to Supply Technical Know-How
Agreement is made at …. this… day of .. between M/s. XYZ Co. Ltd., a
Company incorporated under the laws of …. and having its registered office
at …. hereinafter referred to as the ‘Foreign Company, of the One Part
and M/s. ABC Co. Ltd., a Company registered under the Indian Companies Act,
1956, and having its registered office at … hereinafter referred to as the
‘Indian Company’ of the Other Part.
the Foreign Company is carrying on business of manufacturing/fabricating the
Items of machinery/the products, the particulars of which are set out in the
Schedule hereunder written, at …
Whereas the Foreign Company has the exclusive expertise or know-how in respect
of the said items of machinery/product.
Whereas the Indian Company proposes to set up a factory at … with intent to
manufacture similar machinery/product and requested the Foreign Company to make
available the know-how to the Indian Company.
Whereas after the negotiations the Foreign Company has agreed to make available
to the Indian Company know-how on the following terms and conditions and which
are set out and now proposed to reduce to writing.
Whereas approval of the Government of India will be obtained to enter into this
agreement and this agreement will be subject to such approval.
It Is Agreed By And Between The Parties Hereto As Follows:
Foreign Company shall make available to the Indian Company all the expertise or
know-how in relation to the manufacture of the said items of machinery/product
mentioned in the Schedule hereunder written within a period of . days from
the date hereof.
Foreign Company shall supply to the Indian Company all the materials regarding
such know-how, such as the formulae, charts. drawings, process sheets,
calculation sheets, standards and other Information as Is necessary to
understand and utilise the said know-how and to implement the same In the
manufacture of the said items of machinery/ products.
such material referred to above shall be in the English language and shall be
supplied to the Indian Company by the Foreign Company within … days from the
date hereof and as and when required subsequently by the Indian Company.
the Foreign Company effects any improvement or makes any additions or
alterations in the technology for the manufacture of the said items of
machinery/product, the same will be intimated to the Indian Company forthwith
and all the literature, new formulate, drawings and other information in
respect of such new technology or improvement, additions or alterations shall
also be supplied to the Indian Company forthwith.
the know-how and other Information supplied to the Indian Company shall be kept
secret by the Indian Company and shall not he directly or indirectly passed on
to any other person In or outside India. The Indian Company will secure from
its employees who become acquainted with such know-how, proper agreements for
maintaining the secrecy of the know-how and supply copy thereof to the Foreign
Foreign Company will assist the Indian Company in selecting and buying the
modern and up to date machinery and equipment in India or abroad, suitable for
the manufacture the type of machinery /product aforementioned and supply the
necessary Information with the Foreign Company in connection with such
material relating to the know how mentioned above shall be in English language
or If the original is any other language it will be accompanied by English
translation thereof and measurement and weight figures will be as for metric
know-how material will be handed over by the Foreign Company in …. at the
registered office of the Foreign Company to the authorised representative of
the Indian Company with utmost secrecy
Foreign Company shall not enter into any agreement with any party for the use
of the said know how by such party in India.
Indian Company may not grant a sub-licence or permission any party for
manufacturing their machinery /product with the help of the said know how
except with written consent of the Foreign Company and which consent maybe
given on such terms and conditions as may be agreed upon.
said machinery /product will be according to the specification quality and standard
envisaged by the know-how. The Indian Company shall have the first production
tested by the Foreign company and if any deficiency is found the same will be
rectified by the Indian Company.
the termination of this agreement by efflux of time (but not otherwise) Indian
Company will be entitled to use the know-how free of charge. But if the
agreement is terminated earlier as herein in after provided that the Indian
Company shall-hot be entitled to make use of the know how and shall forthwith
return all the technical material relating to the know how to the Foreign
and whenever required by the Indian Company, the Foreign Company shall depute
one or more representatives who are specialised in the application of the said
know-how with a view to teach any one or more employees of the Indian Company
for the application of the said know-how and/or supervise the application of
the know-how in the factory of the Indian Company.
Indian Company will bear and pay all the travelling charges to and from India
of such representatives of the Foreign Company ‘as aforesaid and shall also
bear and pay the expenses incurred for their stay in India and other incidental
so desired by the Indian Company it may send one or more representatives to the
factory of the Foreign Company to get themselves acquainted with the
Implementation of the know how and with the process of manufacture of the said
items of machinery/product and in that case the Foreign Company shall render
them all facilities and assistance to achieve the said object. The Foreign
Company will make all arrangements for the stay of such representatives or
representative of the Indian Company. All the expenses on account of travelling
from and to India and of the stay of the said representative or representatives
of the Indian Company at the place where the factory of the Foreign Company is
situate will be borne and paid by the Indian Company.
any special tools, Instruments and material are required in the application of
the said know-how and which are not available in the Indian market. the same
will be supplied by the Foreign Company. The Indian Company will obtain the
necessary Import License for the same and the price thereof will be paid by the
Foreign Company opening a Letter of Credit on any Indian Bank through Foreign
Bank in favour of the Foreign Company. Such goods will be sent F.O.B. to some
port In India.
Indian Company shall not make any innovations or additions or alterations in
the said know-how and the process of manufacture. without the written consent
of the Foreign Company and the Indian Company “I take care to see that the
said items of machinery/products will be In strict compliance with the
specifications of quality and standards laid down by the Foreign Company.
Indian Company in all advertisements wherever made and other literature mention
the fact that the item of machinery/products are manufactured in collaboration
with the Foreign Company.
Foreign Company will have the right to send its one or more representatives on
its own but at its own costs to India and to visit the factory of the Indian
Company. to supervise and cheek that the said know- how or expertise Is being
utilised properly and according to the requirements and the items of
machinery/product are according to the standards maintained by the Foreign
items of machinery/products manufactured by the Indian Company will be sold
only in the Indian market and not outside India except with the written consent
of the Foreign Company.
