Government may allow MNCs to charge service fee

In a move that will help attract greater foreign direct investment in India, the government is considering to allow the multinational corporations to charge a management fee from their subsidiaries. If finalised, the move will provide another important source of income to MNCs and hence attracting greater amount of capital inflows.

The original FDI policy allows for payments of royalty, licence fee and technical knowhow fee but restrict any payments towards annual service fee or management fee by Indian subsidiaries of MNCs.

However, in the current times, when the FDI flows are declining due to global economic downturn and poor outlook, the government wants to attract more FDI to keep Indian economy on fast track growth.