Ten Legal Thought Leaders Talk Candidly Revitalizing-India

India Business Law Journal 15

Cover storyEconomic revival

October 2013

Revitalizing IndiaTen legal thought leaders talk candidly about India’s economic

woes and outline a series of bold measures to put the shine back into the country’s economy

T he odds appear to be stacked against India at the moment. Investors are worn out by the legal and regulatory complexities, political schizophrenia

and bad press that have soured the mood in India and dulled the country’s shine.

It is perhaps no wonder then that India has slipped

three places in the World Bank’s “Doing Business” report to a rank of 134 out of 189 economies listed. Against this gloomy backdrop, 10 of the country’s leading commercial lawyers talk to India Business Law Journal about the urgent measures that they believe are needed to get the country back on track.

Cover story

India Business Law Journal16

Economic revival

October 2013

How would you describe India’s economic climate?

How do you think this will compare with its climate in 12 months?

At the moment things continue to look gloomy, but the silver lining is beginning to shine through the gloom. If the government stays the path it has adopted in the last few months, the economy should look better in the next 12 months

Anand Prasad, partner, Trilegal

The Indian economy is going through a phase of uncertainty. Growth has slowed to the low-est in a decade and industrial output data have been abysmal. The depreciation of the rupee has made matters worse. All these factors coupled with high consumer inflation and political uncertainty have shrouded the economy in a pall of gloom. The election in 2014 will be crucial. Also, with the expected increase in exports and revival of various infrastructure projects, I’d expect the economy to have picked up by Q3 next fiscal

Alka Bharucha, senior partner, Bharucha & Partners

The economic climate is more stringent as compared to last year primarily for two reasons. The first is our economic issues – a huge current account deficit, growing imports and slackening exports, the manufacturing industry not delivering on expected targets, and so on. The other reason is global economic issues and par-ticularly US economic issues. All this has led to the rupee depre-ciating fast and has seen sig-nificant volatility making working conditions tougher for business. Liquidity has suffered and that has impacted business significantly

Ajit Yadav, president & group general counsel, Vedanta

The Indian economy has been in low gear over the last three quar-ters: inflation has remained high and growth has slackened from 8% to about 5%. These and other fac-tors have whittled away at investor confidence. In the next 12 months, however, I hope to see the economy turning a corner and pulling out of the tailspin. Some positive cues from the central bank and a good harvest season might just provide the right spark for this turnaround. Already, the rupee – which was in a freefall – has recovered considera-bly with the new governor stepping in to take charge of the Reserve Bank of India (RBI)

Rajiv Luthra, Managing Partner, Luthra & Luthra

India Inc is experiencing growing pains and is facing a set of chal-lenges presently, but we remain cautiously optimistic about the

economic climate in the next 12-24 months. The current economic cli-mate is plagued with many uncer-tainties, such as chronic inflation, slowing GDP growth, regulatory uncertainties and complexities (espe-cially with respect to tax and foreign investment in India), approaching elections and endemic corruption. However, once the dust from the election begins to settle and regu-latory policies continue to try and mitigate such woes and facilitate more foreign investment in India, the crouching tiger will leap again!

Haigreve Khaitan, partner, Khaitan & Co

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October 2013

It seems like there is a very high level of uncertainty in almost all spheres – business, social and political – and this is true of the economic climate as well. That the stock market is doing well makes it extremely difficult to explain the economic situation. Unless there is drastic change in the attitude of government towards its people, I expect that even the stock market will fol-low the course of the prevailing despondent sentiment

Murali Neelakantan, global general counsel, Cipla

The Indian economy contin-ues to grow very slowly across sectors including across con-sumer segments. GDP growth has tapered down to mid single digits, significantly lower than in the past. The economy has entered a volatile phase with a weak rupee, relatively high inflation and a stronger global economy providing alternative sources of investment to foreign institutional investors

Amit Vyas, senior legal coun-sel, Procter & Gamble Hygiene & Healthcare

The economic indicators are showing signs of improvement but the political situation seems to have declined, so the sig-nals are mixed since economics and politics are intertwined. The next 12 months will see a lot of shrill noise on the political front with general elections round the corner. Foreign investment inter-est will be low until the outcome of the elections is clear

