The key players in India’s growth story have returned to the table. The game is on, even though the level of play has yet to match the dizzy heights of years gone by
As this issue of India Business Law Journal goes to press, news that the worst may be over for the Indian economy is making headlines. Foreign direct investment is beginning to recover, consumer spending is up and major stock indexes are surging – prompting talk of a more robust recovery than earlier forecast.
As highlighted in our timely Cover story (Keeping a tight grip, page 23), venture capital and private equity investors are getting back to business after more than a year on the sidelines. For now they are more concerned with due diligence than they are with signing cheques, but as Tihir Sarkar of Cleary Gottlieb puts it, “India is truly an emerging destination for investors from rather jaded investor jurisdictions.”
The renaissance in investor activity is occurring in spite of often-mentioned concerns thrown up by controversial court rulings such as the Vodafone case and regulatory uncertainties including the country’s proposed tax reforms. Does this mean that law firms advising investors, many of whom are still hesitant to take the plunge, are confident that New Delhi will get it right? India’s new law minister certainly believes so.
In a wide-ranging and exclusive interview (page 29), M Veerappa Moily reveals his plans to revitalize the country’s legal system and explains why he believes the entry of foreign law firms will become a “non-issue”. Moily “would like to see capacity built up within the country so that [Indian] lawyers and Indian law firms can compete with the entire world”. Having achieved something similar with Bangalore’s information technology sector, he is supremely confident of doing it again in the legal arena.
“Clearance of arrears is topmost on my agenda,” says Moily confidently. He backs up this lofty ambition with specifics: making arbitration easier, setting up village courts, and a “roadmap for judicial reform”.
With entry of foreign law firms set to become a “non-issue”, one of this month’s Spotlight features (Racing for a place in the sun, page 33) reveals that law firms in offshore jurisdictions are increasingly chasing India-related business. This underlines the practical reality, summed up by Amir Singh Pasrich of International Law Affiliates, that “the incorporation of a company in an offshore jurisdiction does not require a shroud of secrecy or cloak-and-dagger treatment”.
Gone also – albeit not as fast as some would like – is the shroud of secrecy surrounding fees paid for legal services. In this month’s Intelligence report (page 47), India Business Law Journal presents its 2009 survey of law firm billing rates. Our coverage reveals that Indian firms are increasingly willing to disclose their fees. Average rates have fallen slightly since last year, but there were also some surprising increases, most notably at the senior associate level, where hourly fees have risen by more than 8%. The survey highlights pressure from clients for a move away from “archaic” hourly billing mechanisms. One corporate counsel suggests that the financial crisis has given Indian law firms an opportunity to “distinguish themselves with a value for money approach by billing clients for work done”. He predicts that “the ones who excel in this regard will be the leading law firms of the future”.
India’s courts also need a powerful leader – one that “commands public confidence as never before”. So argues senior counsel Harish Salve in this month’s Vantage point (page 22). His words deserve careful scrutiny. Salve laments recent incidents in which the integrity of Supreme Court judges has been called into question and argues that the court must distance itself from the appointment of judges. “We need a credible judicial appointments commission, with representation from all sections of society, to undertake this onerous task,” he says.
Representation and participation by all stakeholders will be crucial to the next stage of India’s economic growth. With this in mind, India Business Law Journal has launched an initiative to provide free copies of the magazine to full-time law students in India (News, page 12). Shamnad Basheer, a professor at the National University of Juridical Sciences in Kolkata, describes the move as “revolutionary”. Vaishali Kant, a student at the National Law School of India University in Bangalore, is certain that it will help her “in understanding corporate practices and managerial difficulties” related to the legal profession.
The global downturn has sent companies scrambling in different directions, with many still refraining from making significant investment decisions. French company Vétoquinol is clearly made of sterner stuff. As Rahul Mahajan of Wakhariya & Wakhariya describes in this month’s What’s the deal? (page 43), it has bucked the market by acquiring the animal health division of Wockhardt.
The deal involved complex taxation, intellectual property and licensing issues. Mahajan’s sharp analysis provides invaluable insights into how it was successfully brought to fruition. Deals like this – happening as they are at a time of global hand wringing and despair – bear testament to the fundamental attractiveness of India’s economy. The pace of activity may still be slower than many would like, but as Anthony Root, a partner at Millbank Tweed, declares: “In the medium to long term, India is an extraordinary country with extraordinary opportunities.”
