Manufacturing accounts for 78% of foreign tie-ups: RBI

Mumbai, November 6

Manufacturing sector accounted for 78% of the total reported Foreign Technical Collaborations (FTCs) with Japan, the US, and Germany remaining the top three source countries for technology transfer, a Reserve Bank of India (RBI) survey said.

Of the 709 Indian entities that participated in the latest survey round, the RBI said 674 FTCs agreements were reported by 356 entities, of which, 221 had also responded in the previous survey round.

356 entities reported collaborations

• Of the 709 Indian entities that participated in the latest survey round, the RBI said 674 Foreign Technical Collaborations (FTCs) were reported by 356 entities
• Foreign Direct Investment (FDI) companies accounted for an overwhelming majority of the FTCs
• Foreign subsidiaries (single foreign investor holding over 50% of the total equity) and foreign associate companies (foreign investors’ equity holding ranging from 10-50%) reported a 71% and 18% of FTC agreements, respectively

Foreign Direct Investment (FDI) companies accounted for an overwhelming majority of the FTCs.

Further, foreign subsidiaries (single foreign investor holding over 50% of the total equity) and foreign associate companies (foreign investors’ equity holding ranging from 10-50%) reported a 71% and 18% of FTC agreements, respectively.

“Among economic sectors, manufacturing and services sectors accounted for 78% and 17% of the total reported FTCs, respectively; machinery, transport equipment, chemicals and chemical products together accounted for over 40% share in the manufacturing sector,” the survey said. The construction sector accounted for nearly 3% of the total FTCs.

The survey captures information on financial parameters and operations of the Indian companies having technical collaboration with foreign companies during the reference period.

It was the 14th round of the RBI’s biennial survey on foreign collaboration in Indian industry covering 2021-22 and 2022-23 fiscal years.

Japan, the US, and Germany remained the top three source countries for technology transfer, as per the survey respondents. Over two-thirds of the FTC agreements involved technology knowhow transfer or use of trademarks/brand names by foreign collaborators. Also, royalty payments were payment mode for over 70% of the FTCs, with some having additional clauses for lump-sum technical fees.