The Department of Industrial Policy & Promotion
("DIPP") is working on a discussion paper to re-consider
the cap on royalty payments to foreign partners/parent companies.
The Telecom Regulatory Authority of India ("TRAI") has
suggested increasing the license fee applicable on Internet Service
Providers ("ISP") from the existing 6% to 8%.
1. Re-discussing the royalty payment issue
The DIPP is likely to bring a discussion paper for review of the
proposal on 50% rise in royalty payments by Indian companies to
their foreign partners or parents. So, essentially, the paper will
invite comments on whether or not the royalty ceiling applicable
till 2009 should be re-imposed. Know that until December 16, 2009,
lump sum royalty payments were capped at $2 million. For the cases
where there were no flat rates, royalty payment for technological
collaboration was capped at 5% of the domestic sales and 8% of
exports. Further, for the usage of a brand name, royalty could be
paid
