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India’s desire to strengthen trade ties with its Asian neighbours may bear fruit as investment channels open up, but legal and cultural hurdles need to be cleared

Vandana Chatlani reports

“MY GOVERNMENT has moved with a great sense of priority and speed to turn our Look East Policy into [an] Act East Policy.” These words from Indian prime minister Narendra Modi, spoken in November 2014 at the East Asia Summit in Myanmar, marked the beginning of a renewed interest in increasing India’s economic and political ties with its Asian neighbours.

Nowhere is this more apparent than in India’s aggressive push for greater cooperation with the Association of Southeast Asian Nations (ASEAN) bloc. In February, India announced that it would extend a US$1 billion line of credit to promote projects that support physical and digital connectivity between India and ASEAN. “We are also at the final stages of a Motor Vehicles Agreement between India, Myanmar and Thailand which will address soft connectivity issues,” said Anil Wadhwa, secretary (East) for the Ministry of External Affairs (MEA), at Delhi Dialogue VIII, a forum to discuss political, economic and socio-cultural issues between ASEAN and India.

ASEAN-India agreements on trade in services and investment came into force on 1 July 2015, building on the free trade agreement signed in 2010. The new agreements will ease restrictions on the movement of professionals in a range of service industries and provide new investment opportunities.


Asia’s geographical proximity and diverse industry offerings have attracted Indian companies for years (see Who’s where? below). Large conglomerates have spread their wings across the continent: the Tata Group has more than 15 operating companies and employs over 7,000 people in countries such as Singapore, Bangladesh, Sri Lanka and Bhutan; Aditya Birla runs chemical operations in Thailand and the Philippines, and produces carbon black in China and South Korea, and cement in Bangladesh and Sri Lanka; and Tech Mahindra has offices in Hong Kong, Indonesia, Japan, Malaysia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

Companies around Asia have been equally bullish about India; major Korean conglomerates such as Samsung, Hyundai Motors, Posco and LG have made significant investments into India, estimated at over US$3 billion, according to the MEA, while Indian investments in South Korea total more than US$2 billion.

Malaysian investment in India has focused on telecommunications, power, oil and roads through companies such as Maxis Communications, Axiata, Khazanah and AirAsia, while Indian business has moved to Malaysia via players such as Wipro, 3i Infotech, Tata Consultancy Services, Larsen & Toubro, Ranbaxy Laboratories and Taj Hotels.

India and Japan share a strong economic relationship. According to MEA statistics, 1,229 Japanese companies were registered in India in October 2015, 20 more than in December of the previous year. Most of these companies were in the automobile, electrical equipment, telecommunications, chemical and pharmaceutical sectors. Among the Indian companies active in Japan are Amtek Auto, Apollo Tyres, Hindustan Copper, Reliance Communications, Indian Oil, Suzlon Energy, Educomp Solutions, TVS Motors and Lupin Pharmaceuticals.

Singapore, a magnet for financing and fundraising, is a centre for capital markets deals by Indian companies, including US and Indian IPOs, qualified institutional placements, and high-yield and investment-grade bond offerings. “The most significant India-related deals have been the set-up of private equity funds in Singapore, especially credit and special situations funds,” says Amit Dhume, a partner at Colin Ng & Partners.

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Lawyers around the region offer tips for success

Conduct detailed due diligence before entering the [Thai] market to check regulations in your sector and research the differing types of legal entities … to determine which one will best suit your operational needs. Contact the Board of Investment to see if any investment privileges apply to your business. Ryan Crowley, foreign services manager, Dharmniti Law Offices, Bangkok.

Where Singapore is used as the base for various Southeast Asia investments, it is important that proper due diligence be undertaken and tax issues and repatriation of profits issues, etc., be analysed in advance in all countries. Amit Dhume, partner, Colin Ng & Partners, Singapore.

Take comprehensive minutes when dealing with Chinese counterparties, highlighting open points and seek to narrow future discussions to open points only. Work with bilingual contracts in real time if possible. Analyse who is the real decision maker within the Chinese counterparty; Chinese companies usually have one big decision maker. Mark Schaub, international partner, King & Wood Mallesons, Shanghai.

China’s intellectual property regulations are based on a “first-to-file” system, except in cases of “well-known” trademarks. Foreign IP owners should file and register their assets in China to fend off counterfeiters or plagiarism, even if they do not have immediate plans to enter the China market. Ming Ye, partner, Shanghai Keenmore Law Office, Shanghai.

Understanding Chinese business culture is required to avoid common mistakes such as a direct conflict between companies through a lawyer stand-off. This would only worsen the conflict. Friendly negotiations through mediation or arbitration are the main conflict resolution solutions in China. Lin Zhong, partner, Chen & Co, Shanghai.

As Indonesia consists of hundreds of native ethnic groups, recognizing and studying the culture and practical habits of the community surrounding the Indian investors’ businesses is advisable to minimize the risk of conflict. Al Hakim Hanafiah, partner, Hanafiah Ponggawa & Partners, Jakarta.

There are a number of other professions that are similar to an attorney [in South Korea]. They include a certified public accountant, a licensed tax accountant, a judicial scrivener and a patent attorney. It is important for in-house lawyers to have a pool of different experts in advance so that they may receive assistance from proper experts when needed. Matt Mok, foreign attorney, Nexus Law Group, Seoul.

In addition to typical financial diligence, lawyers should conduct thorough due diligence into potential joint venture partners or investment targets to ensure that they are not acquiring a potential problem, particularly from an anti-bribery and regulatory perspective. Eric Deltour, India-focused partner, Dechert, Brussels/Hong Kong.

To better understand Taiwan law, foreign in-house lawyers should not rely only on the text of statutes and regulations. It is important not to overlook how the regulator enforces the law and how the court interprets it. Brian Hsieh, associate partner, Formosa Transnational, Taipei.

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