Indian companies paying royalty to foreign firms for technology transfer, use of brand name or trademark will no longer require government approval, as such payments have been allowed under the automatic route. “. it has been 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.

,” a statement from the Department of Industrial Policy and Promotion (DIPP) said.

Earlier, such payments were allowed without any approval of the government, subject to a ceiling of USD two million. All such payments, though, will be subject to Foreign Exchange Management (Current Account Transactions) Rules, it said.

The move is aimed at promoting the transfer of modern technology to the country. At present, automatic approval was permitted only for foreign technology transfer involving payment of lump-sum fee of USD two million and royalty of five per cent on domestic sales and eight per cent on exports.

Beyond these limits, prior permission of the Project Approval Board in the Department of Industrial Policy and Promotion was required. The government further said a suitable post-reporting system for technology transfer/collaborations and use of trade mark/ brand name will be notified separately.

Over 8,000 approvals have been granted for technology collaborations since 1991 to June 2009.

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