The Reserve Bank of India's (RBI) latest biennial survey, released on Tuesday, revealed that companies with foreign technical collaboration (FTC) agreements in the motor vehicles sector played a dominant role in the overall production of FTC companies in the country.
During the fiscal year 2022-2023, the motor vehicles sector recorded remarkable production growth, reaching 28.4%, surpassing the 24.3% growth registered by all FTC companies collectively.
The survey also highlighted that Japan, the United States, and Germany continued to be the leading source countries for technology transfer, as reported by the survey respondents.
Of the 709 Indian entities participating in the survey, 674 FTC agreements were reported by 356 entities, with 221 of them having also responded in the previous survey.
Other notable findings from the survey included the prevalence of foreign direct investment (FDI) companies in the majority of FTC agreements. Over two-thirds of these agreements involved the transfer of technology know-how or the use of trademarks and brand names by foreign collaborators. Additionally, royalty payments were the preferred payment mode for over 70% of the FTC agreements, with some agreements also containing clauses for lump-sum technical fees.
Among the 674 reported FTC agreements, 198 included export restriction clauses, and 217 had provisions for exclusive rights on assets transferred under the agreements.
Regarding partner countries, technical collaborations with Japan had the highest number of export restriction clauses, followed by the United States and Germany as the leading source countries for technology transfer.
The survey also indicated that exports and imports of FTC-reporting companies experienced significant growth, increasing by 19.8% and 26.5%, respectively, in the fiscal year 2022-2023. These activities constituted 13.6% and 24.0% of the total value of production, respectively.
The average profitability of FTC-reporting companies, as measured by the ratio of gross profit to capital employed, was reported at 10.5% in the current survey round.
(With Agency Inputs)
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