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Date : Mar 22, 2017
Survey on Foreign Collaboration in Indian Industry : 2014–2016 – Data Release

The RBI has today placed on its website Survey on Foreign Collaboration in Indian Industry for 2014-2016.

Foreign collaboration is widely used as an effective vehicle for overcoming the technology gap in the path of economic development. Cross-border technical collaboration is often embedded in financial collaboration, thus securing buy-in from the technology partner in corporate management. Regular assessment of the dimensions and impact of technological collaboration on various aspects of economic development is, therefore, useful for informing the setting of macroeconomic policies so as to derive maximum benefits from such collaborations.

In India, foreign collaborations have a long history. Over the years, companies have increased their overseas financial and technical alliances and foreign subsidiaries have been set up, as India’s integration into the global economy has strengthened in multiple directions. In order to facilitate analytical studies in this area, the Reserve Bank has been conducting the Survey on Foreign Collaboration in Indian Industry since the 1960s. After introduction of the mandatory Census on Foreign Liabilities and Assets (FLA) of Indian Direct Investment Companies in 2011, this survey was restructured in 2012. It now supplements the FLA census and focuses on major operational facets of Indian companies that have technical collaboration agreements with foreign companies (survey schedule is attached).

The latest survey (eleventh round) covers the financial years 2014-15 and 2015-16.

Highlights:

  • Coverage: Of the 694 Indian entities that responded in the latest survey round, 306 reported 590 foreign technical collaboration (FTC) agreements. Around 60 per cent of the reporting companies were foreign subsidiaries (single foreign investor holding majority equity) and a fourth were foreign associates (foreign investors’ equity holding ranging between 10-50 per cent). Thus, an overwhelming majority of the FTC companies also had overseas financial collaboration. Only 11 companies had pure technical collaborations (Table 1). Of the 306 companies that reported FTCs, 183 are common in relation to the previous survey round, 123 are new in the sample and 38 companies, which reported in the last round, have not reported in the latest round.

  • Industry-wise Agreements: 80 per cent of the reported FTC agreements belonged in the manufacturing sector, with nearly half relating to motor vehicles, transport, machinery and equipment, chemicals and pharmaceuticals. Construction attracted a higher number of such collaborations with a larger share of output in the latest round relative to the previous round. In the services sector, information and communication reported more FTC agreements than in the previous round (Table 2).

  • Partner Country Profile: Japan, USA and Germany remained the top three technology source countries, together accounting for 58 per cent of the reported FTC agreements. UK, Italy, Republic of Korea, France and Switzerland were other countries with significant shares in total technical collaboration (Table 3).

  • Asset transfer and Payment Mode: Over two-third of the FTC agreements involved know-how transfer by the foreign collaborator and another 10 per cent involved use of trade-marks / brand names. Less than one per cent of the agreements were on patent transfer (Table 4). An overwhelming majority of the FTCs provided for royalty payment, some of which also had additional clauses for lump-sum technical fees. Only 13.8 per cent of the reported contracts were based on pure lump-sum technical fees payments (Table 5).

  • Export Restriction Clauses and Exclusive Rights Provisions: Export restriction clauses are typically written into FTCs by foreign collaborators intending to protect their own markets. On the other hand, local collaborators try include provision of exclusive rights on assets transferred under the agreement so as to restrict the foreign collaborator from transferring such assets to another local party. Over a third of the reported manufacturing sector FTC agreements had export restriction clauses whereas it was less than 10 per cent for the services sector. Within the manufacturing FTCs, the export-intensive chemicals, rubber and plastic and motor vehicles sectors had lower export restriction clauses. FTC agreements for pharmaceuticals and electrical and other machinery had a significant share of such clauses. Nevertheless, exports from these sectors remained substantial, implying that companies without export restriction clauses in their FTCs accounted for the larger part of export activity. Japan accounted for over a third of the reported FTC agreements and nearly 45 per cent of them had export restriction clauses. At the aggregate level, around 32 per cent of reported FTCs had export restriction clauses and nearly 36 per cent had provision for exclusive rights on assets transferred under the agreements (Tables 6, 7, 8 and 10).

