23 ASIAN LEGAL BUSINESS – MARCH 2024 WWW.LEGALBUSINESSONLINE.COM CROSS-BORDER INVESTMENT “Also, a more transparent and streamlined registration process for foreign lawyers and law firms could encourage more foreign entities to consider practicing in India. Lastly, fostering a more collaborative environment through the establishment of official platforms or forums for interaction between Indian and foreign law firms could facilitate better understanding and cooperation,” she adds. Pandey echoes these thoughts, adding that currently, only a representative office may be viable for a Japanese firm in India. “With the liberalisation of India’s legal sector, it is likely that Japanese law firms may consider entering the Indian legal market. However, as of now, the physical presence of Japanese law firms on Indian soil is likely limited to having a representative office of such Japanese law firms in India. At the same time, Japanese law firms, akin to their counterparts in UK and U.S. would await further clarity on the policies and laws pertaining to entry of foreign lawyers in India. Therefore, further clarity is awaited in relation to the recent reforms enabling entry of foreign lawyers in India,” