Should We Invest in India?
Vineet Aneja divides his time between managing his practice as well as steering the overall management of his firm.
“With the nature of corporate practice being sector neutral, my team and I are regularly called upon to address matters relating to corporate law by sector specialist teams.”
Having said that, leading a firm is a full-time job: “The bulk of my time is spent on forging strategic partnerships with global firms, considering business expansion and growth, managing client relationships, laying the roadmap for the firm, staffing needs, being available for my lawyers and clients whenever they need me and at times taking certain hard decisions.”
Regardless of how pressured Vineet may be, he still has taken the time to share interesting insights into the investment scope in India. We ask: should we invest in India? Vineet shares his thoughts with us below.
When working with foreign organisations, what is a common misconception when it comes to working in India?
There is a very strong perception that statutory approvals and processes take a long time in India and that the system inherently slows down the entire process of setting up a business or doing an acquisition. In our experience, the foreign clients are also very apprehensive about the general compliance burden and more specifically labour and employment, as well as corporate compliances that a company is expected to adhere to.
While it is true that foreign organisations do find the regulatory environment in India to be one of the most difficult to navigate, in my view, this is partly because of the certain inherent challenges in the system and partly due to the fact that the foreign companies often tend to compare it to their jurisdictions, where things are largely streamlined.
I won’t deny that India is a complex jurisdiction with overlapping laws due to its federal structure, however, the right kind of legal adviser can help the companies tide over the systemic inefficiencies. The initial process of doing business in India requires patience and once the business is set up, India is a great place to do business.
How are you hoping the M&A sphere will change in 2018 which will shape the country’s future in investment?
The M&A opportunities in 2018 would remain robust riding on the back of a large number of stressed assets with several big ticket projects referred to the NCLT (National Company Law Tribunal) under the Insolvency and Bankruptcy Code, which are likely to see change in promoters. Given that these stressed assets would be on offer at tempting valuations, an uptick in the M&A deal activity is expected. Additionally, this government’s continued thrust on economic, regulatory and fiscal reforms with the abolition of FIPB, liberalisation of FDI in single brand retail, pharma and real estate services, introduction of Insolvency and Bankruptcy Code and GST are likely to catalyse more M&A deals. The government’s efforts to improve the overall business ecosystem will also go a long way in incentivising investments in India.
How do you ensure that legal requirements are met, alongside the commercial needs?
Not meeting legal requirements sufficiently for commercial considerations is never an option. Therefore, we as commercial lawyers have to constantly strive to maintain that delicate balance between legal compliance and commercial prudence. While advising on any transaction, we ensure that the commercial structure falls within the four corners of the applicable legal framework and that the commercial interests of the clients are largely protected through contractual covenants. We offer our clients holistic advice and ensure that we diligently evaluate and foresee issues under various laws and regulations so that clients’ commercial needs are addressed in complete compliance with the applicable laws.
What challenges do you often face when trying to accommodate both legal and commercial demands and how do you overcome this?
The key challenge that we face is when at times clients approach a structure initially from a financial and commercial perspective and later assess its legal validity. In our experience it is always advisable to have the lawyers and financial advisers on board simultaneously so that a legally viable structure could be achieved at the very outset.
In terms of accommodating legal and commercial demands, I would say that in this day and age clients do not need to be told the law because they know it already. They need commercially sound legal advice that fits into their vision for their business. It is imperative for us to understand the nuances and challenges of the client’s business so that the advice offered is so done with the background of the business environment that the client operates in. The role of a legal adviser is no more that of an external adviser, sermonising on law, but that of a business partner who walks with the client, toe to toe, to help it achieve harmony between law and business goals in the best possible manner.
You have been awarded for your corporate advisory expertise; can you share some expertise that you think accounts towards this award?
Well, it is always good to be recognised for one’s professional expertise. If I look back I would say that I have been fortunate to witness the evolution of laws impacting trade, business and investments in India. In fact, my career in law has coincided with major developments in commercial laws that India has seen, be it economic liberalisation in 1991; introduction of Foreign Exchange Management Act in 1999; industrial delicensing; de-regulation of the industrial sector; public sector policy; abolition of MRTP Act; introduction of the new Companies Act in 2013; the passage of Real Estate Regulation Act 2016, and more. Having advised the clients from a period that saw volatility in regulations, barriers in trade, heavy foreign exchange regulation, to now, when the focus is to improve investor sentiment and remove business barriers, I have come a long way and have witnessed the changing needs and demands of the clients. My experience has given me a deep and invaluable insight into the philosophical underpinnings of each business regulation which has helped me in advising my clients in a holistic manner, that has delivered them the desired results; because the ultimate litmus test of a lawyer is the result he can achieve for his clients. An important factor in advising a client is to understand the business of the client and its objectives.
Is there anything else you would like to add?
India is witnessing another surge of change in laws, regulations and policies with the advent of Insolvency and Bankruptcy Code, GST, development of bond market, availability of long-term funding, increase in government spending and launch of large infrastructure projects. The government is committed on hard selling India as a viable investment destination through a slew of trade and economic measures to attract foreign investment. This is an opportune time for companies to develop their outlook on India, but at the same time this is also the time of evolving regulations with newer notifications being issued at frequent intervals, creating an air of confusion and uncertainty; therefore, it is in order for foreign companies to commission experienced legal, financial and tax advisers well in advance, to guide them through the Indian regulatory landscape.
Vineet Aneja
Managing Partner, Clasis Law
Email ID: vineet.aneja@clasislaw.com
M: +91-9810405782 (India)
Vineet Aneja is the Managing Partner and Head of the Corporate Practice at Clasis Law. He is also a Founding Partner of the firm. Clasis Law is a full service Indian law firm with offices in New Delhi and Mumbai that provides advice on matters relating to Indian law and jurisdiction. On account of the confidence built with the clients, clients have also entrusted them with transactions relating to other jurisdictions including UAE, Finland, Nepal, Bangladesh, Pakistan, UK, USA.
Expertise within the firm spans a range of practice areas including corporate and commercial, aviation & aerospace, banking & finance, insurance, retail, hospitality, infrastructure, real estate, intellectual property, employment law, competition, compliance & auditing, shipping & international trade law, TMT, litigation & dispute resolution. The firm acts for a diverse Indian and international client base across a number of sectors.
