Joint Venture (JV) is defined as a contractual agreement formed between two or more parties, with each party contributing their equity share, in order to undertake an economic activity which is subjected to joint control. In such an agreement all parties agree to share expenses, revenue, etc and govern various financial and operating policies for the benefit of the enterprise. In other words, no single venturer is in a position to unilaterally control the activity.
Joint Ventures Companies are generally formed under Indian Companies Act. These Companies may be a private limited or a public limited.
A very common method used by foreign companies entering the Indian market is to work on a joint venture with an Indian company. Joint Venture can provide following advantages for a foreign investor:-
It is possible to start such a joint venture either with an existing company or to start it anew with an Indian partner. In either case, the Indian company needs to exist and it has to approach the Foreign Investment Promotion Board (FIPB) or the Reserve Bank of India with a request for allowing foreign investment in the company.