A perspective on joint venture: an international business expansion strategy and legal implications with specific reference to India

Author:Harsh Pathak
Position:Advocate Supreme Court of India, New Delhi, India
A perspective on joint venture: an international business
expansion strategy and legal implications with specific reference
to India
Collaboration b etween firms is not a new concept, but the new thing that can be
seen is that the collaborations have increased significantly during the past couple of decades,
along with the increasing internatio nal competition. Moreover, the nature of collaboration
has changed, shifting from peripheral interests to the very core functions of the corporation,
and from equity to non-equity forms of collaboration. This pa per essentially focuses on the
legal framework gove rning the various aspects of a Joint Venture in India in brief, the
methods of Joint Ventures, as well as RBI regulations on the topic. The research methodology
adopted is largely analytical and descriptive. Reliance has been p laced largely on various
sources like articles and online articles.
Keywords: joint venture, business strategies, expansion of business, types of joint ventures,
Indian legal framework, RBI guidelines, arbitration clause, Supreme Court judgments.
JEL Classification: K22, K33, K41
1. Introduction
India’s economic growth is attracting business houses from across the world.
The mechanism today, to form combination through mergers or amalgamation or
acquisition is well known but another special vehicle, known as Joint Venture has
become a preferred form of corporate entities to form combination and go for
investment in India. Joint Venture is a popular method to enter a country whose legal
and business environment is unknown. In recent years, India has made it easier for
foreign investors to enter its markets. However, foreign investors may want to set up
a joint venture with an Indian partner rather than enter India's markets alone since
the joint venture route can be beneficial for all the parties involved if done properly,
with the right planning. Foreign companies need to be aware of the corporate
structures that they can choose when working in India. Sometimes a contractual joint
venture is a better option than an equity-based joint venture. The choice of model of
joint venture is, of course, determined by the objectives that the partners have and
also whether they intend their relationship to be long term or short term.
There are no separate laws for joint ventures in India and are governed by
contractual relationship as well as corporate legal entity relationship as in case of
Incorporated Joint Venture. The Joint Venture formed due to contractual relationship
Harsh Pathak - Advocate Supreme Court of India, New Delhi, India, dr.harshpathak@gmail.com.

To continue reading

Request your trial