India’s commerce minister has urged auto companies to reduce their royalty payments to foreign parent companies, Reuters reported, citing two sources familiar with the matter. Indian carmakers such as Hyundai Motor’s local unit and Maruti Suzuki pay millions of dollars in royalties to their Korean and Japanese parent entities for using their brand and technology.
The minister, Piyush Goyal, asked representatives from domestic auto manufacturers and auto parts producers to review the royalty payments and find a way to cut them. According to the sources, there are concerns about high royalty payments, even for old technologies.
In 2019, India’s markets regulator suggested limiting payments which exceed 2% of the local company’s revenue. However, some sectors submitted complaints about the curbs, saying it could prevent international firms from investing or sharing technology. Hence, the curb was finally set at 5%.
