Economic revival

Cover story

Revitalizing India
Ten legal thought leaders talk candidly about Indias economic
woes and outline a series of bold measures to put the
shine back into the countrys economy

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 countrys shine.
It is perhaps no wonder then that India has slipped
October 2013

three places in the World Banks Doing Business report

to a rank of 134 out of 189 economies listed. Against this
gloomy backdrop, 10 of the countrys 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.
India Business Law Journal

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Economic revival

How would you describe Indias 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 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 particularly US economic issues. All
this has led to the rupee depreciating fast and has seen significant volatility making working
conditions tougher for business.
Liquidity has suffered and that has
impacted business significantly
Ajit Yadav, president & group
general counsel, Vedanta
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The Indian economy is going

through a phase of uncertainty.
Growth has slowed to the lowest 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, Id expect
the economy to have picked up
by Q3 next fiscal

The Indian economy has been in

low gear over the last three quarters: inflation has remained high
and growth has slackened from 8%
to about 5%. These and other factors 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 considerably with the new governor stepping
in to take charge of the Reserve
Bank of India (RBI)

Alka Bharucha, senior partner,

Bharucha & Partners

Rajiv Luthra, Managing Partner,

Luthra & Luthra

India Inc is experiencing growing

pains and is facing a set of challenges presently, but we remain
cautiously optimistic about the

economic climate in the next 12-24

months. The current economic climate is plagued with many uncertainties, such as chronic inflation,
slowing GDP growth, regulatory
uncertainties and complexities (especially 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 regulatory 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
October 2013

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Economic revival

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 signals 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 recovery path in a years time even if we
havent recovered fully. I must add
that so far as Indias economic climate
is concerned, failure is not an option
Amitabh Lal Das, senior legal director and general counsel, Yahoo!
India

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 follow the course of the prevailing
despondent sentiment
Murali Neelakantan, global
general counsel, Cipla
October 2013

The situation is grim and is not

likely to improve during the next
12 months
Lalit Bhasin, managing partner,
Bhasin & Co

The economic indicators are

showing signs of improvement
but the political situation seems
to have declined, so the signals are mixed since economics
and politics are intertwined. The
next 12 months will see a lot of
shrill noise on the political front
withgeneral elections round the
corner. Foreign investment interest will be low until the outcome
of the elections is clear

The Indian economy continues to grow very slowly across

sectors including across consumer 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

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

Sridharan

Amit Vyas, senior legal counsel, Procter & Gamble Hygiene

& Healthcare
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How would you describe Indias current position

in terms of legal and regulatory progress?

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

Unfortunately, there has been

very little progress for some
time now. The last set of regulations 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 couldnt get any worse we
saw retrospective amendments
to the Income Tax Act and the
cancellation of the 2G telecom
licences, the controversy surrounding mining leases, the government 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
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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 system was not in place to meet the
fast-growing needs of sunrise
industries. This resulted in several 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

Slow and confused! There

hasnt been any commendable
headway and we have seen sunshine 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 investments in those businesses

Ajit Yadav

Amitabh Lal Das

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 activities. Every step needs to be calculated. 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 uncertainty for foreign investors who
depend on double taxation avoidance agreements for their investments in India
Haigreve Khaitan
October 2013

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Economic revival

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 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 performed by the union government
(for the entire country) and state
gover nments (for their respective states). Moreover, consensus
October 2013

the case of simple approvals from

government departments takes
a mammoth amount of time. This
has led to the very rampant practice of speed money. Criminal
cases take not less than 10 years
to decide and civil cases take 15
years to decide. Thus in India justice is always denied since it is
always delayed. The only remedy
appears to be to spruce up, galvanize and electrify the legal system,
eliminate unnecessary appellate
provisions, stipulate fixed timeframes for judgments and ensure
stringent provisions to take lawyers 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

building becomes a major challenge

for coalition governments, which
are hamstrung by political disparities. Despite this, we have seen the
regulatory regime in India gradually
shed its protectionist trappings and
warm up to the agenda of business
facilitation. Indias legal and regulatory progress compares favourably
with other countries when it comes
to investor protection and trade liberalization, but unfavourably when
it comes to curbing graft and red
tape. We saw foreign direct investment (FDI) being permitted in multibrand 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 investment agreements. I feel that this
government is a late bloomer, so
there could be one last hurrah
before the elections next year

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 delegation 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 trading norms apply to unlisted companies and even private companies, which defies logic. The
regulatory framework, in particular from a securities market
perspective, has been a mixed
bag. SEBI has liberalized regulations 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
SEBIs 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

Rajiv Luthra

Alka Bharucha

Amit Vyas

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The enactment of important legislation such as the Companies

Act and the clarification on permitting right of first refusal (ROFR),
call and put options and honouring such clauses in shareholder

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Economic revival

agreements is a very positive

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 investment 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 opposition of a large number of political parties that are vehemently
opposed to FDI in retail

In India we tend to think that solution to problems lies in making new

laws. New laws bring more regulators and this implies more disputes
and court proceedings resulting in
slow economic progress

Vijaya Sampath

Lalit Bhasin

October 2013

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Economic revival

What three legal problems are you currently most concerned about?
What can be done to overcome these problems?

