Govt considering to reintroduce restrictions on royalty payments

The government is considering to re-introduce restrictions on royalty payments for technology transfer in view of excessive outflow of such funds to overseas companies, sources said.

A proposal in this regard will soon be circulated by the Department for Promotion of Industry and Internal Trade (DPIIT) for inter-ministerial consultation, sources said.

According to the proposal, limits could be imposed on royalty payments in case of technology transfer or collaboration involving foreign entities either directly or indirectly through any firm in India.

A similar proposal was mooted by the department last year. That time it had proposed that royalty payments should be capped at 4 per cent of domestic sales and 7 per cent of exports for the first four years; and for the next three years the limit should be 3 per cent of local sales and 6 per cent of exports.

But the finance ministry had raised objections over the proposal saying it could send a negative signal to foreign investors.

(Agencies)