The Reserve Bank of India (RBI) announced in August that Indian companies seeking to buy international brands, trademarks and franchises no longer have to seek the bank’s prior approval.
The move should make it easier for retail companies to acquire brands and local distribution rights. Pharmaceutical companies in particular could benefit from the relaxation of rules as the door opens to them buying up foreign brands and then making the products cheaper in India for export abroad.
Prior to the bank’s decision, companies were required under Rule 5 of the Foreign Exchange Management (Current Account Transactions) Rules, 2000, to seek prior approval to draw foreign exchange relating to remittance for purchase of trademarks or franchises in India.
Under the new rules, resident individuals and local entities can withdraw foreign exchange from local banks if they are seeking to purchase a trademark or franchise for use in India.
