MOU with a foreign concern for business co-operation in Indi
P.C. Joshi
(Querist) 25 October 2009
This query is : Resolved
A Ltd a well known company in communication accessories in India wants to enter with a foreign conern who is alos in similar field to develop market in India for the prodcust manufactured by the said Co. for mutual business interets of both the company.Subsequently after experiencing this mutual co-operation between the company under the abovesaid MOU where no monetary consideration is involed, both the company willing to enter into a joint venture/colleboration in India. The query is whether there is any applicability of FEMA regulations in the intitial MOU or afterwards entering into the joint venture or colleboration. Members, pls share your views.
Regards
P.C. Joshi
Raj Kumar Makkad
(Expert) 25 October 2009
Mr. Joshi! Even though no monetary considerations at initial stage are involved even then FEMA regulations are applicable in all such type of matters.
A V Vishal
(Expert) 25 October 2009
No applicability of FEMA in initial MOU, a MOU is just a mutual agreement, FEMA applies when there is real flow of income/transactions between the two companies
PJANARDHANA REDDY
(Expert) 25 October 2009
YOU SHOULD GET ALL APPROVALS FROM THE FEMA,RBI AND EXTERNAL AFFAIRS AND EVEN THE INTERNAL SECURITY OF INDIA ,TRAI ETC.,.
THE FOREIGN COLLABORATION IS A VERY RISK FIELD DUE TO MAFIA&TERRORISM,HENCE CONSULT ON CLB CONSULTANT.TO GET CLEARANCES.
P.C. Joshi
(Querist) 25 October 2009
Dear friends, Thanks for your valued advise. I gather and of the view that for just entering into a MOU without any monetary consideration would not involve any FERM implication for the Indian party. However, the foreign party should get approval from RBI for establishing an liasioning,branch office or any establishment as it may require. But I just want to have your advise as to whther, the MOU, which is a kind of a contract be entered without consideration.
Second part of my query is abt the implication of FEMA & Taxation laws if the parties enter into a colleboration/joint agreement. This woul cetainly involve FEMA & Taxation considerations depending upon the nature of arrangements. I shall welcome if members can provide more inputs in the matter.
Regards
P.c. Joshi
niranjan
(Expert) 25 October 2009
I agree with the opinion of Mr Reddysir.
KUMAR JAGADEESAN
(Expert) 26 October 2009
Mr.Joshi
An MOU as stated by by Mr.Vishal does not involve FEMA regulations. It is not without consideration as stated by you but the consideration may be non-monetary in the sense one party supports others activities in India with its infrastructure et all while gaining some marketing skills etc. One has to go through the MOU to state specifically whether there is an absence of consideration.
As far as the second part is concerned check whether the industry has an investment cap.Depending on whether the industry comes under automatic or approval category you may have to obtain approval from the FIPB and RBI. A visit to DIPP website would help. Technical collaboration agreement has to be approved by the RBI if certain monetary limits are exceeded.
J.KUMAR
Hyderabad
Arul Kumar
(Expert) 26 October 2009
I Agree with Mr. Kumar J.
P.C. Joshi
(Querist) 26 October 2009
Dear Mr Kumar,
thanks for yor reply.Pls let me know will the position will be different if in the initial agreement the foreign party grants exclusive rights of selling its products to Indian compnay in Inida untill they finally enter into collaboration/joint venture in future.
Regards,
P.c. Joshi
