Is having a technical partner better than an in-house software development team?

You can write contracts to say whatever you want. If you don't like the terms the potential partner is offering then don't accept them. Either counter or find a different partner.

Personally I would never sign any agreement that sounds how you describe it. It sounds like the partner is trying to contractually steal your project. Why are you even entertaining it?

This depends alot on how valuable is the technical partner in terms of skills and experience. He will be higly motivated and involved if he has a share in profits. A technical parter can be ideal if you can trust the person enough for a long term relationship. ( IMHO )

Like Jeff said, you can make a counter agreement and be very specific who owns what so that should not be much of a concern.

On a sidenote, unless you are find a very good project manager, managing a team of programmers to get output in the direction you want is not as simple as it might sound.

There is already a partnership agreement in place? What are the terms? If you don't like them, change them as a counter offer. That's why they print them out, so you can cross things out and make additions ;)

Contractually you can make any agreements you want (within the law of course) over who owns what, who has control of the intellectual property rights, salaries, profits, rights to sell, etc.

Unless you can pay competitive salaries and benefits for a technical leader, they'll want to be a partner and may want some form of additional conpensation if they contribute to the company's success. It could be ownership, project control, stock options or just a big cash payout.

Have they given any indication this is there final offer?

This sounds pretty confusing... perhaps you need professional advice on this?

1. The contracts should clarify this. It's usual for s/w to be owned by the consultancy developing it. Exceptions could have been made for certain staff/contractors. India may have different default rules.
2. I'd imagine shared ownership - how it gets separated depends on how you sell on / wind up the business.
3. Absolutely!
4. Don't follow - your partner wouldn't be allowed to make sales? Or you don't want your partner to be able to sell the rights to the product without your knowledge or say so? If the latter, then is he the right partner for you you should be going into this with some pre-existing trust between you.
5. Partnership agreement could be licensing you to sell their products I suppose, as opposed to a legal entity known as a partnership. If you're expecting one and it reads like the other, then you need to seek professional advice on the paperwork/contracts.

Good luck