Processed food major Nestle India, on Friday, said it had increased its royalty rate to 4.5 per cent from the earlier 3.5 per cent of sales.

This move, which comes two months after rival Hindustan Unilever undertook a similar step, will see the company shell out more money to its multi-national parent.

“The board of directors, with only independent directors voting, approved a staggered increase in the royalty rate at 0.20 percentage point per annum over the next five years and effective January 1 2014,” the maker of Nescafe instant coffee said in a statement.

Parent company Nestle SA had requested a review of the general licence agreement that Nestle India uses to access the Nestle Group’s intellectual property rights—and after substantiation by a Mckinsey & Co study— had recommended a different range of royalty rates.

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