Vijaya Sampath, senior part-n e r, L a k s h m i k u m a r a n & Sridharan

The situation is grim and is not likely to improve during the next 12 months

Lalit Bhasin, managing partner, Bhasin & Co

The economic scenario in India looks gloomy: investor confidence is at a concerning low; the current account deficit is alarming; the rupee is devalued; industry performance numbers are discomfiting; and growth is plummeting. I am hoping that the economy will emit more positive sig-nals in the next 12 months. The new RBI governor has definitely fuelled such optimism and I would like to believe that we should be on a recov-ery path in a year’s time even if we haven’t recovered fully. I must add that so far as India’s economic climate is concerned, failure is not an option

Amitabh Lal Das, senior legal direc-tor and general counsel, Yahoo! India

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October 2013

How would you describe India’s current position

in terms of legal and regulatory progress?

Slow and confused! There hasn’t been any commendable headway and we have seen sun-shine industries compelled to walk into their ostensible dusk. Also, newer businesses have not received legal and regulatory stimuli that were largely expected and clearly required to make the environment conducive for invest-ments in those businesses

Amitabh Lal Das

To my mind India is a significant underachiever on advancing its legal and regulatory framework. Good work was done in the past, but we have failed to keep up the tempo

Anand Prasad

This year we witnessed some challenging legal and regulatory issues. Why? India has moved towards an open economy in the last decade and many sectors were opened up for private and foreign investment. This led to a significant rise in activities and perhaps a robust regulatory sys-tem was not in place to meet the fast-growing needs of sunrise industries. This resulted in sev-eral challenges in terms of the questioning and judicial review of executive actions. Given the procedural issues of the judicial system, this has slowed down industrial progress

Ajit Yadav

Unfortunately, there has been very little progress for some time now. The last set of regula-tions that one can remember as being useful was the Alternative Investment Fund Regulations. In fact, the general impression that one gets is that it has been getting worse. Just when one thought that it couldn’t get any worse we saw retrospective amendments to the Income Tax Act and the cancellation of the 2G telecom licences, the controversy sur-rounding mining leases, the gov-ernment holding the Cairn deal hostage, drug price control orders and clinical trials being stalled. All of this makes one wonder how much worse it can get

Murali Neelakantan

“One step forward, two steps backward.” India Inc has a unique set of problems, such as high chronic inflation coupled with a

liquidity crisis. Therefore, raising interest rates to curb inflation may directly exacerbate liquidity issues in the market, which in turn may affect the much needed capital expenditure investments and the funding for other business activi-ties. Every step needs to be calcu-lated. Regulations like the general anti-avoidance rules (GAAR) may seem like a good idea in order to avoid leakages from lost tax revenues. However, one step in the right direction to ensure tax evaders are caught sets India Inc two steps back, creating uncer-tainty for foreign investors who depend on double taxation avoid-ance agreements for their invest-ments in India

Haigreve Khaitan

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Economic revival

October 2013

The progress made by India on the legal and regulatory front should be seen contextually. Given its federal structure, law-making in India is a complex tango per-formed by the union government (for the entire country) and state governments (for their respec-tive states). Moreover, consensus

building becomes a major challenge for coalition governments, which are hamstrung by political dispari-ties. Despite this, we have seen the regulatory regime in India gradually shed its protectionist trappings and warm up to the agenda of business facilitation. India’s legal and regula-tory progress compares favourably with other countries when it comes to investor protection and trade lib-eralization, but unfavourably when it comes to curbing graft and red tape. We saw foreign direct invest-ment (FDI) being permitted in multi-brand retail and aviation last year. The new Companies Act just got rolled out. Despite all the drama, we saw the Land Acquisition Bill and the Food Security Bill become laws. Just this month, the Securities and Exchange Board of India (SEBI) gave its nod to pre-emption rights and put and call options in invest-ment agreements. I feel that this government is a late bloomer, so there could be one last hurrah before the elections next year

