RSS arm demands to re-impose cap on royalty payments by MNCs

New Delhi: RSS' economic wing, Swadeshi Jagran Manch (SJM) expressed its concern over issues regarding outflow of valuable foreign exchange in the name of royalty and technical fees by multinational corporations (MNCs).

Referring to the decision of Hindustan Unilever Ltd (HUL) to increase the royalty payment to their parent company Unilever, from 2.65 per cent to 3.45 per cent (that is, 80 basis point hike), over three years till 2025, it said: "This decision has once again exposed the unethical practice of increasing royalty payment by MNCs, impacting, health of the economy in general and outgo of foreign exchange and ultimate depreciation of rupee in particular." "SJM demands that the government reimpose these 'caps' to save valuable foreign exchange as there is no logic to continue the same. These curbs would help increase the profits of MNCs, mainly in the automobiles sector, prevent depletion of foreign exchange reserves and protect the interest of minority shareholders. It will also increase the revenue of the government, apart from saving valuable foreign exchange," said Dr Ashwani Mahajan, National Co-Convenor, SJM on Tuesday.

Dr Ashwani Mahajan said that rising royalty and technical fees to foreign companies have been widening the deficit in our Balance of Payment (BOP) further. Royalty payment outflows are payments made by MNCs to their foreign parent firms or by Indian citizens to foreign entities for use of property, patent, copyrighted work, licence or franchise.

Royalty and technical fees is one of the many ways in which MNCs extract huge sums of money from the developing and underdeveloped economies.

For the year 2017-18, "While FDI inflows accounted for $60.96 billion, the payments relating to Royalty and technical fees amounted to $20.65 billion. This figure is reaching nearly $25 billion by now. This shows how benefits of FDI are clearly being negated by the outflow on royalty and technical fees," he said.