The technical assistance agreement (TAA), which envisages transfer of technology from Daewoo Heavy Industries, Korea, to Daewoo Motors India for the small car and subsequent royalty payment, was cleared last week, company sources said today.

When contacted, managing director of Daewoo Motors India, S G Awasthi, neither confirmed nor denied this but only said, "A small car project is on schedule and we are confident of succeeding in the competition."

As per the TAA, Daewoo India will pay a royalty of three per cent of local value added for a period of seven years and a sum of USD 2.7 million in six instalments to Daewoo Heavy Industries, Korea. The amount will be paid at various stages of transfer of technology, the sources said.

Sources said the TAA also granted Daewoo, whichhas already invested about Rs 3,300 crore, permission for introducing new vehicles with an engine capacity of upto 3000 cc without any further clearances.

Daewoo plans to launch the 796 cc small car in September end and more variants at a later stage.

In its application to the PAB, the company had stated that ''after catering to domestic market and initial stabilisation of production, Daewoo Motors India Ltd plans to undertake direct export of fully built small cars to many countries including Australia, Africa and neighbouring countries.''

At the Surajpur plant, Daewoo has already built a capacity of 72,000 cars (Cielo and Matiz together), 3 lakh engines and transaxles and 15,000 commercial vehicles.