Rajiv Luthra

India remains perfect in terms of its theoretical approach to laws and regulations. Laws are fantastically drafted and set out objectives that are justice focused. However, the practical scenario is dismal: there is no proper enforcement of laws; there is rampant corruption among regulators; and red tape even in

the case of simple approvals from government departments takes a mammoth amount of time. This has led to the very rampant prac-tice of “speed money”. Criminal cases take not less than 10 years to decide and civil cases take 15 years to decide. Thus in India jus-tice is always denied since it is always delayed. The only remedy appears to be to spruce up, galva-nize and electrify the legal system, eliminate unnecessary appellate provisions, stipulate fixed time-frames for judgments and ensure stringent provisions to take law-yers to task for unreasonable adjournments. Factually, this is the root cause of the malady and those with vested interests have always opposed even the feeblest attempts by the government to reform systems. Adjournments are what actually earn money for many lawyers and hence any judicial reform process is going to face stiff resistance

Amit Vyas

While on the legislative front there has been some progress with legislation such as the new Companies Act and the Land Acquisition Act being enacted, the content of the legislation leaves much to be desired. The Companies Act for instance leaves room for significant del-egation of powers. Large parts of the legislation will now be dependent on the rules, which are yet to be framed. Further, there are certain contentious issues which already require clarification. For example a bare reading of the Companies Act would suggest that insider trad-ing norms apply to unlisted com-panies and even private compa-nies, which defies logic. The regulatory framework, in par-ticular from a securities market perspective, has been a mixed bag. SEBI has liberalized regula-tions to enable angel investors to invest in India and also sought to protect small investors from Ponzi schemes by tightening existing regulations. That said, SEBI has made mergers more difficult for listed companies and made the process significantly more time-consuming even for a simple fold-back. Similarly, while SEBI’s decision to not implement the safety-net measure (for now) is welcome, its intense scrutiny of pricing of public issues is at odds with a free pricing regime

Alka Bharucha

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October 2013

In India we tend to think that solu-tion to problems lies in making new laws. New laws bring more regula-tors and this implies more disputes and court proceedings resulting in slow economic progress

Lalit Bhasin

The enactment of important leg-islation such as the Companies Act and the clarification on permit-ting right of first refusal (ROFR), call and put options and honour-ing such clauses in shareholder

agreements is a very posit ive move. However, the fiasco on the ordinance relating to the right of convicted persons to stand for election, the passage of the Land Acquisition Bill, which will make it very difficult for corporates to acquire land for projects, and, worse, the inability of Vedanta to operate its multibillion-dollar invest-ment in Lanjigarh after obtaining all approvals because of objections by a few villages, show a lack of consistency in the implementation of reforms. Additionally, the huge political controversy over foreign direct investment in retail and the resultant lack of interest shown by large foreign retailers in India is on account of the intransigence of the government in introducing a lot of conditions and the virulent oppo-sition of a large number of politi-cal parties that are vehemently opposed to FDI in retail

Vijaya Sampath

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October 2013

What three legal problems are you currently most concerned about?

What can be done to overcome these problems?

The three greatest legal prob-lems are as follows: (a) The tug-of-war between the judiciary and the government, with the gov-ernment taking immediate steps to vitiate major decisions of the Supreme Court with retrospec-tive legislation such as on tax after the Vodafone judgment and on the right or inability of convicted persons to stand for election or hold office. This can be overcome if the government learns to respect the decisions of the Supreme Court and the court in turn does not cross the line into making executive and policy decisions. (b) The volume of regulatory litigation pending in various courts filed by, or against, the government. Early settlement of these disputes through a bind-ing conciliation mechanism will release the courts to take up other matters, provide relief to telecom companies in terms of certainty and provide impetus to the indus-try. (c) Too many levels of appeals that allow even the smallest matter to go up to the Supreme Court. Sometimes, government officers prefer to let matters go on appeal just to ensure that they are not accused of favouritism later. The number of appeals permitted in a case should be reduced

Vijaya Sampath

We have three main legal chal-lenges: First, regulators need to eliminate uncertainty and complex-ity surrounding tax policies. For example, with respect to remov-ing uncertainty, after the Supreme

