Technology Transfer Remittances Allowed without Limit by RBI w.e.f 16.12.2009
No Central Government
Permission Required Remittance under Automatic Approval
[RBI
Circular No. 52 dated 13th May 2010]
Sub: Foreign Exchange
Management Act (FEMA), 1999 - Current Account Transactions – Liberalisation
Attention of Authorised Dealer Category-I (AD Category-I)
banks is invited to Foreign Exchange Management (Current Account Transactions)
Rules, 2000 notified vide Notification No.G.S.R.381(E) dated 3rd May 2000, as
amended from time to time.
2. In terms of
Rule 4 of the Foreign Exchange Management (Current Account Transactions) Rules
2000, prior approval of the Ministry of Commerce and Industry, Government of
India, is required for drawing foreign exchange for remittances under technical
collaboration agreements where payment of royalty exceeds 5% on local sales and
8% on exports and lump-sum payment exceeds USD 2 million [item 8 of Schedule II
to the Foreign Exchange Management (Current Account Transactions) Rules, 2000].
The Government of India has reviewed the extant policy with regard to liberalization
of foreign technology agreement and it was decided to omit item number 8 of
Schedule II to the Foreign Exchange Management (Current Account Transaction)
Rules, 2000, and the entry relating thereto.
3. Accordingly,
AD Category-I banks may permit drawal of foreign
exchange by persons for payment of royalty and lump-sum payment under technical
collaboration agreements without the approval of Ministry of Commerce and
Industry, Government of India.
4. The amendment to the Foreign Exchange Management (Current Account
Transactions) Rules, 2000, in this regard has been notified by the Government
of India vide Notification No.G.S.R.382 (E) dated May 5, 2010 (copy enclosed).
5. AD Category-I
banks may bring the contents of this circular to the notice of their constituents
and customers concerned.
6. The
directions contained in this Circular have been issued under Section 10(4) and
11(1) of the Foreign Exchange Management Act, 1999 (42 of 1999) and is without
prejudice to permissions / approvals, if any, required under any other law.
Ministry of
Finance
(Department of Economic Affairs)
Notification
New Delhi, the 5th May 2010
Sub:
Foreign Exchange Management (Current Account Transactions) (Amendment) Rules,
2010
In exercise of the powers conferred by Section 5
and sub-section (1) and clause (a) of sub-section (2) of Section 46 of the
Foreign Exchange Management Act, 1999 (42 of 1999) and in consultation with the
Reserve Bank, the Central Government, having considered it necessary in the
public interest, hereby makes the following further amendment in the Foreign
Exchange Management (Current Account Transactions) Rules, 2000, namely:-
1. (1) These rules may be called the Foreign Exchange Management
(Current Account Transactions) (Amendment) Rules, 2010.
(2) They
shall be deemed to have come into force with effect from the 16th day of
December, 2009.
2. In the
Foreign Exchange Management (Current Account Transactions) Rules, 2000, in
Schedule II, item number 8 and the entry relating thereto shall be omitted.
[F.No. 1/1/EC/2004]
Explanatory Memorandum:- The Government of India reviewed the extant policy with regard to
liberalization of foreign technology agreement and it was decided to permit,
with immediate effect, payments for royalty, lump sum fee for transfer of
technology and payments for use of trademark/brand name on the automatic route.
Accordingly, Government of India issued a Press Note on 16.12.2009. Hence, the
rule shall be deemed to have come into force with retrospective effect, i.e.,
from 16.12.2009.
1. It is certified that no person will be adversely
affected by giving retrospective effect to these rules.
Government of
India
Ministry of Commerce & Industry
Department of Industrial Policy & Promotion
(FC Section)
Press Note No.8 (2009 Series)
Subject:
Liberalization of Foreign Technology Agreement policy
The existing policy of Government of India on the
payment of royalties under Foreign Technology Collaboration provides for
automatic approval for foreign technology transfers involving payment of lumpsum fee of US$ 2 million and payment of royalty
of 5% on domestic sales and 8% on exports. In addition, where there is no
technology transfer involved, royalty up to 2% for exports and 1% for domestic
sales is allowed under automatic route on use of trademarks and brand names of
the foreign collaborator. Separate norms are available for the hotel sector
vide Press Note 18 (1991 Series) and Press Note 1 (1995 Series). Technology
transfers involving payments above these limits required prior permission of
the Government of India (Project Approval Board, Department of Industrial
Policy and Promotion).
2. The
Government of India has reviewed the extant policy and it has been decided to
permit, with immediate effect, payments for royalty, lumpsum
fee for transfer of technology and payments for use of trademark/brand
name on the automatic route i.e. without any approval of the Government of
India. All such payments will be subject to Foreign Exchange Management
(Current Account Transactions) Rules, 2000 as amended from time to time.
3. A suitable
post-reporting system for technology transfer/ collaborations and use of trade
mark/ brand name will be notified by the Government separately.
4. These
guidelines issue in modification of provisions relating to foreign technology
proposals/approvals contained in paragraph 3 of Press Note 10 (1991), para 7 of
Press Note 11 (1991), para 4 & 5 (a) of Press Note 12 (1991), para 2-6 of
Press Note 20 (1991), para 2 of Press Note 5 (1992), para 4 of Press Note 4
(1994), para 3 of Press Note 18 (1997) and paragraphs III and IV of Press Note
9 (2000). These guidelines will issue in supersession of provisions of Press
Note 18 (1991), Press Note 4 (1992), Press Note 1 (1995), Press Note 4 (1996),
Press Note 1 (2002) and Press Note 2 (2003).
Foreign Exchange
Management (Current Account Transactions) Rules, 2000
Deleted Entry
|
8. |
Remittances under technical collaboration agreements
where payment of royalty exceeds 5 percent on local sales and 8 percent on
exports and lump-sum payment US $2 million |
Ministry of Industry and Commerce |