  • Value of Production: The total value of production of the FTC reporting companies increased by 10.3 per cent to ₹ 4,387 billion in 2015-16. Nearly 80 per cent of this output related to the manufacturing sector, where motor vehicles were the largest sub-sector, followed by chemicals (Tables 9).

  • Exports and Imports: Total exports of FTC reporting companies recorded y-on-y increase of 6.7 per cent, rising to ₹ 788.8 billion in 2015-16, with the manufacturing sector recording the dominant share. On the other hand, imports increased by 7.7 per cent to ₹ 877.3 billion. The ratio of exports and imports to value of production stood at 18 per cent and 20 per cent, respectively, at the aggregate level, but there were large inter-sectoral variations. (Tables 10 and 11).

  • Profitability: The average profitability of FTC reporting companies, measured by the ratio of gross profit to capital employed, has increased during the last three survey rounds. In the latest survey, this ratio increased from 17.3 per cent in 2014-15 to 18.5 per cent in 2015-16 (Table 12).

The results of the earlier round of the Survey on Foreign Collaboration in Indian Industry for the period 2012-14 (tenth round) were released on the RBI website on March 24, 2015.

Ajit Prasad
Assistant Adviser

Press Release : 2016-2017/2529


Table 1: Company Group-wise Number of Companies having Foreign Technical Collaboration
Company Group Number of Companies
Foreign Subsidiary 185
Foreign Associate 75
Pure Technical Collaboration 11
Others (Foreign Equity less than 10 per cent or only Outward investment) 35
Total 306

Table 2: Industry-wise Distribution of Agreements of FTC Companies
Industry Tenth Round Eleventh Round
(2012-13 to 2013-14) (2014-15 to 2015-16)
Number % of total Number % of total
A. Agriculture-related, Plantations & Allied activities 17 3.2 22 3.7
B. Mining and quarrying 1 0.2 1 0.2
C. Manufacturing 409 77.5 471 79.8
1. Food Products 8 1.5 13 2.2
2. Beverages 0 0.0 0 0.0
3. Textiles 3 0.6 2 0.3
4. Wearing Apparel 0 0.0 0 0.0
5. Leather and Related Products 2 0.4 2 0.3
6. Wood and Products Of Wood and Cork, Except Furniture 0 0.0 0 0.0
7. Printing and Reproduction Of Recorded Media 0 0.0 0 0.0
8. Coke and Refined Petroleum Products 0 0.0 4 0.7
9. Chemicals and Chemical Products 30 5.7 42 7.1
10. Pharmaceuticals, Medicinal Chemical & Botanical Products 19 3.6 27 4.6
11. Rubber and Plastics Products 11 2.1 11 1.9
12. Other Non-Metallic Mineral Products 0 0.0 1 0.2
13. Fabricated Metal Products, Except Machinery & Equipment 7 1.3 9 1.5
14. Computer, Electronic and Optical Products 3 0.6 6 1.0
15. Electrical Equipment 14 2.7 24 4.1
16 Machinery and Equipment N.E.C. 58 11.0 61 10.3
17. Motor Vehicles, Trailers and Semi-Trailers 59 11.2 69 11.7
18. Other Transport Equipment 47 8.9 49 8.3
19. Other manufacturing 148 28.0 151 25.6
D. Electricity, gas, steam and air conditioning supply 0 0.0 0 0.0
E. Water supply; sewerage, waste management and remediation activities 1 0.2 0 0.0
F. Construction 10 1.9 14 2.4
G. Services 90 17.0 82 13.9
1. Wholesale & retail trade; repair of motor vehicles & motorcycles 0 0.0 1 0.2
2. Repair and installation of machinery and equipment 11 2.1 6 1.0
3. Accommodation and Food service activities 6 1.1 5 0.9
4. Information and communication 14 2.7 19 3.2
5. Financial and insurance activities 2 0.4 5 0.8
6. Real estate activities 0 0.0 0 0.0
7. Other service activities 57 10.8 46 7.8
Total 528 100.0 590 100.0
Note: The sum of the constituent items may not add to the total due to rounding off. (Also applicable to other tables)

