Out of the 244 companies which reported agreements on Foreign Collaboration in Indian Industry during FY12, 144 were foreign subsidiaries-RBI

The Reserve Bank of India has released the data related to the results of the ninth round of the Survey on Foreign Collaboration in Indian Industry covering the years 2010-11 and 2011-12.

This survey captures comprehensive information on various aspects of operations of Indian companies having technical collaboration with foreign companies during the reference period as per the schedule. In this survey round, 550 Indian companies responded, of which, 244 companies reported 334 foreign technical collaboration (FTC) agreements. The highlights of the survey results are presented below:

Highlights:

Coverage: Out of the 244 companies which reported agreements during the period 2010-12, 144 were foreign subsidiaries (single foreign investor holding more than 50 per cent of total equity), 83 were foreign associates (foreign investors holding ranging between 10 per cent and 50 per cent of total equity) and the remaining 17 companies had less than 10 per cent equity participation and/or had only outward investment.

 

Industry-wise distribution of agreements: The share of manufacturing and services sectors in the total FTC agreements had marginally increased in the ninth round. The share of construction sector and agriculture-related activities had declined when compared with eighth round of the survey.

Country-wise distribution of agreements: In terms of source of technology transfer, Japan, USA and Germany were the top three countries which together accounted for around 55 per cent share in total FTC agreements of responding companies during the survey period (Table 3).

Type of assets transferred: Among the FTC agreements reported by companies, the agreements providing Know-how transfer had a share of 45.8 per cent, higher than that of 38.1 per cent in the eighth round of the survey.

Modes of Payment: The share of agreements involving (a) royalty and lump-sum technical fees, (b) only royalty and (c) only lump-sum technical fees stood at 42.4 per cent, 30.4 per cent and 27.2 per cent, respectively.

Export restrictive clauses: The proportion of FTC agreements with export restrictive clauses increased significantly in the manufacturing sector, when compared with the previous survey round. An analysis of country-wise agreements suggests that the share of agreements with export restrictive clauses increased with almost all the countries, with the exception of Switzerland and USA.

Provision of exclusive rights: Any provision of exclusive rights to an Indian company in a FTC agreement, restricts the foreign collaborator from transferring such assets to other parties operating in India. The proportion of agreements providing exclusive rights on assets transferred under the agreements had increased significantly in manufacturing sector vis-vis the previous survey round.

Value of Production: Total value of production of the FTC reporting companies increased from Rs 890.7 billion in 2010-11 to Rs 992.2 billion in 2011-12. The share of manufacturing sector in the total production had improved, whereas share of financial and insurance activities was lower when compared with the previous survey round.

Profitability: The profitability of FTC reporting companies measured by ratio of gross profit to the capital employed increased from 9.8 per cent in 2010-11 to 10.1 per cent in 2011-12.

Exports and Imports: Total exports of FTC reporting companies increased from Rs 132.2 billion in 2010-11 to Rs 156.6 billion in 2011-12 with manufacturing sector constituting the dominant share in exports. Imports of the FTC reporting companies increased marginally to Rs 442.3 billion over this period with manufacturing sector holding the dominant share of import payments made by the FTC companies.

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