Note III
- Document type
- Form
- Dated
- Category
- Forms
Standard Conditions Attached to Approvals for Foreign Investment Technology Agreement
III. Standard Conditions Attached to Approvals for Foreign Investment Technology Agreement
No permission is necessary for hiring of foreign technicians and no application need be made to Government for this purpose irrespective of whether the hiring of foreign technicians is under an approved collaboration agreement or not. As regards release of foreign exchange either against blanket permits or in free foreign exchange, the Reserve Bank of India/Authorised Dealers may be approached, as per RBI guidelines.
V. Deputation of Indian Personnel for Training Abroad
For deputing Indian personnel for training and other purposes abroad, the entrepreneurs may approach only the RBI/Authorised Dealers as per RBI guidelines.
VI. Foreign Testing of Indigenous Raw Materials and Products and Indigenously Development Technology
Entrepreneurs may approach RBI/Authorised Dealers for authorising payments either against blanket permits or in free foreign exchange, as per RBI guidelines.
- The total non-resident share-holding in the undertaking should not exceed the percentage(s) specified in the approval letter. In case of any change in the amount of foreign/NRI investment, or the paid-up capital, an intimation to this effect may be given to SIA, RBI and the Administrative Ministry, subject to the percentage of foreign/NRI equity share-holding remaining unchanged.
- The royalty will be calculated on the basis of the net ex-factory sale price of the product, exclusive of excise duties, minus the cost of the standard bought-out components and the landed cost of imported components, irrespective of the source of procurement, including ocean freight, insurance, custom duties, etc. The payment of royalty will be restricted to the licensed capacity plus 25% in excess there of for such items requiring industrial licence In case of production in excess of the quantum, prior approval of Government will have to be obtained regarding the terms of payment of royalty in respect of such excess production.
- The royalty would not be payable beyond the period of the agreement if the orders had not been executed during the period of agreement. However, where the orders themselves took a long time to execute, then the royalty for an order booked during the period of the agreement, but executed after the period of agreement, would be payable only after a Chartered Accountant certifies that the orders in fact have been firmly booked and execution began during the period of agreement, and the technical assistance was available on a continuing basis even after the period of the agreement.
- The royalty will be calculated on the basis of the net ex-factory sale price of the product, exclusive of excise duties, minus the cost of the standard bought-out components and the landed cost of imported components, irrespective of the source of procurement, including ocean freight, insurance, custom duties, etc. The payment of royalty will be restricted to the licensed capacity plus 25% in excess there of for such items requiring industrial licence In case of production in excess of the quantum, prior approval of Government will have to be obtained regarding the terms of payment of royalty in respect of such excess production.
- The lumpsum shall be paid in three instalments as detailed below, unless otherwise stipulated in the approval letter: First 1/3rd after the agreement is filed with Reserve Bank of India/Authorised Foreign Exchange Dealer. Second 1/3rd on delivery of technical documentation. Third and final 1/3rd on commencement of commercial production, or four years after the agreement is filed with Reserve Bank of India/Authorised Foreign Exchange Dealer, whichever is earlier. The lumpsum can be paid in more than three instalments subject to completion of the activities as specified above.
- In case the proposed activity is not exempted from the provisions of Industrial (Development & Regulation) Act, 1951 and the Foreign Exchange Regulation Act, 1973 it will be your responsibility to obtain such clearances as many be required under the said Acts.
- The location of the industrial projects, will be subject to Central or State Environmental laws or regulations including local zoning and land use laws and regulations.
- Adequate steps shall be taken to the satisfaction of the Government to prevent air, water and soid pollution measures to be installed should conform to the effluent and emission standards prescribed by the State Government in which the factory or the industrial undertaking is located.
- Items reserved for Small Scale Sector shall not be manufactured without prior approval of the Government as per the prescribed policy and procedure.
- Since the maximum equity participation allowed for in Small Scale Units is 24%, the company"s proposal for having, foreign equity of more than 24% would be subject to the condition that the company would get itself de-registered as a small scale unit and obtain industrial license or would file Industrial Entrepreneur Memorandum with SIA as [per prescribed policy and procedure.
- For undertaking the export obligation, if any, specified in the approval letter, the requisite guarantee, i.e. legal undertaking/bank guarantee, as may be required, should be furnished according to the detailed instructions issued by the Directorate General of Foreign Trade (E.O. Cell), Ministry of Commerce (EP Division) and the Administrative Ministry, who may be contacted in the matter.
- Import of capital equipment, components and raw materials will be allowed as per the import policy prevailing from time to time
- The approval is valid for a period of two years from the date of issue. Within this period, the collaboration agreement is required to be filed with Reserve Bank of India/ Authorised Foreign Exchange Dealer.
- The FC agreement shall be subject to Indian laws.
- Foreign Investment Remittance (FIRC) is required to be sent to the Reginal Office, Reserve bank of India, immediately on receipt of foreign remittance.
- All remittances to the foreign collaborator shall be made as per the exchange rates prevailing on the day of remittance.
- A copy of the collaboration agreement signed by both the parties may be furnished to the following authorities:
- Administrative Ministry/Department.as mentioned in the Approval to be issued by SIA.
- Secretariat for Industrial Assistance, (Foreign Collaboration-II Section) Department of Industrial Policy & Promotion, Udyog Bhawan, New Delhi - 110 011.
- Department of Scientific and Industrial Research, Technology Bhawan, New Mehrauli Road, New Delhi - 110 016.
- Administrative Ministry/Department.as mentioned in the Approval to be issued by SIA.
- *The outflow of foreign exchange on account of dividend payment will be balanced by export earnings on the following basis :
- The balancing of dividends would be over a period of 7 years from commencement of production. Balancing will not be required beyond this period.
- Remittance of dividends should be covered by earnings of the company from export of items covered by foreign collaboration agreements. You are also to cover remittance of dividens from earnings through export of items not covered by the agreement provided they are covered in the list of industries in Annexure III of Statement by export earnings of such items covered in years prior to the payment of dividends or ( *Wherever applicable)
- The balancing of dividends would be over a period of 7 years from commencement of production. Balancing will not be required beyond this period.
No permission is necessary for hiring of foreign technicians and no application need be made to Government for this purpose irrespective of whether the hiring of foreign technicians is under an approved collaboration agreement or not. As regards release of foreign exchange either against blanket permits or in free foreign exchange, the Reserve Bank of India/Authorised Dealers may be approached, as per RBI guidelines.
V. Deputation of Indian Personnel for Training Abroad
For deputing Indian personnel for training and other purposes abroad, the entrepreneurs may approach only the RBI/Authorised Dealers as per RBI guidelines.
VI. Foreign Testing of Indigenous Raw Materials and Products and Indigenously Development Technology
Entrepreneurs may approach RBI/Authorised Dealers for authorising payments either against blanket permits or in free foreign exchange, as per RBI guidelines.