Court’s verdict in the Vodafone dis-pute the government not only intro-duced retroactive legislation, but also introduced GAAR to override treaty benefits available to certain investors. With respect to eliminat-ing complexity, the government is still looking to introduce the new direct tax code and the goods and services tax. Second, regulators need to eliminate caps in certain investment sectors. For example, the government already permits 100% FDI in wholesale cash-and-carry business without any owner-ship or sourcing restrictions, and in single-brand retail. However, FDI in multi-brand retail is only permitted up to 51%. There is no credible logic to this. Finally, regulators need to implement and enforce stronger anti-corruption laws to ensure that multinational compa-nies are comfortable investing in India ethically and are not violating anti-corruption laws, such as the UK Bribery Act or the US Foreign Corrupt Practices Act

Haigreve Khaitan

The first has to be the insufficien-cies of the justice delivery mecha-nism. The second greatest legal problem is the inadequate frame-work for addressing and tackling corruption, including at the highest levels. We need an anti-corruption framework that exists not only on paper but can be enforced. The third biggest legal issue has to be the regressive tax laws that are not aligned with international tax laws. India has seen recently a handful of cases where such issues have been emphatically underscored. Having tax laws that do not conform to international tax principles hurts India’s prospects and while I am not propounding a tax haven kind of a regime here, it will be beneficial if we implement international tax conven-tions in letter and spirit

Amitabh Lal Das

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October 2013

(1) The Land Acquisition Act, while understandable from a social justice perspective, could make land acqui-sition extremely difficult. In addition to the increased cost (which may be justified) the requirement for obtain-ing consent from 80% of the affected families could be onerous and could significantly impact project imple-mentation. Moreover, the actual

implementation of the legislation will depend on the state govern-ments and could make investments in certain states more conducive than others. In the long term, lack of available land in such states could pose serious concerns. (2) Archaic and rigid labour laws continue to be a source of concern. Liberalizing labour laws, particularly in respect of layoffs and retrenchment, will provide a fillip to the manufactur-ing sector. (3) The new Companies Act has a number of glaring errors. Various provisions that appear to be applicable to private companies should be applicable only to listed companies or, at worst, unlisted public companies. Further, omission of expected changes such as facili-tating leveraged buyouts and minor-ity squeeze-out is disappointing. The recent controversy regarding the attempt to impose transfer pric-ing adjustment in the case of capital investments by non-resident holding companies into Indian subsidiaries is also source of genuine concern

Alka Bharucha

There is a litigation pandemic in India. No one is ready to go home after losing a case in the lower courts. Presently, there are more than 30 million pending cases in the hands of the judiciary. A committee supported by the Supreme Court “conservatively” pegged the number of pending cases by 2040 at 150

million. That is an unnerving number for investors looking to dip their toes in India. Secondly, there is cor-ruption. There is an old joke about it in India: A friend visits a young Indian politician’s sprawling house. “How did you afford this place?” says the friend. “See that flyover getting built over there?” says the politician, “It is meant to cost `2 bil-lion. But we will do it for `1 billion, so I kept the rest.” Five years later, the friend visits him again but in a palatial mansion. “And how did you afford this?” asks the friend. “Well,” says the politician, “see that flyover over there, which cost `2 billion?” “No”, says the friend. “Exactly,” says the politician. The thing is you can no longer joke about corruption in India. Thirdly, there is a climate of unpredictability in India. From the standpoint of a foreign investor, things like retrospective tax policies create incalculable risks. Business cannot flourish in an opaque and ambiguous environment

Rajiv Luthra

The three greatest legal prob-lems which I see are: (i) rampant corruption on the part of the regulators making a mockery of enforcement of laws; (ii) the recalci-trant approach on the part of many practising lawyers to getting faster resolution of cases; and (iii) poor infrastructure in courts and the lack of adequate courts, adequate judges and moreover specialists who can be judges for specific laws and who can decide matters with much better accuracy and within much shorter timeframes

