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Explain Government Approvals for Joint Ventures and Drafting International Joint Venture Agreements

Date Added: January 17, 2009 10:04:42 AM
Author: Mukesh Choudhary
Category: Blogs: Making Money
Madam & Co. has helped US companies & foreign companies in setting up their Joint Venture operations in India and other countries. Business Joint Ventures are more likely to be beneficial if Joint Venture Entry Strategies are carefully formulated. Negotiating Joint Ventures properly is very important for a win-win Joint Venture for the help www.jointwebventures.com. Proper drafting of Joint Venture Agreements are very important for the success of any joint venture. We can help you in setting up your Joint Venture: from entry strategies, to negotiations to drafting agreements to compliance programs. All the joint ventures in India require governmental approvals, if a foreign partner or an NRI or PIO partner is involved. The approval can be obtained from either from RBI or FIPB. In case, a joint venture is covered under automatic route, then the approval of Reserve bank of India is required. In other special cases, not covered under the automatic route, a special approval of FIPB is required. The Government has outlined 37 high priority areas covering most of the industrial sectors. Investment proposals involving up to 74% foreign equity in these areas receive automatic approval within two weeks. An application to the Reserve Bank of India is required. Please see Foreign Investment in India - Sector wise Guide for sectorwise guidelines under automatic route. Besides the 37 high priority areas, automatic approval is available for 74% foreign equity holdings setting up international trading companies engaged primarily in export activities. Approval of foreign equity is not limited to 74% and to high priority industries. Greater than 74% of equity and areas outside the high priority list are open to investment, but government approval is required. For these greater equity investments or for areas of investment outside of high priority an application in the form FC (SIA) has to be filed with the Secretariat for Industrial Approvals. A response is given within 6 weeks. Full foreign ownership (100% equity) is readily allowed in power generation, coal washeries, electronics, Export Oriented Unit (EOU) or a unit in one of the Export Processing Zones ("EPZ's"). For major investment proposals or for those that do not fit within the existing policy parameters, there is the high-powered Foreign Investment Promotion Board ("FIPB") for the help www.joint-venture-guide.com. The FIPB is located in the office of the Prime Minister and can provide single-window clearance to proposals in their totality without being restricted by any predetermined parameters. Foreign investment is also welcomed in many of infrastructure areas such as power, steel, coal washeries, luxury railways, and telecommunications. The entire hydrocarbon sector, including exploration, producing, refining and marketing of petroleum products has now been opened to foreign participation. The Government had recently allowed foreign investment up to 51% in mining for commercial purposes and up to 49% in telecommunication sector. The government is also examining a proposal to do away with the stipulation that foreign equity should cover the foreign exchange needs for import of capital goods. In view of the country's improved balance of payments position, this requirement may be eliminated. * How to Build Your Joint-Venture Business As you look at your advertising budget for the upcoming year, think about allocating some of your funds to joint-venture projects. As you build your business model, know that you can grow your business faster when you consolidate your knowledge, company resources, as well as other company assets with other businesses that have complementary attributes to grow each others' businesses. Below are simple steps you can follow as you get started on your next business project: Step 1: Find qualified joint-venture partners who have complementary services that can help you grow your business. Engage yourself with them and identify what interests and what objectives you both can accomplish. Know this:There is significant value in linking resources, common interests and strategic objectives together with other experienced professionals; both online and offline. Step 2: Define jointly what makes up a good JV for both of you. Knowing this and answering these questions in advance is very important to helping you succeed in the JV process. Step 3: Think about creating a win/win strategy. Having a strategy that works good for both parties can be the difference between a successful joint venture and one that fails. Step 4: Take action on your strategy and make sure to achieve your common goals as well as objectives that you have written down in advance. Learning the process is not as hard as some think. Taking action is really what matters. Step 5: Monitor your performance and seek ways to continuously improve on the relationship. http://www.easy-jv-manager.com http://www.joint-venture-softwares.com
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