Question

What are the benefits of entering into a joint venture and public private partnership?

Answer 1

A joint venture is a business agreement in which two or more organisations come together for mutual benefits and gains. Business organisations in a joint venture share not only the physical, financial and human resources available but also the risks and profits of the business. The following are some of the benefits for a company entering into a joint venture.

(a) Increased resources and capacity: In a joint venture, the resources and operational capacities of the individual business are pooled. A joint venture is able to expand and grow better than an individual business enterprise.

(b) Access to new markets and distribution networks:Entering into a joint venture with an enterprise located in another region widens the market base for each of the individual enterprises.

(c) Access to technology:Through a joint venture, a company can acquire new and modern technology more easily with less investment and less time and effort compared with the technology that individual enterprises may be able to acquire working independently.

(d) Innovation: A joint venture, especially with a foreign partner, gives a company access to new ideas and technology which help in the innovation of new products. These new products enable businesses to sustain in today’s complex and competitive market.

(e) Low cost of production: The costs of raw material and labour, etc., are very low in India compared to other countries. Thus, international corporations that enter into joint ventures with Indian companies reap huge benefits.
The Public Private Partnership is that model of partnership wherein the tasks, obligations, responsibilities and risks are optimally allocated among the public and the private partners. In a PPP, the public partner may include government entities, such as ministries, government departments, municipalities, etc., whereas the private partner may include local or foreign businesses or investors with relevant technical or financial expertise. 
The key benefits of PPP are as follows:
(1) Sharing of risk: With the public and the private entities, both coming together for the construction and designing of projects, the risks are shared and thus reduced.
(2) Accelerating project: The public and private partnership ensure that the project work is accelerated by sharing the tasks and responsibilities with the aim of completing the project on time.