Unlike joint ventures in India, Joint venture undertakings are established abroad by the Indian entrepreneurs for building up an export potential for their products manufactured through foreign collaboration in the developing countries where there is a favorable political climate and a demand for the Indian products. For this purpose, the Government offers the following opportunities:
(i) opportunities to increase the export potential of the Indian company;
(ii) facility of repatriation to India of capital and dividend and royalty and remuneration earned outside India from joint ventures;
(iii) incentives under the Income-tax Act.
(iv) Compliance with requirements for setting up joint ventures.-The following requirements will have to be complied with for setting up joint ventures abroad :
(a) Under Companies Act.-Since the Government’s policy is to encourage only the corporate bodies to invest in joint ventures abroad application should be made to the Central Government, Department of Company Affairs under section 372 (4) if the Companies Act, 1956 in Form 34-B prescribed under the Companies (Central Government’s) General Rules and Forms, 1956. [Form No. 1 below].
(b) Under FERA.- Section 27 of Foreign Exchange Regulation Act, 1973, requires that persons resident in India including firms and companies (other than foreign nationals) should obtain prior permission of the Government of India to associate themselves with, or participate in, whether as promoters or otherwise, any concern outside India engaged in, or intending to engage in, any activity of a trading, commercial or industrial nature, whether such concern is a body corporate or not. The application has to be made in the prescribed Form PFCE (See Form No. 31 in Chapter 12).
(c) Approval of Reserve bank.-An application has to be made to the Reserve Bank of India in the prescribed Form GRI/EP (Form Nos. 2 and 3 below)... [continues]
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