A Candid Conversation to Bolster India's Business Environment

NEW DELHI, India, March 23, 2015 /PRNewswire-iReach/ -- "Chalein Saath Saath: Forward Together We Go" is the expression jointly crafted by India's Prime Minister, Narendra Modi, and U.S. President, Barack Obama, as the defining mantra for the U.S.-India relationship – and was principal theme guiding a candid discussion with leading lawyers and industry leaders in New Delhi on 27th January 2015,

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The event, "Forward Together We Go – Chalein Saath Saath: Shaping Policy and Sharing Best Practices for a Shared Future" was presented by leading law firm Dechert LLP and Thomson Reuters, with the support of the American Bar Association (ABA) India Committee and the U.S.-India Business Council. A panel of distinguished business leaders and experienced legal counsel explored the challenges facing corporates and entrepreneurs in India and proposed ways to enhance the regulatory and policy frameworks to allow better business practices, so that India and the U.S. may realize the full potential of their economic relationship. The results of a survey entitled "Cross-Border Deals and the Indian Entrepreneurial Ecosystem", completed by the ABA India Committee, comprising over 300 lawyers from both the U.S. and India, were shared as a roadmap for discussion.

Survey respondents reported their view that the biggest challenge that India's legal and regulatory framework imposes onto the Indian entrepreneurial ecosystem is the reactionary approach to legislation demonstrated by the regulators. The panelists identified the historical underpinnings behind this challenge – including legacies of bureaucracy and socialism inherited by independent India and a pervasive business culture of corruption. The panelists concurred in the view that the pragmatic business approach to law and regulation demonstrated by the Modi administration renders policy paralysis a trait of the past and portends a more stable business environment for industry and entrepreneurs.

A majority of the ABA India Committee lawyers estimated that somewhere between USD $100 to $500 million or over USD $1 billion in foreign investment had likely been foregone in lost opportunities over the past few years as a result of tax ambiguity and cumbersome and unpredictable laws. Rahul Bhasin of Baring Private Equity emphasized the need for enforceability of corporate laws mandating accountability for breach of fiduciary duty, to reduce barriers to entry for budding entrepreneurs.

Fifty percent of survey respondents reported witnessing an increased level of new company incorporations outside of India and the inversion of existing Indian companies to jurisdictions outside of India. A desire to mitigate taxation, attract financing and operate amidst more business friendly corporate laws were cited as the top reasons for this emerging trend. Pratibha Jain of Nishith Desai Associates emphasized the importance of bringing retail investors into the Indian domestic capital markets, to curtail this trend.

Survey respondents ranked a desire for simplification of tax rules, permanent removal of retrospective taxation and fast tracking the formation and winding up of companies as some of the most impactful amendments that the Indian government can introduce to stimulate the business environment. Manoj Kohli, Managing Director, Bharti Enterprises, confirmed the proactive approach being undertaken by the Modi administration to address the recommendations made by the Task Force of Ease of Doing Business in the Confederation of Indian Industry (CII) and praised recent transparency measures. Shankar Narayanan of The Carlyle Group lauded the majority mandate given to the Modi administration as one that will enable reforms to an extent not previously observed in India.

The panelists proposed several reforms to facilitate ease of doing business in India. Suggested reforms included:

• Clubbing of the Department of Industrial Policy and Promotion (DIPP) and the Foreign Investment Promotion Board (FIPB) to streamline ease of approvals for foreign investments;
• Capital convertibility to facilitate inbound as well as outbound remittance of funds for investment without excessive regulation under the Foreign Exchange Management Act (FEMA);
• An enhanced ability to attract foreign investment in infrastructure, energy, healthcare and education;
• Use of technology to hasten judicial resolution of disputes in a transparent and equitable fashion; and
• Opening up of the Indian legal market to foreign law firms, to strengthen the cross-border knowledge and depth in expertise required for India to leap to the next level of global growth.

The discussion ended on a high note, with panelists praising the new administration for championing capitalism and anticipating significant progress in the upcoming years.

"We are looking ahead at a future that really envisions the U.S. and India coming closer together, bridging the gap. The room for growth is tremendous. As lawyers and business leaders, we all play a very important role in pushing the agenda forward and helping the leaders of our countries see their visions implemented in action. It is important that we are more candid and more collaborative than ever before in our discussions. Best practices have to be shared – and the American Bar Association is there to help," emphasized the event Organizer and Moderator, Ms. Asma Chandani, Chair of the ABA India Policy and Rule of Law Committees, and a leading U.S. private equity and corporate lawyer, representing Dechert LLP in India.

© 2015. DaWall Street. All Rights Reserved.

Panelists depicted in picture, from left to right: (1) Manoj Kohli, Managing Director, Bharti Enterprises, (2) Rahul Bhasin, Managing Partner, Baring Private Equity Partners, (3) Percival Billimoria, Partner, AZB & Partners, (4) Asma Chandani, Chair ABA India Policy & Rule of Law Committees, Dechert LLP, (5) Shankar Narayanan, Managing Director, The Carlyle Group, (6) Pratibha Jain, Partner, Nishith Desai Associates, (7) Rajat Mukherjee, Partner, Khaitan & Co. and (8) Arvind Pachhapur, India Country Head, Thomson Reuters.

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