(i) Under the old procedure, all proposals for entering into foreign technical collaborations were required to be approved by the Government of India and on receipt of Governments approval, formal authorisations under FERA 1973 were being issued by Reserve Bank. Copies of collaboration agreements were required to be filed with Reserve Bank/Government of India. However, under the revised liberalised procedure Reserve Bank considers under the Automatic Route, applications from Indian companies for foreign technical collaborations, for lumpsum payment of technical know-how fee upto Rs.one crore and/or royalty up to 5% on domestic sales and 8% on exports over a period of 7 years from the date of commencement of commercial production or 10 years from the date of agreement, whichever is earlier. Since November 1996, the limit for lumpsum payment of technical know-how fee has been increased from Rs. one crore to US $ 2 million. Applications for foreign technical collaborations under the Automatic Route should be made to the concerned regional office of Reserve Bank in form FT (RBI). Proposals which do not conform to the above parameters would require the approval of Secretariat for Industrial Assistance (SIA), Ministry of Industry, Government of India, New Delhi. The extension of foreign technical collaboration agreements (including those approved by Reserve Bank) would also need the approval of SIA, Government of India.

(ii) In cases where the collaboration is approved by Reserve Bank/Government of India, a letter of approval will be issued indicating the terms and conditions of the approval. A copy of the letter of approval will also be issued by Reserve Bank to the designated branch of an authorised dealer (as mentioned in the application) through whom remittances of technical know-how fee and/or royalty are to be made by the Indian company. A registration number will be granted by Reserve Bank when an approval is granted for foreign technical collaboration under the Automatic Route. Also in cases where the approval for collaboration is granted by the Government, the Indian company should obtain a registration number for the collaboration agreement from the concerned regional office of Reserve Bank before remittances under the agreement are made.

(iii) The Indian company which has obtained approval for the foreign collaboration agreement from the Reserve Bank/Government should file a copy of the agreement with the designated branch of the authorised dealer through whom remittances falling due under the collaboration agreement would be made. The Indian company should also submit a Return in form TCD to the concerned office of Reserve Bank in the first fortnight of January each year showing payments made under the collaboration during the preceding calendar year duly countersigned by the designated branch of an authorised dealer.

(iv) Indian companies which had executed collaboration agreements under the old procedure and the agreements are subsisting should switch over to the revised procedure for making payments under the agreement (see paragraph 10B 5). Application for the purpose should be made to the concerned office of the Reserve Bank together with a Return in Form TCD showing details of all payments made under the collaboration till the 31st December of the previous year. Reserve Bank will grant a registration number and approval to the concerned authorised dealer to effect future remittances.