Royalty payments and minority shareholders

In the December of 2009, the government of India, through press note 8, liberalized the payment of foreign technology collaborations and royalty fees under the automatic route (- including lump sum payments for transfer of technology, payments for the use of trademark and brand name). The liberalization of the Foreign Technology Agreement Policy was aimed at facilitating inflow of foreign direct investment and technology transfers into the country. Foreign partners would now no longer have to go through administrative hoops. Importantly this meant that ‘foreign sponsors’ who earlier required government approval for charging royalty under the various heads were now free to charge any amount as royalty to their Indian subsidiaries.

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