NEW DELHI, Mar 9: Maruti Udyog has sought the government's permission to pay royalty to its foreign partner, Suzuki Motor Corporation of Japan, on the 800cc, Omni and Gypsy models.The application, which was submitted to the government last week, states the royalty payments as 3,000 yen per Omni and 800 cc models; 5,000 yen for the Gypsy and 2.15 per cent on spare parts, official sources said. The Maruti board, which met last month, decided that the level of royalty may remain unchanged.
Sources said the decision was taken after a review of the transfer of technology which has already come in the venture such as model upgradation and fuel efficiency measures. The decision is also based on a report to the Maruti board. Sources disclosed that Suzuki submitted a plan for transfer of gear-box technology, dye-making and research and development.
Industry analysts pointed out that the royalty payments should have been reduced considering the fact that the company's volumes have increased and no new modelshave been introduced. The board, however, cleared the payments on the same terms possibly to ease tensions between the warring partners.
Sources said that the management was also satisfied about the technology transfer likely to take place in the next three years.
It is not known as yet how the government would respond to the company's proposal for renewing the royalty payments. Royalty payments on the Maruti 800, Omni and Gypsy have been pending since April 1, 1997. The seven-year agreement valid from April 1, 1994, had a review clause after three years. The payments would continue for the next three years after a review of the transfer of technology by the company's board of directors. A board meeting held on February 5 cleared the payments for the next three years. The renewal of royalty is linked to technology transfer.
The secretariat of industrial assistance (SIA) had earlier imposed certain conditions for the payment of royalty to Suzuki. These were capability of gear-box technology, fuelefficiency, research and development and CAD/CAM facilities (computer aided design and computer aided manufacturing).
Sources said the payment of royalty would involve a total outgo of about Rs 30 crore. Royalty payment on the 800 and Omni would cease in 1999 and for the Gypsy in 2000.