Table 3: Country-wise Distribution of Agreements of FTC Companies
Country Tenth Round Eleventh Round
(2012-13 to 2013-14) (2014-15 to 2015-16)
Number % of total Number % of total
Japan 133 25.2 200 33.9
USA 69 13 82 13.9
Germany 67 12.6 63 10.7
UK 31 5.9 30 5.1
Italy 24 4.5 27 4.6
Republic of Korea 22 4.2 22 3.7
France 31 5.9 20 3.4
Switzerland 22 4.2 17 2.9
Singapore 13 2.5 9 1.5
Others 116 22 120 20.3
Total 528 100.0 590 100.0

Table 4: Distribution of Agreements According to Type of Assets Transferred of FTC Companies
Asset transferred Tenth Round Eleventh Round
(2012-13 to 2013-14) (2014-15 to 2015-16)
Number % of total Number % of total
Know-how 353 66.9 405 68.6
Trademark/ Brand Name 51 9.6 59 10.0
Patent 11 2.1 4 0.7
Others 113 21.4 122 20.7
Total 528 100.0 590 100.0

Table 5: Distribution of Agreements According to Mode of Payment of FTC Companies
Mode of Payment Tenth Round Eleventh Round
(2012-13 to 2013-14) (2014-15 to 2015-16)
Number % of total Number % of total
Royalty 216 48.1 268 55.4
Lump sum technical fees 96 21.4 67 13.8
Both Royalty and Lump-sum technical fees 137 30.5 149 30.8
Total 449 100 484* 100.0
* Of the 590 agreements, 484 agreements reported along with the specific mode of payment in the present survey.

Table 6: Industry-wise Agreements with Exports Restrictive Clauses of FTC Companies
Industry Tenth Round Eleventh Round
(2012-13 to 2013-14) (2014-15 to 2015-16)
Total no of Agreement Number of Agreements with Export Restrictive Clauses % of Agreements with Export Restrictive Clauses Total no of Agreement Number of Agreements with Export Restrictive Clauses % of Agreements with Export Restrictive Clauses
A. Agriculture-related, Plantations & Allied activities 17 1 8.9 22 2 4.5
B. Mining and quarrying 1 0 0.0 1 0 0.0
C. Manufacturing 409 151 36.9 471 176 37.4
1. Food Products 8 2 25.0 13 3 23.1
2. Beverages 0 0 0.0 0 0 -
3. Textiles 3 1 33.3 2 0 0.0
4. Wearing Apparel 0 0 0.0 0 0 -
5. Leather and Related Products 2 1 50.0 2 1 50.0
6. Wood and Products Of Wood and Cork, Except Furniture 0 0 0.0 0 0 -
7. Printing & Reproduction Of Recorded Media 0 0 0.0 0 0 -
8. Coke and Refined Petroleum Products 0 0 0.0 4 0 0.0
9. Chemicals and Chemical Products 30 5 16.7 42 5 11.9
10. Pharmaceuticals, Medicinal Chemical and Botanical Products 19 14 73.7 27 18 66.7
11. Rubber and Plastics Products 11 4 36.4 11 3 27.3
12. Other Non-Metallic Mineral Products 0 0 0.0 1 0 0.0
13. Fabricated Metal Products, Except Machinery and Equipment 7 2 28.6 9 4 44.4
14. Computer, Electronic & Optical Products 3 0 0.0 6 1 16.7
15. Electrical Equipment 14 9 64.3 24 12 50.0
16 Machinery and Equipment n.e.c. 58 27 46.6 61 26 42.6
17. Motor Vehicles, Trailers & Semi-Trailers 59 33 55.9 69 19 27.5
18. Other Transport Equipment 47 15 31.9 49 28 57.1
19. Other manufacturing 148 38 25.7 151 56 37.1
D. Electricity, gas, steam and air conditioning supply 0 0 0.0 0 0 -
E. Water supply; sewerage, waste management & remediation activities 1 0 0.0 0 0 -
F. Construction 10 0 0.0 14 5 35.7
G. Services 90 8 8.9 82 7 8.5
1. Wholesale and retail trade; repair of motor vehicles and motorcycles 0 0 0.0 1 1 100.0
2. Repair and installation of machinery and equipment 11 2 18.2 6 1 16.7
3. Accommodation & Food service activities 6 0 0.0 5 0 0.0
4. Information and communication 14 2 14.3 19 1 5.3
5. Financial and insurance activities 2 0 0.0 5 1 20.0
6. Real estate activities 0 0 0.0 0 0 -
7. Other service activities 57 4 7.0 46 3 6.5
Total 528 160 30.3 590 189 32.0

