HomePoliticsPeaceA Borderless World: Why Foreign Collaborations Are On The Rise

A Borderless World: Why Foreign Collaborations Are On The Rise

Until 1991, India closed off foreign trade in an attempt to protect and encourage the development of its local industries. However, the lack of competition from international producers eventually led to low quality products being sold at high prices, which was detrimental to the growth of the economy. As foreign exchange reserves dropped to dangerously low levels and India found itself in an economic crisis and external debt, economists decided it was finally time to open up the economy to international trade and develop its export sector.

The various reforms that resulted, such as reduction in tariffs and quotas as well as the simplification of tax structure, have received both praise and criticism. While globalization has created many employment opportunities and contributed to the growth of GDP, this development has been concentrated only in certain areas such as IT, retail and pharmaceutical.

Joint Ventures in Recent Years

Tata Starbucks, a joint venture in India between Starbucks and Tata Global Beverages is one of the most successful collaborations in recent times. The success of such a venture lies in the combination of ideas and attention to detail. By partnering with Tata, Starbucks gets the advantage of using an established name and gets access to a huge market in India. On the other hand, Tata gets to use Starbucks’ tried and tested trade practices to earn profits. Another Tata collaboration called Vistara has, quite literally, taken off in India. Air Vistara is a joint venture between Tata Sons and Singapore Airlines which has low airfares.

Why We Need More Joint Ventures

Joint Ventures are an integral part of a rapidly globalizing world. They help in the economic development of a country by facilitating trade, providing employment and giving competition to local manufacturers. A joint venture essentially lets companies have the best of both worlds: access to new markets and distribution networks along with shared profits and risks. Companies located in first world countries usually have the kind of technology that third-world companies have yet to acquire.

Joint ventures are also beneficial to the social progress of a country as they bring with them new ideals and often, fair trade practices. For instance, the official website of Tata Starbucks claims to recruit employees on the basis of qualifications and not race, gender, sexual orientation, caste, etc. Something like this is much needed in a country where we place arbitrary restrictions on employment and educational opportunities.

The Downfalls of Joint Ventures

It has been observed that companies in a joint venture may be at loggerheads due to different cultures, management styles, ideals, etc. There may be poor leadership and communication which leads to inefficient working. However, such problems can be overcome with orientation programs for employees and defined objectives for both companies in terms of what they expect from their collaboration.

There has also been a concern that joint ventures prevent growth of local industries that cannot compete with their advanced technology and marketing strategies. But joint ventures have often picked up sick units and help them re-establish themselves. Even the competition provided by them can be considered as healthy and encourage domestic industries to work better.


India as a developing nation has benefited immensely from various partnerships as it has allowed inflow of new technology and ideals into the country. Companies looking to expand their operations in the Indian market have found allies in the form of well-known Indian corporations. Thus, we need more such foreign collaborations in order to become a truly borderless world.

[Image Attribute: Unsplash]
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