1

What are the approvals required to set up a JV?

Ans.

A two tier approval mechanism has been provided:-
1. Automatic Approval Route:- FDI in sectors or activities to the extent permitted under automatic route does not require any prior approval either by Government of India or Reserve Bank of India (RBI). The investors are only required to notify the Regional office concerned of RBI within 30 days of receipt of inward remittances and file the required documents with that office within 30 days of issue of shares to foreign investors.
2. Foreign Investment Promotion Board (FIPB) Approval Route:- FDI in activities not covered under the automatic approval route requires prior Government approval and are considered by the Foreign Investment Promotion Board (FIPB).The FIPB has been set up in the Ministry of Finance to promote inflows of FDI into the country, as also to provide appropriate institutional arrangements, transparent procedures and guidelines for investment promotion and to consider and approve/recommend proposals for foreign investment.

2

What is meant by a Collaboration Agreement?

Ans.

A collaboration agreement is an arrangement that allows one company to use the expertise and skills of another.

3

What is Joint venture?

Ans.

A joint venture is a new enterprise owned by two or more participants. It represents a combination of subsets of assets contributed by two (or more) business entities for a specific business purpose and a limited duration.

4

Who are the approving authorities for collaborations in India?

Ans.

1. The Reserve Bank of India (RBI); 
2. The Department of Industrial Development in the Ministry of Industry, Government of India;
3. Foreign Investment Promotion Board (FIPB): The FIPB is the nodal, single window agency for all matters relating to foreign direct investment (FDI) as well as promoting investment into the country. Secretary, Industry (Department of Industrial Policy and Promotion) chairs it.

5

What is the validity of a foreign collaboration approval?

Ans.

Government approval for foreign collaboration is valid for an initial period of two years, which may be extended for one more year. In case any further extension is needed, beyond the period of three years, it will be considered by the Foreign Investment Promotion Board on the recommendation of the administrative ministry.

6

What happens when a JV has a non-resident partner?

Ans.

1. Approval of Reserve bank of India {RBI} will be required for acquiring shares of the company and establishing place of business in India 
2. A non-resident Indian citizen / Person of Indian origin are generally permitted to subscribe to the memorandum and articles of association 
3. Such company can issue shares to the non-residents subject to the condition that the total face value of shares is not to exceed Rs 10,000 
4. The company cannot engage in the activity of agriculture / plantation / dealing in real estate other than its development and the company files a declaration with RBI within 90 days of its incorporation. With the ongoing liberalization more general permissions of RBI are expected.