We have three main legal challenges: First, regulators need to

eliminate uncertainty and complexity surrounding tax policies. For
example, with respect to removing uncertainty, after the Supreme

October 2013

Courts verdict in the Vodafone dispute the government not only introduced retroactive legislation, but
also introduced GAAR to override
treaty benefits available to certain
investors. With respect to eliminating 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-andcarry business without any ownership 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 companies 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

The first has to be the insufficiencies of the justice delivery mechanism. The second greatest legal
problem is the inadequate framework 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
Indias prospects and while I am not
propounding a tax haven kind of a
regime here, it will be beneficial if we
implement international tax conventions in letter and spirit

The three greatest legal problems are as follows: (a) The tugof-war between the judiciary and
the government, with the government taking immediate steps
to vitiate major decisions of the
Supreme Court with retrospective 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 binding 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 industry. (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

Amitabh Lal Das

Vijaya Sampath

Haigreve Khaitan

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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

(1) The Land Acquisition Act, while

understandable from a social justice
perspective, could make land acquisition extremely difficult. In addition
to the increased cost (which may be
justified) the requirement for obtaining consent from 80% of the affected
families could be onerous and could
significantly impact project implementation. Moreover, the actual
October 2013

million. That is an unnerving number

for investors looking to dip their
toes in India.Secondly, there is corruption. There is an old joke about
it in India: A friend visits a young
Indian politicians 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 billion. 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

implementation of the legislation

will depend on the state governments 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 manufacturing 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 facilitating leveraged buyouts and minority squeeze-out is disappointing.
The recent controversy regarding
the attempt to impose transfer pricing adjustment in the case of capital
investments by non-resident holding
companies into Indian subsidiaries
is also source of genuine concern
Alka Bharucha

The three greatest legal problems which I see are: (i) rampant
corruption on the part of the
regulators making a mockery of
enforcement of laws; (ii) the recalcitrant approach on the part of many
practising lawyersto 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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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 implemented makes one tear ones hair
out. The government refusing to
accept that it is subject to law and
judicial decisions makes everyone
extremely nervous. The government 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 decision of every authority until the
matter is decided by the Supreme
Court. This applies to matters
concerning even its own employees, members of the armed
forces and poor farmers, many
of whom will be dead before the
Supreme Court decides the case
and dont 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 confirmed 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 government-owned entities decided
by a separate system of arbitration with no judicial intervention
Murali Neelakantan
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The three legal problems are: (1)

Retrospective tax law. Why? It has
shaken the faith of the international
community in Indias ability to govern 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 specifies the circumstances in which tax
laws would be made retrospective. (2) Time-consuming dispute
resolution mechanisms. Alternative

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

dispute resolution is as ineffective as the traditional court process. Consequently, parties are
effectively left remediless in the
context of a fast-moving commercial 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 various 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 penalties 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 partys 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

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 somewhat 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 interest litigation, which is a newly found
tool in support of judicial probity,
has further augmented this trend. An
already overburdened judicial system thus endsup 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 structural arbitral system which can provide speedy and cost-efficient solutions to business disputes
Ajit Yadav
October 2013

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Economic revival

How would you describe Indias current position

in terms of legal and regulatory progress?

Investors worst fear is uncertainty

that has no limits. India has redefined this lack of limits to an unprecedented 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 controlling interest being transferred
at the buyers 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 confidence 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

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

Murali Neelakantan

Ajit Yadav

Investor optimism could be significantly enhanced by an overhaul

of the administrative machinery,
where there is incentive for government officials to take speedy
decisions and be fair in their decision 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 nonperforming individuals

(a) We need consistency, uniformity and fairnessin interpretation 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 eating the country

India should develop effective 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 resolution to enable the speedy resolution of disputes in public-private
partnerships covering all infrastructure projects

Anand Prasad

Vijaya Sampath

Haigreve Khaitan

October 2013

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We are already over-regulated.

The emphasis needs to shift to
self-regulation. There should be
a clear-cut and well-defined policy on FDI and clearances from
authorities
Lalit Bhasin

Liberalizing foreign investment

norms in the insurance sector is
an imperative. The Indian insurance sector covers less than 10%
of the population; the potential for
growth is staggering. Parliaments
approval of the much delayed
insurance bill enabling an increase
in FDI in the insurance sector will
provide Indian insurance companies with the much required funding to enable further growth. It will
also send out the right signal to
investors about Indias commitment to continued financial and
economic reforms. Indian regulators, SEBI in particular, should
ensure that the regulations framed
are unambiguous. Heightened
transparency in government dealings, 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
October 2013

