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Experts express concerns over new royalty payment norms

Updated : June 19, 2019 08:55 AM IST

The impact of the new royalty payment norms will be seen across almost all sectors — from auto to fast moving consumer goods (FMCG).

Among the FMCG companies, Colgate Palmolive (India) and Proctor & Gamble (P&G) are paying the highest royalties of 4.9 percent of sales to their global parents. Nestle India is paying about 4.4 percent. GSK Consumer Healthcare makes a royalty payment of 3 percent and Hindustan Unilever Ltd (HUL) pays a royalty of 1.8 percent.

In the auto and manufacturing space, Maruti Suzuki India makes the highest royalty payment of 4.7 percent, ABB India and Wabco India make a royalty payment of 4.2 percent and 3 percent respectively. These are followed by SKF India and Castrol India, which pay 2.9 percent as royalty to their global parents.

Several experts said that the threshold of 2 percent for royalty payments was low and the shareholder approval process could become cumbersome and discourage MNCs from sharing the latest technology with their listed Indian subsidiaries.

CNBC-TV18's Priya Sheth gives more details...
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