23 / 116
Legal Aspects
> General Content >
023
Make (it) in India.
Opportunities and
New Methods of Collaboration
Understanding the rules of the "Make in India" initiative and the new Indian vision
serves to pave a path for the materialization of the Indian economy's potential
Benjamin Grossman, Adv.
The author is a Partner
and Head of the Indian
Legal Practice at Amit,
Pollak, Matalon & Co.
O
n September 25, 2014 Indian PM
Mr. Narendra Modi announced the
"Make In India" initiative; intended
to enhance and formulate the next stage of
India's role as a leading player in the R&D and
production field within the global economy.
"Make in India" emerged alongside other
programs such as "Digital India" and "Start
Up India" which together, are directing India
to its destiny as a global economy in line
with the US and China.
(For details read:
http://www.makeinindia.com/home,
http://www.startupindia.gov.in/, http://www.digitalindia.gov.in/ )
In a nutshell, the provisions of the "Make in
India" program, along with other programs,
enhance and encourage the establishment
and development of technologies in
India and their implementation into
production by Indian companies. This
is expected to be achieved through
incentives and ease of regulations (such
as ease of restrictions on foreign holdings
and investments), establishment of facilities
such as production corridors, infrastructures,
training programs etc., and on the other hand,
benefits and preferences for production and
procurement from Indian companies. For
example, proceeds generated from Indian-
based IP may be exempted from taxes for
up to 3 years.
There is no doubt that the implications of
the above will be a game changer in the
relations of foreign players with the Indian
market. Like any major change, it creates
opportunities as well as concerns.
Notwithstanding, it also creates a new, non-
zero sumgame.Learning and understanding
the rules of this new situation as well as the
new Indianmindset and vision serve to pave
a path for the materialization of the Indian
economy’s potential in this new exciting era.
Relationships are expected to be based on
transparent and open- minded collaboration
between foreign players and their Indian
counterparts. This includes transfer of
know-how and production capabilities,
relinquishing (to some extent) control of
equity and IP and moving from ownership
and control to licensing of background IP
and joint development by JV's. The desired
change can be achieved by addressing two
main challenges: cultural and legal.
As regards the legal aspects,the new age of
collaboration shall be based on:
•
Establishment of Indian legal entities, in a
manner which complies with updated
regulations (such as FDI, FEMA etc.)
absorbing external technologies, knowhow,
IP etc.;
•
Establishment of JV's by foreign and
Indian players;
•
Engaging in Transfer of Technology (ToT)
and Technological Collaboration
Agreements (TCA);
•
Granting IP licensing for foreign IP to the
Indian entities; the licensed IP shall be
a background IP serving as a base for
advanced IP developed in India by Indian
entities in accordance with the particular
requirement of the Indian market (price,
standardization, logistics etc.);
•
M&A of foreign companies by Indian
players – which, to some extent already
exists, mainly by the 1st tier players. This,
however, shall be increased by the inclusion
and participation of more players including
2nd tier players;
•
Implementation of the above practices will
take into account the particular cultural and
legal sensitivities and constraints of both
parties; with emphasis being focused on
those pertaining to the Indian side.
The cultural challenge shall be based on
waiving presumptions and prejudices
regarding the goals and capabilities of
the other party and adopting transparent,
equal and respectful attitudes toward the
other party.