| With
swelling forex reserves putting the economy in a
robust position, the government has decided to urge
the Reserve Bank of India (RBI) to introduce changes
in exchange control norms to ensure that these regulations
would not hinder acquisitions of technology or R&D
assets, irrespective of whether they are of physical
assets or intellectual property rights (IPRs).
To
start with, the relaxation of forex regulations
could be under certain defined parameters and for
a few chosen sectors. The proposal is to make the
relaxed forex regime available to acquisitions of
technology, design, R&D, marketing and distribution
as well as physical (manufacturing) assets. The
government would, however, keep the ceiling on royalty
payment to foreign technology providers at the current
levels of 5% for domestic sales and 8% for exports
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Our Say |
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| The
move is likely one of the first
steps in the process of India’s
transition from service providers
to technology owners. Probably
the government now thinks that
the time has come for India to
acquire technology on ownership
or partnership basis, rather than
by paying of royalty to the technology
owner. The move reflects the policy
makers’ view that the take-overs
or joint ownerships of technology
assets in foreign countries would
help Indian companies or individuals
to make use of them, in concert
with the advantageous low-cost
manufacturing in India.
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Recently, the government
has, as part of the decision to ease the capitalisation
norms for issue of equity to non-residents,
allowed domestic partners in joint venture
companies to transfer equity shares to a non-resident
on payment of royalty, lumpsum fee, in addition
to cash payment. |
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