Amit Vyas

We have too many laws that are obsolete, outdated, overlapping and ill-drafted. The first solution is to rationalize these laws. The second is to improve the dispute resolution process and the third is to improve legal infrastructure to match the needs of a large population

Lalit Bhasin

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October 2013

Leadership inspires confidence and that seems to be lacking all around. On the contrary, there seems to be a series of blunders. For example, the way in which the Companies Act is being imple-mented makes one tear one’s hair out. The government refusing to accept that it is subject to law and judicial decisions makes everyone extremely nervous. The govern-ment is by far the biggest litigant, both in terms of number of cases and the power it wields to affect the outcome. There seems to be a natural course of events for the government to appeal every deci-sion of every authority until the matter is decided by the Supreme Court. This applies to matters concerning even its own employ-ees, members of the armed forces and poor farmers, many of whom will be dead before the Supreme Court decides the case and don’t have the resources to fight the government. In a recent piece I advocated a system where the government cannot appeal a court decision more than once. The government should accept the decision of an authority con-firmed by an appellate body. This will reduce the number of cases in court significantly, allowing the legal system to function for the people. Another suggestion would be to have all cases between gov-ernment-owned entities decided by a separate system of arbitra-tion with no judicial intervention

Murali Neelakantan

The three legal problems are: (1) Retrospective tax law. Why? It has shaken the faith of the international community in India’s ability to gov-ern and administer in a fair manner and has created a perception of an unstable tax regime. Solution: Withdraw the retrospective aspects of the tax law and enact a new law or amendment which speci-fies the circumstances in which tax laws would be made retrospec-tive. (2) Time-consuming dispute resolution mechanisms. Alternative

dispute resolution is as ineffec-tive as the traditional court proc-ess. Consequently, parties are effectively left remediless in the context of a fast-moving commer-cial environment. Solution: Put in place a “commercial court”, with regular judges, where commercial disputes will be fast-tracked and rulings delivered in a six-month timeframe. Also, stop appointing retired government officials to vari-ous quasi-judicial tribunals. (3) The disincentive to violate the law or breach a contract is low. Typically, the Indian legal system shies away from imposing deterrent penalties on violators. Solution: Bring in a new law or amendment that allows courts to impose high penal costs or damages. Also increase penal-ties for violations of environmental law and other industrial laws. In addition, bring about amendments to the law that require a losing party in a commercial dispute to pay the other party’s actual legal costs. Lastly, make it expensive for a party obtaining an injunction, particularly against a development project, if that party loses the dispute

Anand Prasad

India can safely “boast” about a very robust rule of law, which works as a foundation of democratic polity. We have a very capable judiciary, but what we majorly lack is the right procedural machinery to deliver on business issues. The net result of

all this is that business issues get stuck in a judicial wrangle and take years before they can see end of the tunnel. This is the major issue. Two, a growing economy with a some-what sloppy regulatory framework has translated into a system where a large number of business issues, starting right from the inception stage, end up in courts. Public inter-est litigation, which is a newly found tool in support of judicial probity, has further augmented this trend. An already overburdened judicial sys-tem thus ends up saddling itself with more work causing further delays. Third, the lack of an effective arbitral system is yet another challenge. We have a comprehensive arbitral law. The mechanisms are what need a major revamp. India needs a struc-tural arbitral system which can pro-vide speedy and cost-efficient solu-tions to business disputes

Ajit Yadav

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October 2013

India should develop effec-tive bankruptcy laws to allow US Chapter 11-type restructuring to deal with the growing cases of burdening corporate debt. It should also develop fast-track mechanisms for dispute resolu-tion to enable the speedy resolu-tion of disputes in public-private partnerships covering all infra-structure projects

Haigreve Khaitan

Investor optimism could be sig-nificantly enhanced by an overhaul of the administrative machinery, where there is incentive for gov-ernment officials to take speedy decisions and be fair in their deci-sion making. To my mind, the solution could lie in a new statute being enacted that imposes high performance standards on offices and allows for removal of non-performing individuals

Anand Prasad

We need to address some of the challenges created by the legal framework. We can do this. Industry can get a major boost. We need strong and effective political leadership to drive the macroeconomic agenda so that the economy can be put back on track

Ajit Yadav

(a) We need consistency, uni-formity and fairness in interpreta-tion and application of law and regulation; (b) the government should stop indulging in wasteful schemes like the National Rural Employment Guarantee Act and concentrate on improving health, sanitation and infrastructure; and (c) we need to clamp down on corruption, the canker that is eat-ing the country

Vijaya Sampath

How would you describe India’s current position

in terms of legal and regulatory progress?

