The move, approved by the Cabinet two weeks ago, was aimed at expediting projects in collaboration with foreign technology providers, since companies would be able to enter into tie-ups without seeking prior government approval, including those for pricing. They could be able to make the required payments and merely inform the ministry of commerce and industry.
Officials said it was decided in principle that all payments for royalty, lump sum fee for transfer of technology and payments for the use of trademark or brand name would now be on the automatic route.
They added that the project approval board would also be dismantled. Earlier, companies were required to seek PAB approval for fixing the price to be paid for technology, trademark, patents or royalty.
"Instead, a reporting mechanism will be worked out in collaboration with the Reserve Bank of India and the ministry of finance for these companies to report the transaction and maintain a database," an official said.
The department of policy and promotion and RBI would soon issue the required orders.
At present, in case of technology transfer for an identified project, the automatic route can be used for payment of a lump-sum fee of $2 million or a royalty of 5 per cent of domestic sales and 8 per cent of exports for certain commodities. With no technology transfer involved, royalty up to 2 per cent for exports and one per cent for domestic sales is under automatic route.
The officials, however, said the freedom in pricing would be for sectors where foreign direct investment was allowed and there was no breach of the sectoral limits.
