Accuracy in laser beam collimation is very important in systems used for precision measurements. The present work reports a technique for collimation testing of laser beams using two proximately placed holographic optical elements (HOEs). The required HOEs are designed and fabricated such that upon illumination with the test beam, they release two laterally sheared wavefronts, at desired angles from the directly transmitted beam, that superimpose each other to generate straight interference fringes. Deviation from the collimation of the test beam results in orientation of these otherwise horizontal fringes. The novelty of this setup comes from the fact that HOEs are lightweight, as well as easy to fabricate as compared to conventional wedge plates used for collimation testing, and generate high contrast fringes compared to other interferometry, holography, Talbot and Moiré based techniques in a compact manner. The proposed technique is experimentally validated by measuring the orientation of fringes by an angle of 16.4° when a collimating lens of focal length 200 mm is defocused by 600 μm. The accuracy in the setting of this collimation position is obtained to be 10 μm.