Investors’ worst fear is uncertainty that has no limits. India has rede-fined this lack of limits to an unprec-edented level in the last few years. There needs to be a clear policy, a roadmap for its implementation, and military-style execution. We are

constantly seeing directionless ad hoc measures. For example, there have been announcements about disinvestment of government stakes in large public sector undertakings but no one has been able to state clearly how and when it will be done. Shares of Bharat Aluminium and Hindustan Zinc were sold to the Vedanta Group on the basis of con-trolling interest being transferred at the buyer’s option, however the government reneged on this promise on the pretext that the agreement was illegal. Issues like this and the cancellation of telecom and mining licences without refund mean no foreign investor will have any confi-dence in the integrity of government. All the government needed to do was to act reasonably and think of the message it was giving out in each of these cases

Murali Neelakantan

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October 2013

India should: (a) properly dis-seminate laws which impact com-mon people so that fewer legal cases occur due to a lack of legal knowledge; (b) revolutionize the way judicial proceedings are con-ducted by making maximum use of technology (for evidence), fixing limits on adjournments, setting timeframes for decisions; (c) set up fast-track courts to deal with heinous crimes against women; (d) increase the compensation and perquisites of judges and make their life more comfortable to enable them to decide cases in a proper state of mind; (e) have specialists as judges for special laws so as to decide cases expe-ditiously; and (f) reform tax laws to avoid situations like Vodafone so that foreign investors and foreign entities do not feel threatened and do not operate in a state of fear

Amit Vyas

The focus should be on bring-ing about greater predictability and standardization in the regula-tory regime. You can’t have a situ-ation where one regulator says put and call options are kosher and another regulator professes a secret aversion to them. The central bank, the capital markets regulator, the foreign investment board and the concerned ministry should work in tandem and reach a consensus before announcing major policy decisions to ensure homogeneity across regulations. Equally, you can’t have a situation where one government permits foreign investment in a sector, but there is no certainty that the next government will continue to allow it. Policy-making cannot be capri-cious like a weather-vane

Rajiv LuthraLiberalizing foreign investment norms in the insurance sector is an imperative. The Indian insur-ance sector covers less than 10% of the population; the potential for growth is staggering. Parliament’s approval of the much delayed insurance bill enabling an increase in FDI in the insurance sector will provide Indian insurance compa-nies with the much required fund-ing to enable further growth. It will also send out the right signal to investors about India’s commit-ment to continued financial and economic reforms. Indian regula-tors, SEBI in particular, should ensure that the regulations framed are unambiguous. Heightened transparency in government deal-ings, including by broadening the ambit of the Right to Information Act as a precursor to eliminating corruption, is a prerequisite for regaining investor confidence

Alka Bharucha

Legal and regulatory steps will go a long way in increasing inves-tor optimism but I don’t think those will be the panacea for the country’s economic woes. There have to be adequate macro and micro eco-nomic mechanisms in place to pri-marily address the weak economic situation. From the perspective of the internet and the communications

industries, I believe some steps that the government should take are: (a) creating a conducive environment for e-commerce businesses through the right FDI policy and enabling framework for allied and associ-ated businesses such as electronic payments, movement of goods between states, etc.; (b) creating the right infrastructure and the right legal and regulatory framework that will remove any doubts about data safety and security in India for major players that may want to put up data centres; (c) improving cloud comput-ing services; (d) balancing national security and business interests in connection with internet governance or with local manufacturing of com-munications equipment

Amitabh Lal Das

We are already over-regulated. The emphasis needs to shift to self-regulation. There should be a clear-cut and well-defined pol-icy on FDI and clearances from authorities

Lalit Bhasin

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October 2013

What positive legal and regulatory changes have you seen

over the last 12 months?

