The Hindu Business Line : Tech-equity swap with foreign partners likely

New Delhi, Sept. 9 It may soon be possible for Indian companies to undertake technology transfers or get the right to use brand name or trademarks of their foreign partners by issuing equity shares to the foreign collaborator instead of making cash payment.

The same would also apply for various pre-operative expenses incurred by the foreign partner.

For such transactions the Centre is looking at developing a suitable reporting mechanism in consultation with the Reserve Bank of India, sources said.

Currently, issuing of equity to the foreign collaborator by an Indian company for considerations other than cash needs the approval of the Foreign Investment Promotion Board (FIPB) which decides the issue on a case-to-case basis.

Now, in order to make inward transfer of modern technology easier and faster, such transactions would be put under the RBI’s automatic route, sources said.

Under this route the concerned company would only have to make a self-declaration about the transaction to the RBI and move ahead, thereby saving on the cost and time it takes for routing the deal through the FIPB.

It all started in January 2004 when Bangalore-based Biocon India Ltd became the first domestic company to be allowed to issue shares to the Cuba-based Centre for Molecular Immunology in exchange of technology. The valuation for the deal was decided bilaterally between the two partners. Since then there have been several such transactions permitted by the Government.

Related Stories:
Tech-equity swap for foreign cos proposed
Biocon gets nod for tech-equity swap

More Stories on : Technology | Stocks | IPR

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page