Table 7: Country-wise Agreements with Export Restrictive Clauses of FTC Companies
Country Tenth Round Eleventh Round
(2012-13 to 2013-14) (2014-15 to 2015-16)
Total no of agreements No of agreements with export restrictive clauses % of agreements with export restrictive clauses Total no of agreements No of agreements with export restrictive clauses % of agreements with export restrictive clauses
Japan 133 64 48.1 200 89 44.5
USA 69 16 23.2 82 20 24.4
Germany 67 19 28.4 63 17 27.0
UK 31 10 32.3 30 9 30.0
Singapore 13 0 0.0 9 2 22.2
Italy 24 11 45.8 27 7 25.9
Republic of Korea 22 4 18.2 22 2 9.1
Switzerland 22 10 45.5 17 9 52.9
France 31 7 22.6 20 5 25.0
Others 116 19 15.8 120 29 24.2
Total 528 160 30.3 590 189 32.0

Table 8: Industry-wise Agreements with Provision of Exclusive Rights of FTC Companies
Industry Tenth Round Eleventh Round
(2012-13 to 2013-14) (2014-15 to 2015-16)
Number of Agreements with Exclusive Rights % to Total Number of Agreements Number of Agreements with Exclusive Rights % to Total Number of Agreements
A. Agriculture-related, Plantation and Allied activities 12 70.6 14 63.6
B. Mining & Quarrying 0 0.0 0 0.0
C. Manufacturing 162 39.6 173 36.7
1. Food Products 4 50.0 7 53.8
2. Beverages 0 - 0 -
3. Textiles 2 66.7 2 100.0
4. Wearing Apparel 0 - 0 -
5. Leather and Related Products 1 50.0 1 50.0
6. Wood and Products Of Wood and Cork, Except Furniture 0 - 0 -
7. Printing and Reproduction Of Recorded Media 0 - 0 -
8. Coke and Refined Petroleum Products 0 - 1 25.0
9. Chemicals and Chemical Products 16 53.3 12 28.6
10. Pharmaceuticals, Medicinal Chemical & Botanical Products 14 73.7 20 74.1
11. Rubber and Plastics Products 6 54.5 5 45.5
12. Other Non-Metallic Mineral Products 0 - 1 100.0
13. Fabricated Metal Products, ex.Machinery & Equipment 4 57.1 2 22.2
14. Computer, Electronic and Optical Products 0 0.0 2 33.3
15. Electrical Equipment 5 35.7 7 29.2
16 Machinery and Equipment N.E.C. 22 37.9 26 42.6
17. Motor Vehicles, Trailers and Semi-Trailers 14 23.7 25 36.2
18. Other Transport Equipment 13 27.7 13 26.5
19. Other manufacturing 61 41.2 49 32.5
D. Electricity, gas, steam and air conditioning supply 0 - 0 -
E. Water supply; sewerage, waste management and remediation activities 0 0.0 0 -
F. Construction 0 0.0 5 35.7
G. Services 29 32.2 20 24.4
1. Wholesale and retail trade; repair of motor vehicles & motorcycles 0 - 1 100.0
2. Repair and installation of machinery and equipment 6 54.5 2 33.3
3. Accommodation and Food service activities 1 16.7 0 0.0
4. Information and communication 5 35.7 8 42.1
5. Financial and insurance activities 0 0.0 0 0.0
6. Real estate activities 0 - 0 -
7. Other service activities 17 29.8 9 19.6
Total 203 38.4 212 35.9

