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Royalty payment under FEMA

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Royalty payment under FEMA

Postby tanyaa_shah2007 » Thu Sep 13, 2007 10:19 pm

Hello Friends,

Can anybody please tell me what is the maximum limit of royalty payments by Indian Co. to foreign co. for trademark license under the FEMA? and which FEMA Reg?

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Postby suresh_cs » Tue Sep 25, 2007 6:38 pm


refer the following may help you, further clarification you may contact on 9324381267

Foreign / technical Collaboration / technology transfer

-Automatic route: In case the lump sum payment does not exceed US$ 2 million and payment of royalty does not exceed 5% on domestic sale and 8% on export sale, RBI may register the agreement and grant approval for remittance under the Automatic Route, if certain prescribed criteria.

-Otherwise, Permission from RBI is required

-RBI may give permission with registration number with respect to foreign collaboration.

-Form TCD in respect to each collaboration under registration number granted by RBI at the time of approval, shall be filed
annually in duplicate, within first fortnight of January. The form should be counter signed by Authorized dealer.

-Certificate of CA shall be filed with TCD.

C.S., LL.M.
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Postby tanyaa_shah2007 » Thu Sep 27, 2007 10:56 am

Dear Sir,

Thanks a lot for the reply- I find it very useful indeed.

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Re: Royalty payment under FEMA

Postby Raajesh » Tue Sep 21, 2010 4:16 pm

Dear Mr. Suresh,

I am Raajesh Kumar Gupta and my contact number is 09718587120. I am a Company Secretary and working as Legal head and Company Secretary of a reputed group in Gurgaon.

While I was looking for some clarification on the internet regarding royalty payment, I happen to enter into the website of feelmind and the reply given by you in 2007. You have also given your contact number but right now it is coming as swiched off.

My basic query is about the definition of "Standard Bought out Components". Let me give you the brief behind my query.

In earlier days when the Government approval was required to make payment of Royalties to Foreign technical provider, we use to negotiate with the Licensor and arrive at a method for royalty calculation and later on obtaining the approval of the Government of India. Since December, 2009 the restrictions on payment of royalties have been done away with and now we can make any payment to the collaborators. While we are negotiating with collaborators for future products, we are of the opinion that the royalty has to be calculated on teh net selling price of the product minus the excise duties and the cost of standard bought out components. Since the terms Standard Bought out components has not been defined anywhere it is quite open for interpretation. While the collaborator says that the specification of the products being provided by us contain everything, there is no standard bought out components. While we are of the opinion that the Standard Bought out components are those components which are not manufactured by the Licensee inhouse and procured from outside parties who manufacture the same without use of technology of the Licensor.

I would be highly obliged if you could throw some light on the above and help me in getting some definition of Standard bought out components.
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Re: Royalty payment under FEMA

Postby j.aman1983 » Sat Sep 25, 2010 10:41 am

Dear Raajesh,

Yes you are right that the restrictions on payment of royalties have been done away.

You want to know about "Standard Bought out Components".

Its mean that product which we directly imported from outside party and for which no technical expertise used by that party, that’s why these are excluded from calculation of royalty payment.

very simple logic behind this that first we import then without modification on what basis we can give the royalty on the same.

Aman Jain

B-15, "B" BLOCK,
NEW DELHI-110024

Mob. No. +91-97174.900.58
Email: j.aman1983@gmail.com
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Location: Delhi/NCR

Re: Royalty payment under FEMA

Postby rvsekar2000 » Wed Jun 29, 2011 1:59 pm

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