Manufacturing sector accounted for 78% of FTCs

FDI companies accounted for an overwhelming majority of the FTCs

FinTech BizNews Service 

Mumbai, 1 November, 2023:  The Reserve Bank on Tuesday released the results of fourteenth round of its biennial survey on foreign collaboration in Indian industry (FCS) covering the financial years 2021-22 and 2022-23. This survey captures information on financial parameters and operations of the Indian companies having technical collaboration with foreign companies during the reference period.

Out of the 709 Indian entities that participated in the latest survey round, 674 foreign technical collaboration (FTC) agreements were reported by 356 entities, of which, 221 had also responded in the previous survey round.

Highlights:

•  Foreign direct investment (FDI) companies accounted for an overwhelming majority of the FTCs: foreign subsidiaries (i.e., single foreign investor holding over 50 per cent of total equity) and foreign associate companies (i.e., foreign investors’ equity holding ranging between 10-50 per cent) reported 71 per cent and 18 per cent of the FTC agreements, respectively.
•  Among economic sectors, manufacturing and services sectors accounted for 78 per cent and 17 per cent of the total reported FTCs, respectively; machinery, transport equipments, chemicals and chemical products together accounted for over 40 per cent share in the manufacturing sector.
•  Japan, the United States of America (USA) and Germany remained the top three source country for technology transfer, as per the survey respondents.
•  Over two-third of the FTC agreements involved technology know-how transfer or use of trademarks / brand names by foreign collaborators.
•  Royalty payments was payment mode for over 70 per cent of the FTCs, with some having additional clauses for lump-sum technical fees.
•  Of the 674 reported FTC agreements, 198 had export restriction clauses and 217 had provision for exclusive rights on assets transferred under the pacts.
•  In terms of partner countries, technical collaborations with Japan continued to have the maximum export restriction clauses built into them, followed by the USA and Germany among the source countries for technology transfer.
•  Companies with FTC agreements for motor vehicles sectors had the highest share in total production of FTC companies; motor vehicles sector recorded 28.4 per cent production growth during 2022-23 as against 24.3 per cent growth registered by all FTC companies.
•  Exports and imports of FTC reporting companies grew by 19.8 per cent and 26.5 per cent, respectively, in 2022-23 - they had 13.6 per cent and 24.0 per cent shares, respectively, in the total value of production.
•  Average profitability of FTC reporting companies, measured by the ratio of gross profit to capital employed, stood at 10.5 per cent in the current survey round.