Financial Daily from THE HINDU group of publications
Saturday, Nov 06, 2004
Financial Daily from THE HINDU group of publications Saturday, Nov 06, 2004 |
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Industry & Economy
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Environment FIPB defers decision on higher royalty payment by Denso Haryana Ambarish Mukherjee
New Delhi , Nov. 5 THE Foreign Investment Promotion Board (FIPB) has deferred its decision on a proposal from Denso Haryana for paying increased royalty to its Japanese parents for Euro III technology. Following the norms laid down by the Supreme Court for complying with Euro III emission standards for the Indian automobile sector, Denso Haryana Private Ltd (DHPL) had sought permission from FIPB for remitting increased royalty to its Japanese parent company for introducing Euro III standards. FIPB has, however, deferred its decision on the proposal following a request by the Ministry of Heavy Industries, which wanted to examine Denso's proposal from the financial angle. Denso Haryana has entered into an agreement with its parent company - the $17.8-billion Denso Corporation of Japan - for providing Euro III technology to manufacture and sell electronic control units of 32-bit microprocessors for engine management systems for gasoline engines and electronic control units for common rail injection system for diesel engines. Till now, Denso Haryana has been manufacturing components with 16-bit microprocessors. It was paying a 5 per cent royalty on net sales to the Japanese corporation for electronic gasoline control units and 4 per cent of net sales for fuel pumps. It also paid a lump-sum know-how fee of $4.8 million to Denso Corporation. The proposed royalty for Euro III technology, however, is more than double of what it was earlier. The company informed the FIPB that it would make a one-time payment of $9 million and a running royalty of 5 per cent to the parent company.
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