- Commercial Contract Drafting, Review & Negotiation
- Master Service & Service Agreements
- Vendor, Supplier & Procurement Agreements
- Consultancy & Independent Contractor Agreements
- Agency, Distribution & Franchise Agreements
- Non-Disclosure & Confidentiality Agreements
- MoUs, Term Sheets & Letters of Intent
- Corporate Structuring & Governance
- Shareholders' Agreements
- Share Purchase Agreements
- Share Subscription & Investment Agreements
- Joint Venture & Strategic Collaboration Agreements
- Partnership & LLP Agreements
- Founders' Agreements
Joint Venture & Strategic Collaboration Agreements
A joint venture agreement records how two or more businesses will work together on a defined project or business while remaining separate. It can create a new company or LLP that the parties own together, or it can be a contract alone, with each party doing its part and sharing the revenue or the costs.
India has no joint venture statute. An incorporated venture is governed by the Companies Act, 2013 or the Limited Liability Partnership Act, 2008, and a contractual one by the Indian Contract Act, 1872. A foreign partner brings in the foreign exchange rules, and ventures between competitors need a look at the Competition Act, 2002.
When you need it
When entering a market with a local partner
A foreign company and an Indian company combine a product or technology with local reach.
When bidding for a project together
Consortium bids for infrastructure and government contracts need agreed roles and shared liability.
When combining technology with distribution
One side has the product and the other has the customers. The agreement decides who owns what is built together.
When a collaboration falls short of a new company
Co-development, co-marketing and referral arrangements still need written terms on money, IP and exit.
When an existing venture is deadlocked or ending
How a venture unwinds depends on the exit terms agreed at the start.
How the process works
Six stages. Timings are typical, not promised.
- 1
Define the venture
A meeting or twoSet out what the venture will do, where, for how long, and what each party is expected to bring: money, people, technology, licences or customers.
Documents
- The business plan
- Any MoU or term sheet already signed
- 2
Choose the structure
About a weekDecide between a jointly owned company, an LLP and a contractual arrangement. The choice affects liability, tax, how profits are shared and how easily a party can leave.
- 3
Agree control
Depends on the partiesSettle ownership percentages, board seats, who appoints the management, the decisions that need both parties’ consent and what happens when they cannot agree.
- 4
Draft the agreements
Three to four weeksPrepare the joint venture agreement and the documents that sit beside it: articles of association, licences of intellectual property, and supply, services or secondment agreements between the venture and each party.
- 5
Approvals
Depends on the sectorCheck and obtain any approvals needed: sector limits on foreign investment, licences the venture needs to operate, and competition clearance where the parties’ size crosses the thresholds.
- 6
Set up and close
On closingIncorporate the entity where there is one, make the agreed contributions, sign the ancillary agreements and adopt the articles.
Common questions
No. A contractual joint venture is common for single projects. A separate company or LLP is usual where the venture will run a continuing business, own assets, employ people or raise money.
It can. If the parties carry on a business together and share its profits, the arrangement may be a partnership under the Indian Partnership Act, 1932, making each liable for the other’s acts. The agreement should be drafted with that risk in mind.
Through the procedure in the agreement: escalation to the chief executives, mediation, an independent director’s casting vote on limited matters, or a buy-out mechanism. Equal ventures without such a procedure are the ones that fail in court.
Whoever the agreement says. Each party usually keeps what it brought and licenses it to the venture. Ownership of what the venture develops, and each party’s right to use it after the venture ends, has to be spelt out.
While the venture continues, a reasonable restriction is generally enforceable. A restriction after exit runs into section 27 of the Indian Contract Act, which makes restraints of trade void, except on a sale of goodwill.
The investment has to comply with the foreign direct investment policy for the sector, the price of shares has to meet the pricing rules, and the investment is reported to the Reserve Bank of India. Exit rights cannot guarantee the foreign partner a fixed return.
At the end of its term or project, by agreement, on a default, or by one party buying out the other. The agreement should deal with valuation, the licences that stop or continue, employees, and the use of the venture’s name.
Related
To discuss a joint venture, write to info@ireniclegal.com or call +91 96547 47331. Written by Adv. Kanika Marwaha Bindal; last updated 7 October 2026.