In India Joint Venture

Forming a Joint Venture in India: Some Considerations

One of the most preferred corporate entity types in India is the joint venture. Why? Because joint ventures in India are subject to the same law as other companies. Even if a joint venture has one hundred percent of its equity coming from foreigners, it is still treated like a domestic company.

Because of this, people who want to explore the market open joint ventures in India. If you are planning to do this and open your own joint venture in India, you should think about the following:

1) Partner – if you are a foreign corporation wishing to form a joint venture with a local company as an entry strategy, you should select you partner well. Although foreign corporations today are allowed to own as much as 100 percent equity on a joint venture, you should realize that having a local partner gives you as lot of advantages.

You will gain an ally to help familiarize you with the local business practices. By getting a good local partner, you could be gaining an ally who will help you spend the minimum amount of cash for maximum profit.

2) Nature of business – you should realize that the government does prioritize certain types of joint ventures for approval. If you intend to enter a joint venture with 100 percent foreign equity in India, then your business should be of an export nature. This is because the 100 percent foreign equity joint venture in India is only approved by the government in specific cases. The nature of your business should be among those prioritized by the government. Otherwise, you are back to step one: find yourself a local partner.

3) Lawyer – before you enter into a joint venture in India, you have to hire a good local lawyer who can take you through the local laws and enable you to fully comprehend the legality of your actions. By hiring a good lawyer, you might be able to spot some weaknesses in the structure of your joint venture in India. It is imperative that you hire a local lawyer since foreign lawyers, no matter how good they are, will be dealing with a whole new set of rules in India.

4) Papers – When setting up a joint venture in India, you will be required to file a lot of paperwork. The first paper that you will be required to submit is a letter of intent or a memorandum of agreement. This will show your intent to form a joint venture in India with a local partner.

Before you start signing the joint venture agreement, however, you should definitely negotiate the terms and make sure that all of the law is covered when doing so. You should address all of the issues involved in the business and make contingencies for every possible event. This will help you cover your investment.

India has been declared by the US department of commerce as one of the top emerging markets of today. This means that you need to take advantage of every opportunity to tap that market. It is abundant in raw materials and the government is very lenient towards investors.

These are just some of the reasons that you should consider for forming a joint venture in India. By considering these things, you should be able to arrive at a decision which will ultimately lead to your prosperity in business.