Joint ventures in India: a guide for foreign infrastructure companies

Many foreign firms can now own 100% of an Indian business in infrastructure, so a JV is a choice, not a requirement.^[2] It makes sense when an Indian partner brings something you cannot buy quickly: completed works that count towards tender eligibility, manufacturing that meets local-content rules, relationships with buyers, or a share of the capital. Where you only need a partner for one bid, a contractual consortium for that tender is often enough. Where you only need distribution, a supply or licensing agreement may be simpler.

This guide is general information, not legal or tax advice. Confirm your position with Indian counsel before you sign.

• Most infrastructure is 100% automatic. Sectors not listed with a cap, which include power, renewables, roads, ports and water, allow 100% foreign investment without prior approval.^[2][3]
• Railway infrastructure, including high-speed rail, freight corridors, rolling stock, signalling and metro, is 100% automatic, subject to Ministry of Railways guidelines; security-sensitive areas need extra approval above 49%.^[2]
• Construction development (townships, buildings, city infrastructure) is 100% automatic but with conditions, including a three-year lock-in per tranche before exit. Check with counsel whether your activity falls here or under the general rule.^[2]
• Land-border countries. Investors from or owned through countries that share a land border with India, notably China, need government approval. In March 2026 the rules were revised so that non-controlling beneficial ownership of up to 10% from such countries can use the automatic route; the FEMA rules were amended in May 2026.^[6][7][8]
• Timing. Shares must be issued within 60 days of receiving the money, or the money refunded within 15 days after that.^[2]

Source: DPIIT Consolidated FDI Policy, as amended.^[2] An LLP can also be converted into a company, or a company into an LLP, under the automatic route where the sector conditions are met.^[2]

• Fair value. Shares in an unlisted company cannot be issued to a non-resident below a fair value certified by a chartered accountant, SEBI-registered merchant banker or cost accountant, using an internationally accepted method.^[3]
• Transfers. A resident selling to a non-resident cannot sell below fair value; a non-resident selling to a resident cannot sell above it.^[3]
• Deferred consideration. Up to 25% of the price can be deferred, escrowed or covered by indemnity for up to 18 months.^[3]
• Reporting. The Indian company files Form FC-GPR within 30 days of issuing shares; share transfers are reported on Form FC-TRS within 60 days; and an annual foreign liabilities and assets return is filed with the Reserve Bank of India.^[3][2][9]

• Control thresholds. A shareholder with more than 25% can block special resolutions; 10% or more gives statutory rights to act against oppression and mismanagement. Plan your shareholding around these lines.^[1]
• Board and reserved matters. Set board seats, quorum and a list of decisions that need both partners. Reserved matters can be weak in practice in promoter-run companies, so pair them with information rights and audit access.^[26]
• Deadlock. Give deadlock clauses clear timelines and escalation steps; many do not.^[26]
• Exit. Put and call options are allowed after a minimum one-year lock-in, but without any assured return: exit prices must respect fair-value rules.^[3][2]
• Business plan and dividends. Agree a multi-year business plan and dividend policy in the agreement itself.^[25]
• Disputes. Two Indian parties may choose a foreign arbitration seat, and awards from New York Convention countries notified by India can be enforced in India.^[10] Do not rely on treaty protection: India’s investment treaty with the UK is not in force, and the EU’s separate investment protection agreement has not been agreed.^[11][12]

Most failed JVs could have been predicted from facts available before signing. Before you commit, check:

• Ownership. Who ultimately owns the partner, including any beneficial owners from land-border countries that would trigger approval requirements.^[6]
• Track record. Completion certificates for the works the partner will contribute to your pre-qualification, and how they were shared in earlier JVs.^[18]
• Finances and funding capacity. Whether the partner can meet capital calls, since dilution of an underfunded partner is a common cause of JV breakdown.^[25]
• Related parties. Companies linked to the promoters that might trade with the JV, a recognised source of value leakage.^[26]
• Disputes and record with authorities. Litigation, arbitration and debarment history, since a debarred partner can bar the whole JV from tenders.^[18]

Our partner search service runs these checks before introductions turn into negotiations.

India’s new Income-tax Act 2025 came into force on 1 April 2026.^[13] Domestic companies can still opt for a 22% base rate, about 25.17% with surcharge and cess, in return for giving up specified deductions.^[14] Dividends paid by the Indian JV to its foreign shareholder are taxed in India at treaty rates where a treaty applies:

Source: Income Tax Department treaty rate table.^[15] Without a treaty, the domestic rate is 20%.

Transactions between the JV and its foreign parent, such as technology fees, equipment supply and royalties, must be priced at arm’s length under India’s transfer pricing rules, which the 2025 Act carried over with some changes.^[16]

The 2025 Income-tax Act changed several transfer pricing details that matter to JVs dealing with a foreign parent: a single test now defines associated enterprises, the audit report Form 3CEB has been replaced by Form 48, a three-year block approach lets the first year’s arm’s-length price apply to the next two years, the ±3% tolerance band is kept, and the advance pricing agreement fee is ₹20 lakh.^[16] Agree how technology fees, royalties and equipment prices will be set before the JV starts trading.

1. Digital signatures and director IDs

   Digital signature certificates for the directors take about three to seven working days.^[5]

2. Documents from abroad

   The foreign parent’s board resolution and certificate of incorporation need an apostille, and foreign directors’ passports must be notarised. Collecting these is usually the slowest part and can take weeks.^[5]

3. Incorporation

   India’s single SPICe+ web form covers name reservation, incorporation, director identification, tax numbers, employee registrations, a bank account and optional GST registration.^[17]

4. Investment and reporting

   Bring in the capital, issue shares within 60 days, and file FC-GPR within 30 days of allotment.^[2][3]

Public tenders set their own JV rules, so read each one. A January 2026 tender from WAPCOS, a central government company, is typical:^[18]

• two or three members, with a lead member holding at least 51% and each other member at least 20%;
• joint and several liability for all members, including through the defect liability period;
• the combined experience of members counts, with past JV work credited in proportion to each member’s share;
• the lead member must meet at least 51% of the financial criteria and each other member at least 25%;
• if the JV is debarred, every partner is debarred.

The Finance Ministry’s 2025 works procurement manual allows non-lead partners’ qualifying requirements to be set lower than the lead partner’s.^[19] Our guide on how foreign EPC contractors win work in India covers eligibility in more detail.

The range is the point: a JV company for a long-term manufacturing business, a consortium for a single large contract, and a collaboration agreement where neither side wants shared ownership.

Law firms that handle JV disputes point to the same causes again and again:^[25][26]

• disagreement over the business plan or dividend policy;
• the Indian partner being diluted when it cannot fund capital calls;
• different appetites for risk, and cultural and management gaps;
• a change of strategy or control at the foreign parent;
• foreign investment rules loosening, so the foreign partner no longer needs the JV;
• exit clauses that are unenforceable because they promise a price above fair value or ignore sector caps;
• related-party dealings that leak value from the JV.

Most of these can be anticipated before signing. That is why our partner search and joint venture work starts with due diligence on the partner and a frank conversation about business plan, funding and exit.