Indian Company will furnish to the Foreign Company a statement every six months
of the total production of the said Items of machinery/products, and the total
sale effected to enable the Foreign Company to ascertain the response to the
said items of machinery/ products from the Indian market.
Company may sell the said items of machinery/products, under Its own trade mark
or trade name In India but shall not use the trade mark or trade name of the
Foreign Company without a separate written agreement to that effect between the
Foreign Company and the Indian Company.
consideration of the Foreign Company making available to the Indian Company the
said know-how. the Indian Company shall pay to the Foreign Company as follows
lump sum payment of …… American Dollars in the manner hereinafter mentioned
royalty at the rate of Rs …. on the ex-factory price of the each of the said
items of manufacture/product at the end of every three months as hereinafter
stated. The lump sum legally payable as aforesaid shall be paid to the foreign
company in three instalments unless otherwise stipulated in the letter of the
Reserve Bank of India namely-
third of the said amount will be paid on the approval of this agreement by the
Reserve Bank of India and on this agreement being pledged with the authorised
dealer in foreign exchange.
second instalment of one-third amount will be paid on the supply of the
third instalment of the balance will be paid after four years or on the
approval of the Reserve Bank and the agreement is filed with the authorised
dealer in foreign exchange whichever is earlier.
remittances of money to be made to the Foreign Company under this agreement
will be forwarded as per the exchange rates prevailing on the date of
Indian Company will submit to the foreign company every three months from the
date the first item of machinery/product is produced and the statement of the
total production during the previous months duly certified by a Chartered
Accountant and after the same is verified and accepted by the Foreign Company.
The India Company will pay the amount of royalty at the rate aforesaid on such
three months production within one month from the date of such acceptance.
payment to be made by the foreign company will be subject to payment of cess.
if any payable under the Research and Development Cess Act of 1986.
Indian Company will also, be entitled to deduct from such payment the income
tax, if any payable under the Income Tax Act. 1961.
of this agreement signed by both the parties will be filed with the several
authorities as required by law.
Indian company will submit to the Foreign Company every three months from the
date the first item of machinery /product is produced , a statement of the
total production during the previous months duly certified by a Chartered
Accountant and after the same is verified and accepted by the Foreign Company,
the Indian Company will pay the amount of royalty at the rate aforesaid on such
three months production within one months from the date of such acceptance.
payment to be made to the Foreign Company will be subject to payment of cess,
if any payable under the Research and Development Cess Act of 1986.
Indian Company will also be entitled to deduct from such payment the income
tax, if any payable under the Income Tax Act, 1961.
copy of this agreement signed by both the Parties will be filed with the
several other authorities as required by law.
payments to be made by one party hereto to the other in Indian or foreign
currency under this agreement will be made subject to the approval of the
Reserve Bank of India and In the manner stipulated by the said Bank.
Letter of approval of the Government of India hereinbefore recited shall be
deemed to be a part of this agreement and any term herein contained which is
contrary to or inconsistent with any term or condition contained In the said
letter, shall be treated as void and of no effect.
agreement will remain in force for a period of… years from the date hereof
subject to the other terms hereof. The parties may extend the said period by
agreement will be treated as terminated on the happening-of any of the events
any party hereto commits breach of any provisions of this agreement and the
party who is alleged to have committed breach is served with a notice by the
other party. three months prior to the intended date of termination by the
other party and the former party has failed to amend the breach within the said
any event happens which will make the performance of this agreement Impossible
including any force majeure event.
either the Indian Company or the Foreign Company goes into either voluntary or
compulsory liquidation according to or under the law by which it is governed.
the parties hereto mutually agree to terminate this agreement.
the sanctions, approvals, permissions, licenses and other requirements of the
Government of India and of any statutory authorities required for giving effect
to all the terms and conditions, of this agreement shall be obtained by the
the event of any dispute or difference arising between the parties hereto or as
to the rights and obligations under this agreement or as to any claim, monetary
or otherwise of one party against the other or as to the interpretation and
effect of any terms and conditions of this agreement, such dispute or difference
shall be referred to Arbitration of a common Arbitrator if agreed upon
otherwise to two or more Arbitrators, one to be appointed by each of the
parties to this agreement and such Arbitration shall be governed by the Indian
Arbitration & Conciliation Act, 1996. The venue for such Arbitration shall
he in India.
validity of this agreement and the effect or meaning of the terms hereof will
be decided according to the Indian Law.
communication by one party to the other shall be made by registered post through
airmail. with acknowledgement due or by telex or fax or cable. In case the
communication is made by telex or fax or cable, the same will be subsequently
but immediately thereafter confirmed by written communication sent by
registered post as aforesaid. Any evidence showing the communication was posted
or telex, fax or cable communication was made will be sufficient to prove the
posting of sending the communication.
this agreement the expression ‘know-how’ shall include technical information
such as Inventories formulae process, engineering and manufacturing skill,
scientific data. calculations. specifications, drawings, standards. sketches
and all other relevant information and knowledge.
of the parties hereto shall be deemed to include its successors or permitted
Schedule above Referred to in Witness Whereof the parties have put their
respective seals the day and year first hereinabove written.
common seal of M/s. ABC Co. Ltd., is hereunto affixed pursuant to the
resolution of the Board of Directors dated …. in the presence of
Mr …,a Director duly authorised in that behalf
common seal of M/s. XYZ & Co. Ltd., is hereunto affixed pursuant to the
resolution of the Board of Directors dated .. in the presence of Mr.
… a Director, duly authorised In that behalf.