Table 9: Industry-wise Share in Value of Production of FTC Companies
(₹ billion)
Industry Value of Production Annual Growth
(per cent)
Share in VoP (2015-16)
2014-15 2015-16
A. Agriculture-related, Plantation and Allied activities 40.3 43.4 7.7 1.0
B. Mining & Quarrying 0.0 0.0 - 0.0
C. Manufacturing 3157.2 3508.8 11.1 80.0
1. Food Products 47.9 46.9 -2.1 1.1
2. Beverages 0.0 0.0 - 0.0
3. Textiles 0.1 0.1 0.0 0.0
4. Wearing Apparel 0.0 0.0 - 0.0
5. Leather and Related Products 24.3 26.6 9.5 0.6
6. Wood and Products Of Wood and Cork, Except Furniture 0.0 0.0 - 0.0
7. Printing and Reproduction Of Recorded Media 0.0 0.0 - 0.0
8. Coke and Refined Petroleum Products 38.6 39.1 1.3 0.9
9. Chemicals and Chemical Products 407.5 425.0 4.3 9.7
10. Pharmaceuticals, Medicinal Chemical & Botanical Products 31.8 33.7 6.0 0.8
11. Rubber and Plastics Products 16.1 17.3 7.5 0.4
12. Other Non-Metallic Mineral Products 1.8 1.8 0.0 0.0
13. Fabricated Metal Products, Except Machinery & Equipment 246.3 279.3 13.4 6.4
14. Computer, Electronic and Optical Products 35.9 40.3 12.3 0.9
15. Electrical Equipment 115.7 147.3 27.3 3.4
16 Machinery and Equipment N.E.C. 236.4 267.2 13.0 6.1
17. Motor Vehicles, Trailers and Semi-Trailers 1237.6 1386.4 12.0 31.5
18. Other Transport Equipment 97.4 104.8 7.6 2.4
19. Other manufacturing 619.8 693.0 11.8 15.8
D. Electricity, gas, steam and air conditioning supply 0.0 0.0 - 0.0
E. Water supply; sewerage, waste management and remediation activities 0.0 0.0 - 0.0
F. Construction 593.0 626.6 5.7 14.3
G. Services 187.7 207.7 10.7 4.7
1. Wholesale and retail trade; repair of motor vehicles & motorcycles 8.9 11.0 23.6 0.3
2. Repair and installation of machinery and equipment 1.9 1.4 -26.3 0.0
3. Accommodation and Food service activities 2.2 2.4 9.1 0.1
4. Information and communication 12.0 13.7 14.2 0.3
5. Financial and insurance activities 2.8 3.0 7.1 0.1
6. Real estate activities 0.0 0.0 - 0.0
7. Other service activities 159.9 176.2 10.2 4.0
Total 3978.1 4386.6 10.3 100.0

Table 10: Industry-wise Exports of FTC Companies
(₹ billion)
Industry Exports Annual Growth
(per cent)
Share in Export
(2015-16)
2014-15 2015-16
A. Agriculture-related, Plantation and Allied activities 0.4 0.1 0.6 0.1
B. Mining & Quarrying 0.0 0.0 - 0.0
C. Manufacturing 544.9 570.6 4.7 72.3
1. Food Products 6.2 6.6 6.5 0.8
2. Beverages 0.0 0.0 - 0.0
3. Textiles 0.0 0.0 - 0.0
4. Wearing Apparel 0.0 0.0 - 0.0
5. Leather and Related Products 0.2 0.1 -50.0 0.0
6. Wood and Products Of Wood and Cork, Except Furniture 0.0 0.0 - 0.0
7. Printing and Reproduction Of Recorded Media 0.0 0.0 - 0.0
8. Coke and Refined Petroleum Products 0.3 0.3 0.0 0.0
9. Chemicals and Chemical Products 42.2 40.9 -3.1 5.2
10. Pharmaceuticals, Medicinal Chemical & Botanical Products 16.8 18.0 7.1 2.3
11. Rubber and Plastics Products 0.5 0.7 40.0 0.1
12. Other Non-Metallic Mineral Products 0.7 0.7 0.0 0.1
13. Fabricated Metal Products, Except Machinery & Equipment 2.0 5.1 155.0 0.6
14. Computer, Electronic and Optical Products 17.3 21.0 21.4 2.7
15. Electrical Equipment 16.7 18.9 13.2 2.4
16 Machinery and Equipment N.E.C. 76.6 98.5 28.6 12.5
17. Motor Vehicles, Trailers and Semi-Trailers 180.6 171.3 -5.1 21.7
18. Other Transport Equipment 11.1 11.6 4.5 1.5
19. Other manufacturing 173.6 176.8 1.8 22.4
D. Electricity, gas, steam and air conditioning supply 0.0 0.0 - 0.0
E. Water supply; sewerage, waste management and remediation activities 0.0 0.0 - 0.0
F. Construction 95.0 111.5 17.4 14.1
G. Services 98.9 106.1 7.3 13.5
1. Wholesale and retail trade; repair of motor vehicles & motorcycles 0.8 1.0 25.0 0.1
2. Repair and installation of machinery and equipment 0.1 0.1 0.0 0.0
3. Accommodation and Food service activities 0.5 0.5 0.0 0.1
4. Information and communication 3.4 4.7 38.2 0.6
5. Financial and insurance activities 0.0 0.0 - 0.0
6. Real estate activities 0.0 0.0 - 0.0
7. Other service activities 94.0 99.9 6.3 12.7
Total 739.2 788.8 6.7 100.0

