Foreign tech-related payments policy eased

By Sawant Singh and Arun Madhu, Phoenix Legal
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The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce and Industry, in a press release issued in early November, indicated that it would, in the coming months, amend the policy on technology-related payments by Indian firms to foreign persons. Close on the heels of the press release, the DIPP eased the policy on remittance of royalties and similar payments for licensing of trademarks, technology transfers, etc, through Press Note 8 of 2009, dated 16 December.

With the introduction of Press Note 8, payments for royalties, lump sum fees for transfer of technology and payments for use of the trademark/brand name of a foreign party can now be made under the automatic route (i.e. without prior governmental approval) provided certain minimal conditions are met with. Our column this month briefly examines the genesis of this development and its impact.

Sawant Singh Partner Phoenix Legal
Sawant Singh
Partner
Phoenix Legal

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The manner and extent of payments by Indian parties for technical collaborations and technology transfer arrangements have formed an integral part of India’s liberalized foreign investment policy over the past decade or so. Typically, such arrangements involve the use by an Indian party of a foreign party’s intellectual property rights (IPR) or the procurement of technical services from a foreign party with the payment of fees or royalties as consideration for the arrangement.

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Sawant Singh is a partner and Arun Madhu an associate at Phoenix Legal in Mumbai. They can be reached at sawant.singh@phoenixlegal.in and arun.madhu@phoenixlegal.in.

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