Positives include the passage of the new Companies Act and deci-sions on enhancing foreign invest-ment limits in various sectors

Anand Prasad

India has recently enacted a brand new companies law through the Companies Act, 2013, which brings a lot of rationality to cor-porate law, provides answers to some governance issues and has brought in some concepts which will make corporate and business functioning more efficient

Ajit Yadav

The positive changes I see are reform of the entire Companies Act after a long wait of nearly 12 years; the damning and fear-less decisions against powerful politicians like Lalu Prasad Yadav in the fodder scam and against the rapists and murderers in the highly publicized Delhi rape case; and the Supreme Court’s deci-sion on the Novartis patent in the larger interests of poor cancer patients

Amit Vyas

The recent amendment to the Securities Contracts (Regulation) Act permitting options, ROFR, tag and drag along rights in shareholders’ agreements was the single most positive change over the last 12 months. Also the enactment of the new Companies Act was positive simply because it has been long pending. Its impact, though, will depend on its implementation. From a regu-latory perspective, the introduc-tion of angel funds and broaden-ing the scope of the Prevention of Fraudulent and Unfair Trade Practices Regulations were posi-tive steps

Alka Bharucha

Important legal milestones have come from the courts. The verdict on the disqualification of convicted members of parliament is a welcome one. Similarly, the voter’s right to

not choose any of the contesting candidates in an election by select-ing “none of the above” is extremely significant. The prosecution of a leading politician for corruption is yet another positive development. On the regulatory side, the willing-ness of ministers to talk about a better way forward on ticklish issues like tax has been an encouraging trend that needs to be further refined and rationalized. The suspension of preferential market access, too, should be commended, even though the reprieve has been temporary. Some headway has been made with regard to transfer pricing. The gov-ernment has not shut its door on FDI in e-commerce and there is still hope that something meaningful will come out of the deliberations

Amitabh Lal Das

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I am sure there must be a few but nothing comes to mind

Murali Neelakantan

T h e e v o l u t i o n o f t h e Competition Commission and the new Companies Act are positive developments

Lalit Bhasin

The only bright note in the past 12 months is the passing of the Companies Act. Most of the other steps have been riddled with con-ditions or doubts thus negating any positive perceptions about the whole matter

Vijaya Sampath

Regulators have increased FDI market caps, allowed investments under the automatic route, indi-cated that foreign banks will be allowed to acquire Indian banks, permitted (albeit with caveats) non-listed Indian companies to list abroad without prior or simultane-ous listing in India, and permitted non-resident investors to acquire shares under the FDI regime of a target directly from a recognized stock exchange. In each case, the regulators have facilitated the increase of flow of foreign funds into India. Regarding the cur-rent tax regime, the government has started providing clarity with respect to GAAR in addition to deferring the applicability of the rules until 1 April 2016. In both cases, this brings much needed relief and comfort to various for-eign investors

Haigreve Khaitan

Personally, I feel India needs for-eign investment in multi-brand retail and I see that as a positive. But why the government did not take its coalition partners into confidence before announcing it is beyond me. Despite the bearish reactions of pundits and market analysts to the government’s move to allow foreign

investment into aviation, it has spurred activity in the sector. This certainly counts as a positive for a sector in which the combined loss of the country’s airlines is around US$1.6 billion. I also welcome SEBI allowing pre-emption rights and options in shareholder agreements. The move is in line with the section in the new Companies Act which provides for free transferability of shares in a public company and recognizes restrictions on trans-fer in shareholder agreements. The likely genesis of this is in the Bombay High Court division bench decision in the Messer Holdings Limited case. It is clear now that the Companies Act will finally see the light of day after several near-misses. It has many positives: an enhanced corporate governance framework; a greater role for inde-pendent directors; newer concepts like the one-person company; and an emphasis on self-reporting and disclosures, to name just a few. But its implementation so far has been inelegant, to say the least

Rajiv Luthra

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October 2013

What is the solution to lifting India out of its slump

and keeping the economy buoyant?

