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
• Pages: 130-137

A perspective on joint venture: an international business

expansion strategy and legal implications with specific reference

to India

PhD. Harsh PATHAK

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Abstract

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

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Harsh Pathak - Advocate Supreme Court of India, New Delhi, India, dr.harshpathak@gmail.com.