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.iii)
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.ii
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.iii
Minimum
royalty.-There should be no requirement for the payment of a minimum guaranteed
royalty regardless of the quantum and value of production.iv
Exports.-To
the fullest extent possible, there should be no restriction on free exports to
all countries.v
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.vi
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.vii
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.viii
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.iiiiiiivvviviiviiiix
Indian
laws.-Collaboration agreements will be subject to Indian laws.x
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.Guidelines for
Foreign Collaboration Proposals