Joint Venture & its Characteristics

Joint Venture Companies are the most preferred module of corporate entities for Doing Business in India to achieve specific objectives of a partnership like temporary arrangement between two or more firms. JVs are advantageous as a risk reducing mechanism in new-market penetration and in pooling of resource for large projects. There are no separate laws for joint ventures in India. The key to the success of any joint venture lies in the selection of a good local partner. Once a partner is selected generally a Memorandum of Understanding or a Letter of Intent is signed by the parties. This is an unregistered form of the partnership/ Association of Person(AOP), in this arrangement parties of the Joint venture enter in partnership through a Memorandum of Understanding (MOU). Such MOU among the JV partners describe their duties, job, capital contribution etc. A non resident Indian (NRI) or Person of the Indian Origin (PIO) resident outside India can invest in India on non repatriation basis without any approval.


However, NRI/PIO may investment in the capital of the partnership firm on repatriation basis with the prior approval of the Reserve Bank of India. Reserve bank of the India will decide approval with consultation with the Government of the India. Further more a person other than non resident Indian or person of the India origin can only invest in capital of the AOP with the prior approval of the Reserve Bank of the India


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