So many Indian personnel those who are very eager to start industry or enter into a profession of manufacturing as entrepreneurs, possess a vast knowledge of technical aspect. But it seems that all these entrepreneurs overlooked to give attention to a legal aspect, which plays a key role in industry.

To achieve a great success in an industry all these manufacturers or entrepreneurs are very anxious generally to enter into collaboration with or very anxious to get some foreign orders for their products and the problem starts at this juncture.

The multinational companies those who want to expand their business in India or in Asia requires certain material for their finished goods and they start hunting these manufacturers/entrepreneurs, basically the Indian manufacturers/entrepreneurs to prove their marketability for their product enter into an agreement with this foreign companies. It is an attitude of Indian manufacturers/entrepreneurs that they usually don’t lose this opportunity to prove themselves eligible for international market; basically this is not a wrong thinking. The manufacturers/entrepreneurs must be ambitious while expanding his business but he should not overlook the hidden dragons of danger while entering into an agreement

As soon as the Indian manufacturers/entrepreneurs gets opportunity to enter into an international business arena, without thinking he usually accepts all the terms of a foreign company.
In this eventuality the foreign companies may impose certain international standard of qualities on the products and to fulfill that and not to lose the opportunity of getting business the Indian manufacturers/entrepreneurs hurriedly purchases new machinery from India or abroad by arranging a financial help from Indian banks or from multi national leasing companies.

Basically it seems that the foreign companies while grabbing the market in India or in Asia gives importance to their name, their product, and their advertisement, to their packaging. To achieve this they impose certain quality control norms on Indian manufacturers, and the Indian manufacturers targeting the achievement of a great success overlook the hidden threats in financial aspect and other aspects also. To avoid this the Indian manufacturers/entrepreneurs must keep in mind the following points:
a) Agreement
I) While entering into an agreement with foreign companies the assurance of fixed period for orders must be obtained.
II) For obtaining all necessary governmental, semi-governmental permissions for importing foreign machinery or for obtaining permission from RBI, the interaction or a declaration for a fixed period or a fixed quantum of order from a foreign company must be obtained so that the Indian manufacturers can give assurance to the financial institutions for a repayment of such type of huge loans they obtain.
III) There must be a control of governmental body or an institution or RBI on such type of agreements whereby the foreign companies will be held responsible if they backed out from their promises.
IV) In case if any dispute arose in between these foreign companies and Indian companies regarding the product manufactured or regarding backing out of foreign companies if their product is not marketed in India or Asia. In that eventuality though the Indian government has formed International center for alternative dispute resolution at New Delhi wherein the arbitration cases has been conducted. Despite of that Indian companies must insist for a local jurisdiction where they are situated.

Vijay M. Jadhav
Advocate
Mumbai high court