Anti-corruption legislation hitting investment in India

By Nusrat Hassan, DH Law Associates

Corruption has been and will continue to be a matter of debate from drawing rooms to the parliament of India, with promises of eradication. Indian companies have lost the luxury of being mere spectators since developed countries have not only legislated or strengthened their anti-corruption laws but also are increasingly aggressive in implementing them.

Today’s anti-corruption laws are extra-territorial in their jurisdiction. Companies face heavy penalties and criminal prosecution for bribing foreign officials outside their home country, with many laws extending to private individuals. This has had a grave impact on foreign investment in India, which in turn is hurting economic growth. Any growth rate below 8% will limit the fight against poverty.

Laws not working?

A question often raised is whether the anti-corruption laws in India are adequate. Several laws target corruption – e.g. the Indian Penal Code, 1860, Prevention of Corruption Act, 1988, and Prevention of Money Laundering Act, 2002 – and more legislation is at the bill stage. India also has several authorities to ensure that anti-corruption laws are respected, the most prominent being the Central Vigilance Commission and the Central Bureau of Investigation, as well as special courts to try corruption cases. Despite this, India scores 3.4 on Transparency International’s scale, which ranks countries from non-corrupt (10) to highly corrupt (0), making India a high-risk investment jurisdiction.

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Nusrat Hassan is the managing partner at DH Law Associates.

(D.H. Law Associates)


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