfied:

  • Proposals which requires compulsory licensing.
  • Items of manufacture reserved for the small scale sector
  • Proposals involving any previous joint venture or technology transfer/trademark agreement in the same field in India
  • Extension of foreign technology collaboration agreements (including cases which may have received automatic approval in the first instance)

Procedure for Government Approval

Proposals for Foreign Technology Collaboration not covered under the automatic route are considered by the Project Approval Board (PAB) in the Department of Industrial Policy and Promotion. Application in such cases should be submitted in Form FC-IL to the Secretariat for Industrial Assistance. Proposals where both financial & technical collaboration are proposed, application is to be submitted to FIPB. No fee is payable.

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