Foreign Companies can set their operations in India by forming a joint venture company with one or more than one Indian partner. As it seems from its name a joint venture is a new enterprise owned by two or more participants to share markets / intellectual property and its knowledge and its profit too.
It is essentially a medium to long-term contract which is specific and flexible. Though, the joint venture a newly created business enterprise can be represented and its participants can continue to exist as separate firms. It can also be organized as a partnership firm, a corporation or any other form of business organisation which the participating firms choose to select.
Advantages of Joint Venture Company:
- Contribution by partners of money, property, effort, knowledge, skill or other assets to the common undertaking.
- Joint property interest in the subject matter of the venture.
- Right of mutual control or management of the enterprise.
- Right to share in the property.
- Joint ventures are of limited scope and duration.
- They involve only a small fraction of each participant’s total activities.
- Each partner must have something unique and important to offer the venture and simultaneously provide a source of gain to the other participants.