What is Foreign Collaboration and Joint Venture? Difference between Joint Venture and Foreign Collaboration

Introduction

Foreign Collaboration is the idea behind people getting together to work toward a common goal or objective. On the other hand, a Joint Venture is a strategic partnership when two or more people or businesses concur to contribute capital, goods, or services to a single commercial enterprise. Many people are unable to difference between joint ventures and Foreign collaboration. This article emphasis on the Difference between Joint Venture and Collaboration, “What is Collaboration?”, “What is Joint Venture?”, Different types of Collaboration and Joint Venture.

What is Collaboration?

A collaboration between a resident and non-resident nation is known as a “foreign collaboration.” It is a partnership or union between a domestic and international business. It takes the shape of a contract that both parties have signed for their mutual benefit. Forming a foreign partnership requires the association of one non-resident entity. It can also be described as a strategic alliance between a local country and two or more foreign-based nations.

Both parties must obtain prior approval from the domestic government authorities before beginning an overseas partnership. Both sides reach an agreement in which both the resident company and the non-resident company join forces to form an alliance after obtaining all relevant permissions.

Types of Foreign Collaboration in India

• Technical Collaboration – Technological partnership is an agreement whereby the developed country promises to give the developing country technical know-how, sophisticated equipment, and any other form of technical support.
• Marketing Collaboration – When there is a marketing collaboration, the host nation is where the goods and services are imported.
• Consultancy Collaboration – Collaboration in consulting refers to an agreement between a foreign and domestic company whereby the foreign company commits to offering the domestic company managerial skills and expertise.
• Financial Collaboration – Financial partnership occurs when a foreign business decides to lend money or other forms of support to a domestic business.

Suggested Read: Foreign Collaboration in India

What is Joint Venture?

A Joint Venture is a strategic partnership when two or more people or businesses concur to contribute capital, goods, or services to a single commercial enterprise. Compatibility between the parties to the contract is essential for any joint venture to be successful in India. The associated parties should have a distinct objective, and conditions should be spelled out in the JV (Joint Venture) agreement provisions, in order to sustain a successful joint venture in India. For foreign investors conducting business in India, creating a joint venture firm is the preferred form of corporate structure.

Types of Joint Venture

• Equity Joint Venture – This arrangement entails the formation of a separate legal body in accordance with the consent of two or more parties.
• Contractual Joint Venture – This kind of joint venture maybe utilized in situations where the formation of a separate legal body is not required or is not practical.

Suggested Read: Joint Venture Business in India 

Difference between Joint Venture and Foreign Collaboration

The best example of collaboration in the world is in trade, where two nations work together to generate goods that would not otherwise be available to their population. A joint venture, on the other hand, is defined as a contract between two or more parties who collaborate, pooling their resources and knowledge to create a commercial entity and divide the profits.

Conclusion

The Indian economy benefits from some foreign collaborations. Indian industry at first mostly focused on the consumer goods sector. Indian business has benefited from foreign partnerships by diversifying its range of products. On the other hand, a joint venture is a company founded by two or more parties that is typically distinguished by shared governance, ownership, and returns and risks.