No doubt like a number of you, I read Kevin’s blog on his recent travels to India with interest. As a first generation British Indian I was as unfamiliar with India as Kevin was, until the age of 13 when I first visited India with my parents, and I too was overwhelmed with the poverty, the amount of people, the traffic, the colours, the spices, the lack of order (which as a Brit totally unnerved me!), yet amazed how with such craziness India still functioned and things got done.
In 1993 when I first started to work on India related insurance issues, doing business in India was not easy- lengthy delays in resolving litigation; lack of transparency in transactions; political factors deciding if a claim should be paid and a hostile financial/economic environment which did not encourage foreign investment.
However, this way of looking at India is no longer accurate and in the past few years, the Indian Government, regulators and judiciary have implemented legislation and/or guidelines to demonstrate that India is looking forward and will do what is required to make India an attractive place to do business.
In the past few years, India has reacted positively to the criticism levied at the lack of regulatory oversight in the financial markets which was largely driven by India’s own Enron (Satyam) and issued a revised Companies Act 2013 (here), which clarified that defence costs for directors and officers could be paid in advance; The Insolvency and Bankruptcy Code 2016 (here) which has combined the laws on insolvency, bankruptcy, and restructuring to address the delays and recovery of funds in corporate insolvencies; issued a circular on misselling by insurers and insurance intermediaries IRDAI (Registration of Corporate Agents) Regulation 2015 (here and here); implemented The Arbitration and Conciliation (Amendment) Act 2015 (here)) and The Commercial Courts, Commercial Division and Commercial Appellate Division of High Court Act, 2015 (here) to raise confidence in businesses that their specialized and complex litigation can be addressed fairly and timely; prioritized reducing the number of non-performing assets or loans that Indian companies have with the Indian banks (here); and in July 2016 issued a “Discussion Paper on Strengthening of the Regulatory Framework for Algorithmic Trading & Co-location” (here) where comments are being invited on high frequency trading with further legislation on this area due to become law before the end of 2016. The latter is quite timely given the recent drop in sterling in the Asian markets which may have been caused by an algorithm set to trade on negative Brexit reports. Commentary by CNBC/Bloomberg is that the Indian financial markets are unlikely to be affected significantly given the stricter regulation and recent efforts to improve liquidity – a welcome positive reinforcement that the financial and economic measures are working.
Doing business in India is becoming easier. Decision makers are willing to meet with you and discuss how you can work together, and with supportive legislation such as that identified above, India is embracing a new found optimism which will continue for a long while to come.