India is not really in a slump. There are challenges, but equally true is that there is huge resil-ience and India has the strength to stand up to these situations and move forward once again. Its vast market potential eventually comes in handy

Ajit Yadav

Take politics out of economic schemes; do not resort to popu-list schemes at the cost of the economy; and have a clear-cut roadmap for the next three years

Lalit Bhasin

I can’t claim to have the solu-tion. I can only hope that there is a solution and that the right set of representatives in the coun-try is empowered by the people to think through, look for, find and work in all earnestness in implementing the solution. In a democracy, effective participa-tion is the key to success. To that extent, I am happy to do what-ever is required of me in thinking through, finding and implement-ing the solution

Amitabh Lal Das

Provide incentives and train-ing for sharp improvement in the manufacturing sector. This will create more jobs as well as make India more self-sufficient in capital, equipment and products, reducing our dependence on imports. Other solutions include rooting out corruption and voting out corrupt politicians as well as coming down heavily on tax eva-sion and ensuring that everyone pays their taxes honestly and that the money is used well, not in useless vote bank schemes

Vijaya Sampath

Providing a stable legislative and regulatory environment is a prereq-uisite for a vibrant economy. The immediate focus should be on the manufacturing sector. Growth of

India’s stagnant manufacturing sec-tor will be crucial in determining how quickly and to what extent the Indian economy recovers. A strong manufacturing sector will, in addition to improving India’s trade deficit, provide employment to millions. It will also have a positive trickledown effect on other sectors including the consumer sector. The two essen-tials for strengthening India’s manu-facturing sector are infrastructure development, particularly power and transportation, and relaxing India’s rigid labour laws. Further, the pro-posal to set up national investment and manufacturing zones should be implemented swiftly. The new Land Acquisition Act could prove to be a hurdle and coordination between the union and state governments on the implementation of the law is important

Alka Bharucha

Cover story


Economic revival

October 2013

India primarily needs to with-draw the retrospective aspects of its tax law; put in place a com-mercial court, with regular judges, where commercial disputes will be fast-tracked and rulings delivered quickly; and bring in a new law or amendment that allows courts to impose high penal costs and damages. Additionally, a renewed focus on infrastructure develop-ment and rural and urban poor development will help

Anand Prasad

The solution is clear: the peo-ple of India need to vote out the United Progressive Alliance gov-ernment, which has been most regressive, anti-people and dicta-torial and one of the biggest fail-ures in the history of independent India

Amit Vyas

Although there are external fac-tors that affect India Inc’s internal workings, its fundamentals are very strong. India has a population of over 1 billion with total consumer spend-ing expected to quadruple by 2020. In addition, India has a relatively young population and an educated and productive workforce with the median age of approximately 26.2 years. With such strong fundamen-tals, regulators must consistently improve clarity and reduce the com-plexity of investor favourable regula-tions, especially those related to tax and FDI, and enforce anti-corruption laws more stringently

Haigreve Khaitan

Infrastructure is the nervous system of an industrial economy. There is a serious need for better infrastructure. Small and medium businesses should be encouraged with cheaper finance. Regulations that affect the business environment should be standardized and made more industry-friendly. There should be a more meaningful partnership between the private and public sectors. Lastly, we must fight graft till jokes about it stop sounding like gallows humour

Rajiv Luthra

Government policy needs to be clear and all arms of the government need to make a concerted effort to listen to the people, frame policy and implement it vigorously. All one sees is

a very insecure group of people using force against the people. The use of police powers, investigative agen-cies illegally snooping on phone calls and online data, tax authorities mak-ing unreasonable and patently illegal demands in a coercive manner and the rise of many “business houses” of dubious provenance is what one sees as government. It almost seems like the government’s official policy is to create uncertainty when authorities like SEBI, the RBI and the enforce-ment directorate all behave in the same manner. No one seems to have any positive comments about what the government has done recently

Murali Neelakantan

The views expressed in this article are personal and do not reflect the official position of the contributors’ organizations.

Ten Legal Thought Leaders Talk Candidly Revitalizing-India

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