guidelines for foreign collaboration proposals

	The Central Government  has issued the following guidelines in connection with the formulation of proposals and agreements of foreign collaboration :

i)	Alternative sources.-The collaborator should explore, to fullest extent possible, alternative sources  of technology, evaluate them from a techno-economic point  of view  and furnish reasons for preferring a particular technology and the source of import.

ii)	Other  arrangement.-There  should  not be any restriction on the Indian Company in the matter of procurement of capital goods, components, spares, raw materials, pricing policy, selling arrangement, etc.

iii)	Sub-licensing.-The  Government   expects that the technical collaboration agreement should generally not prohibit sub-licensing of the know-how, product-design or engineering  design under agreement, to other  Indian parties. Such sub-licensing, when  it becomes  necessary, is subject to terms  to be mutually agreed by all parties  concerned, including the  foreign  collaborator, and is subject to the approval of the Government. The  collaboration agreements should not place any export restrictions to countries except where the collaborator has a sub-licensing agreement.

iv)	Minimum royalty.-There should be no requirement for the payment of a minimum guaranteed royalty  regardless of the quantum and value of production.

v)	Exports.-To the fullest extent possible, there should be no restriction on free exports to all countries.

vi)	Brand names.-There should be  no provision for the use of the foreign brand names on the products for internal sale, although there is no objection to their use on products to be exported.

vii)	Training-Research and development.-Adequate and suitable  provisions  should be made for the training  of Indians in the fields of production and management. There should be  adequate arrangement  for  research and development, engineering design, training of technological  personnel, and other measures for  the  absorption  and adoption and development of the imported technology. Such measures can be  undertaken  through in house facilities  of the entrepreneur or  in collaboration with  recognised  engineering design  consultancy, research  and development organisations in the public or private  sectors, and recognised  scientific and educational institutions  where the necessary facilities exist.

viii)	Consultancy service.-In case any consultancy is required to execute the project, it should be   obtained from an Indian  engineering  consultancy  firm. If a   foreign  consultancy firm is also considered necessary, an Indian  consultancy   firm should, nevertheless, be the prime consultant.

ix)	Patent laws.-If  the proposed   item of manufacture is to be covered by a patent in India, it should  be ensured that the collaboration agreement includes a clause to the effect that the payment of royalty for the  use of the patent rights till the expiry of the life of the patent, and that the Indian party  would have the freedom to produce the item even after the expiry of the collaboration agreement without any additional payment.

x)	Indian laws.-Collaboration agreements will be subject to  Indian laws.

xi)	Extensions.-Government does not favour requests for extensions of the duration of collaboration proposals. All efforts  should, therefore, be made to assimilate the technology  within the initial duration of the agreement.