Pursuing FDI for Technology

The discussion paper on “Industrial Policy 2017” floated by the Department of Industrial Policy and Promotion has stressed promoting the transfer of foreign technology as one of the key priorities with respect to the existing foreign direct investment policy regime. However, the focus remains on ensuring enhanced access to technology. This may not lead to technology transfer owing to several restrictive conditions imposed on the usage of technology by the licensor. For gaining real acquisition of technology, a purposive policy intervention is required through regulatory supervision of costs and conditions negotiated in technology collaboration agreements.

With an apparent aim to formulate the New Industrial Policy (NIP) based on consultative approach, the Department of Industrial Policy and Promotion (DIPP) has recently floated a discussion paper, “Industrial Policy 2017,” and has sought suggestions on key thematic areas of industrial development. Apart from some significant objectives such as adequate job creation, attracting $100 billion foreign direct investment (FDI) inflows annually in the next two decades, promotion of foreign technology transfer has been outlined as one of the foremost priorities of the proposed policy. The NIP shall subsume the National Manufacturing Policy and is expected to specifically review the FDI policy regime to facilitate greater technology transfer.

With regard to the technology transfer process via the FDI route, the discussion paper has distinctly noted that the benefits of retaining investments and accessing technology have not been harnessed to the extent possible. FDI policy requires a review to ensure that it facilitates greater technology transfer, leverages strategic linkages and innovation. (DIPP 2017: 8)