Table 11: Industry-wise Imports of FTC Companies
(₹ billion)
Industry Imports Annual Growth
(per cent)
Share in Import
(2015-16)
2014-15 2015-16
A. Agriculture-related, Plantation and Allied activities 3.5 2.6 -25.7 0.3
B. Mining & Quarrying 0.0 0.0 - 0.0
C. Manufacturing 778.1 824.1 5.9 93.9
1. Food Products 3.5 3.5 0.0 0.4
2. Beverages 0.0 0.0 - 0.0
3. Textiles 0.0 0.0 - 0.0
4. Wearing Apparel 0.0 0.0 - 0.0
5. Leather and Related Products 1.7 2.0 17.6 0.2
6. Wood and Products Of Wood and Cork, Except Furniture 0.0 0.0 - 0.0
7. Printing and Reproduction Of Recorded Media 0.0 0.0 - 0.0
8. Coke and Refined Petroleum Products 1.6 8.8 450.0 1.0
9. Chemicals and Chemical Products 135.8 129.2 -4.9 14.7
10. Pharmaceuticals, Medicinal Chemical & Botanical Products 9.4 11.0 17.0 1.3
11. Rubber and Plastics Products 2.9 3.5 20.7 0.4
12. Other Non-Metallic Mineral Products 0.2 0.2 0.0 0.0
13. Fabricated Metal Products, Except Machinery & Equipment 217.0 244.4 12.6 27.9
14. Computer, Electronic and Optical Products 16.7 16.1 -3.6 1.8
15. Electrical Equipment 26.5 34.8 31.3 4.0
16 Machinery and Equipment N.E.C. 62.5 59.6 -4.6 6.8
17. Motor Vehicles, Trailers and Semi-Trailers 155.9 161.3 3.5 18.4
18. Other Transport Equipment 14.6 15.1 3.4 1.7
19. Other manufacturing 129.7 134.5 3.7 15.3
D. Electricity, gas, steam and air conditioning supply 0.0 0.0 - 0.0
E. Water supply; sewerage, waste management and remediation activities 0.0 0.0 - 0.0
F. Construction 27.1 30.5 12.5 3.5
G. Services 5.9 20.0 239.0 2.3
1. Wholesale and retail trade; repair of motor vehicles & motorcycles 0.0 0.0 - 0.0
2. Repair and installation of machinery and equipment 0.1 0.0 -100.0 0.0
3. Accommodation and Food service activities 0.1 0.1 0.0 0.0
4. Information and communication 0.5 0.5 0.0 0.1
5. Financial and insurance activities 0.0 0.0 - 0.0
6. Real estate activities 0.0 0.0 - 0.0
7. Other service activities 5.2 19.3 271.2 2.2
Total 814.6 877.3 7.7 100.0

Table 12: Profitability Ratio of FTC Companies
Survey Round Year Gross profit to Capital (per cent)
Financial Year Survey Average
Ninth round of Survey
(244 FTC companies)
2010-11 9.8 10.0
2011-12 10.1
Tenth round of Survey
(303 FTC companies)
2012-13 17.0 14.8
2013-14 12.6
Eleventh round of Survey
(306 FTC companies)
2014-15 17.3 18.0
2015-16 18.5

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