In the third part of ALB’s web-only series on what the Year of the Monkey will look like for Asia’s key markets, we speak to Pranav Srivastava, Senior Associate at Phoenix Legal on what 2016 holds for India.
Read the first part of the series on Hong Kong here, and the second part on Singapore here.
ALB: What are some of the most important legal and regulatory developments you expect to see in India in 2016?
Srivastava: Judicial Reforms – we expect the Government / administrative machinery of Indian courts to introduce reforms to fast-track judicial proceedings. This would be continuing the developments in year 2015 where the Government amended the Indian arbitration legislation and also brought into force a legislation for setting up separate commercial courts. The government seems to have understood the importance of speedy dispute resolution mechanism as being a pre-requisite for improving the business/ investment environment. The government has already commenced the review of the Specific Relief Act which, amongst others, deals with specific performance of contracts.
Changes in foreign investment/ FDI regime – the Government may, like in year 2015, further liberalize rules regulating foreign investment/ FDI regime.
Improving ease of doing business – we expect the Government to do away with several archaic regulatory requirements in India (such as requirements for prior approvals, consents, licenses, etc.) to promote the ease of doing business. This is in line with the government’s pro-business initiatives like “start-up India” and “make in India”. On the agenda may also be further liberalizing labour/employment laws to allow investors to hire and fire employees with better flexibility.
Improving the tax regime – the long-pending Goods and Services Tax bill may be passed by the Parliament in year 2016 and other measures for making the tax regime investor friendly may be adopted by the Government.
Real Estate (Development and Regulation) Bill – This bill may be passed in 2016 and is aimed at protecting home buyers and help boost investments in the real estate industry.
Bankruptcy Bill – This bill may be passed in 2016 and will consolidate all existing laws on insolvency. This is envisaged to quicken the winding up process of defunct companies and provide easier exit route for investors.
Opening of legal market – lastly, we expect to see some movement towards the liberalization of legal market in India. The current Government, unlike the previous Governments seems more positive towards opening of legal market.
ALB: From an investors’ perspective, what were some of the trends you saw in 2015? Do you expect these to continue in 2016?
Srivastava: Reduction in PE/venture capital interest in start-ups – from investor’s perspective we saw a fall in/ drop in interest by PE/venture capital funds in start-ups towards the end of year 2015. This is likely to continue in the year 2016.
Strategic investment activity – The strategic investors did not show significant interest in investing in India in the year 2015 despite Government’s efforts to boost FDI. This however, is likely to change in the year 2016 and we expect to see more strategic investment activity.
Restructuring and reorganization of business – Given the high level of debt accumulated by corporates and RBI tightening the screws around banks’ non-performing assets, the year saw sale of non-strategic assets by several large corporates to reduce their debt.
Streamlining and relaxation of regulations relating to roads – This resulted in greater construction activity and higher investor appetite for investments in road assets.
ALB: What were some of the trends when it came to the kinds of work your firm did in 2015?
Srivastava: Significant increase in the disputes work – We significantly strengthened our disputes practice and the volume of disputes handled by the firm at least quadrupled in the year 2015. The disputes handled by the firm include both court litigation work and domestic and international arbitrations.
ALB: How do you see the legal industry in India evolving in 2016?
Srivastava: New and innovative fee structures – With clients becoming increasingly conscious of legal costs, it is time for firms to device new and innovative fee structures which meet the client requirements and on the same hand enable firms to sustain their cost structures and profitability.
ALB: What kinds of advice are you giving clients about the coming year?
Srivastava: Arbitrate in India – With the amended arbitration legislation, we are advising clients to consider arbitrating their disputes in India. We also expect Indian arbitration to be a potential opportunity for Indian law firms to look at.