India should: (a) properly disseminate laws which impact common people so that fewer legal
cases occur due to a lack of legal
knowledge; (b) revolutionize the
way judicial proceedings are conducted 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
lawsso as to decide cases expeditiously; and (f) reform tax laws to
avoid situations like Vodafoneso
that foreign investors and foreign
entities do not feel threatened and
do not operate in a state of fear

The focus should be on bringing about greater predictability

and standardization in the regulatory regime.You cant have a situation 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 cant 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 capricious like a weather-vane

Amit Vyas

Rajiv Luthra

Legal and regulatory steps will

go a long way in increasing investor optimism but I dont think those
will be the panacea for the countrys
economic woes. There have to be
adequate macro and micro economic mechanisms in place to primarily 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 associated 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 computing services; (d) balancing national
security and business interests in
connection with internet governance
or with local manufacturing of communications equipment
Amitabh Lal Das
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Economic revival

What positive legal and regulatory changes have you seen

over the last 12 months?

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 regulatory perspective, the introduction of angel funds and broadening the scope of the Prevention
of Fraudulent and Unfair Trade
Practices Regulations were positive steps

Important legal milestones have

come from the courts. The verdict
on the disqualification of convicted
members of parliament is a welcome
one. Similarly, the voters right to

not choose any of the contesting

candidates in an election by selecting 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 willingness 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 government 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

Alka Bharucha

Positives include the passage of

the new Companies Act and decisions on enhancing foreign investment limits in various sectors

India has recently enacted a

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

The positive changes I see are

reform of the entire Companies
Act after a long wait of nearly
12 years; the damning and fearless 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 Courts decision on the Novartis patent in the
larger interests of poor cancer
patients

Anand Prasad

Ajit Yadav

Amit Vyas

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Economic revival

Personally, I feel India needs foreign 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
governments 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 countrys 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 transfer 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 nearmisses. It has many positives: an
enhanced corporate governance
framework; a greater role for independent 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

Regulators have increased FDI

market caps, allowed investments
under the automatic route, indicated that foreign banks will be
allowed to acquire Indian banks,
permitted (albeit with caveats)
non-listed Indian companies to list
abroad without prior or simultaneous 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 current 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 foreign investors
Haigreve Khaitan

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 conditions or doubts thus negating
any positive perceptions about
the whole matter

The evolution of the

Competition Commission and the
new Companies Act are positive
developments

I am sure there must be a few

but nothing comes to mind

Vijaya Sampath

Lalit Bhasin

Murali Neelakantan

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Economic revival

What is the solution to lifting India out of its slump

and keeping the economy buoyant?

Providing a stable legislative and

regulatory environment is a prerequisite for a vibrant economy. The
immediate focus should be on the
manufacturing sector. Growth of

Indias stagnant manufacturing sector will be crucial in determining

how quickly and to what extent the
Indian economy recovers. A strong
manufacturing sector will, in addition
to improving Indias trade deficit,
provide employment to millions. It
will also have a positive trickledown
effect on other sectors including the
consumer sector. The two essentials for strengthening Indias manufacturing sector are infrastructure
development, particularly power and
transportation, and relaxing Indias
rigid labour laws. Further, the proposal 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

Provide incentives and training 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 evasion and ensuring that everyone
pays their taxes honestly and that
the money is used well, not in
useless vote bank schemes
Vijaya Sampath

I cant claim to have the solution. I can only hope that there is
a solution and that the right set
of representatives in the country is empowered by the people
to think through, look for, find
and work in all earnestness in
implementing the solution. In a
democracy, effective participation is the key to success. To that
extent, I am happy to do whatever is required of me in thinking
through, finding and implementing the solution

India is not really in a slump.

There are challenges, but equally
true is that there is huge resilience and India has the strength
to stand up to these situations
and move forward once again. Its
vast market potential eventually
comes in handy

Take politics out of economic

schemes; do not resort to populist schemes at the cost of the
economy; and have a clear-cut
roadmap for the next three years

Amitabh Lal Das

Ajit Yadav

Lalit Bhasin

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Economic revival

Although there are external factors that affect India Incs internal
workings, its fundamentals are very
strong. India has a population of over
1 billion with total consumer spending 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 fundamentals, regulators must consistently
improve clarity and reduce the complexity of investor favourable regulations, especially those related to tax
and FDI, and enforce anti-corruption
laws more stringently
Haigreve Khaitan

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 agencies illegally snooping on phone calls
and online data, tax authorities making 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 governments official policy is
to create uncertainty when authorities
like SEBI, the RBI and the enforcement directorate all behave in the
same manner. No one seems to have
any positive comments about what
the government has done recently

India primarily needs to withdraw the retrospective aspects

of its tax law; put in place a commercial 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 development and rural and urban poor
development will help
Anand Prasad

Murali Neelakantan

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

The solution is clear: the people of India need to vote out the
United Progressive Alliance government, which has been most
regressive, anti-people and dictatorial and one of the biggest failures in the history of independent
India

Rajiv Luthra

Amit Vyas

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