Technology Transfer

Concept
Scope
Procedure

.......jkchandel@kuk.ac.in
 Technology
Technology is the usage and knowledge of
tools, techniques, crafts, Systems or methods
used in any organization.
The word technology comes from the Greek
technología — téchnē, an 'art', 'skill' or 'craft'
and logia, the study of something, or the
branch of knowledge of a discipline.
The term can either be applied generally or to
specific areas: examples- construction
technology, medical technology, or state of the
art technology or high technology.
.......jkchandel@kuk.ac.in
 Technology
Technology is a body of knowledge used to
create tools, develop skills, and extract or
collect materials.

It is also the application of science (the

combination of the scientific method and
material) to meet an objective or solve a
problem.

.......jkchandel@kuk.ac.in
 Technology
Technology comprises elements:
•Process Know how
•Design Know how
•Engineering know how
•Manufacturing know how
•Application Know how
•Management know how
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.......jkchandel@kuk.ac.in
 Technology Transfer
Technology transfer’ means the use of
knowledge and when we talk about transfer of
the technology, we really mean the transfer of
knowledge by way of an agreement between
the states or companies.
‘Transfer’ does not mean the movement or
delivery; transfer can only happen if technology
is used.
So, it is application of technology and
considered as process by which technology
developed for one purpose is used either in
different applications or by a new user.
.......jkchandel@kuk.ac.in
Policy for foreign technology agreements
RBI accords automatic approval to all
industries for foreign technology
collaboration agreements subject to-
•The lump sum payments not exceeding US $
2 million.
•Royalty payable being limited to 5 per cent
for domestic sales and 8 percent for export,
subject to a total payment of 8 per cent on
sales over 10 year period.
.......jkchandel@kuk.ac.in
 Technology Transfer
Payment of royalty up to 2 per cent for
export and 1 per cent for domestic sales is
allowed under automatic route on use of
trademark and brand name of the foreign
collaborator without technology transfer. In
case of technology transfer, payment of
royalty subsumes the payment of royalty for
use of trademark and brand name of the
foreign collaborators.

.......jkchandel@kuk.ac.in
 Technology Transfer
•Payment of royalty up to 8 per cent for export
and 5 percent on domestic sales by wholly
owned subsidiaries (WOS) to offshore parent
companies is allowed under the automatic
route without any restriction on the duration of
royalty payments.
•All other proposals for foreign technology
agreements not meeting the parameters for
automatic approval are considered on merit by
the Project Approval Board (PAB).This
is chaired by the secretary, department of
Industrial Policy and promotion, Ministry of
Commerce and Industry.
.......jkchandel@kuk.ac.in
 Procedure for approvals-
Technology transfers by SIA
All others proposals of foreign technology
agreement, not meeting any or all of the
parameters for automatic approval, are
considered for approval, on merits, by the
Government.
Applications in respect of such proposals should
be made submitted to the secretariat for
Industrial Assistance (SIA), Department of
Industrial Policy Promotion, Ministry of
Industry, Udyog Bhawan, New Delhi.
No Fees is payable. Approvals are normally
available within 4 weeks of filing the
application.
.......jkchandel@kuk.ac.in
 Scope for foreign collaboration
Government of India issues from time to
time lists of Industries “where foreign
investment may be permitted”. The list so
issued is illustrative only. No doubt, a broad
technology base has been created in the
country, yet a need to update the production
technology may arise due to constant
technological advancements in developed
countries .Government of India (foreign
investment Promotion Board) may consider
import of technology
.......jkchandel@kuk.ac.in
 Technology Transfer

Three different models of institutionalizing

TT as a means to development emerged in
the respective countries. They are:

.......jkchandel@kuk.ac.in
 Technology Transfer
(1) Acquire and use foreign technology from
a limited number of suppliers - replace
similarly - leading to manufacture under
license or by joint ventures for import
substitution and for export by a small group
of established units.

.......jkchandel@kuk.ac.in
 Technology Transfer
(2) Reverse-engineer foreign technology;
incrementally improve it, adopt it to local or
similar conditions, and produce for import
substitution and for export by state owned
enterprises and a small group of established
oligarchs (units), ultimately leading to SMEs
taking over in few niche technologies and
growing to become worldwide suppliers.

.......jkchandel@kuk.ac.in
 Technology Transfer
(3) Acquire foreign technology from
whatever the source and by whatever the
means; use it, learn from it and from the
field - leading to production of break-
through innovations for use and for export in
a great diversity of technologies by a large
number of SMEs growing to significance in
the global marketplace.

.......jkchandel@kuk.ac.in
• FDI brings along with capital, modern technologies and best
practices. The GoI has announced a liberal foreign technology
transfer policy as well. The policy on foreign technology transfer is
regulated on the basis
of the quantum of payments allowed for technology transfers.
Payments for technology transfer from a foreign collaborator are
allowed to a joint venture with an Indian partner as also to wholly
owned Indian subsidiaries of a foreign company.
• There is no time limit prescribed for the duration of payments to
be made. The technology payments are governed by the Foreign
Exchange Management (Current Account Transaction)
regulations, 2000. These do not cover the FDI Scheme which is
governed by Foreign Exchange Management (Transfer or Issue of
security by a Person Resident outside India) Regulations, 2000
except where specifically notified.
• In other words, there is no restriction on technology collaboration
in areas, which are prohibited for foreign equity or which attract
foreign equity caps under the FDI policy except where such a
restriction has been notified.
• At present, foreign technology collaboration involving payment of
lump-sum amount of up to US $2 million and/or royalty at the rate
of 5% on domestic sales and 8% on exports are allowed under the
automatic route.
• In addition, the current policy also allows payment of royalty up to
2% on exports and 1% on domestic sales under the automatic
route for use of trademark and brand names of the foreign
collaborator without technology transfer.
• Cases involving payment of lump-sum amount or royalty beyond
the limits prescribed under the automatic route are considered by
the government on the recommendations of the PAB.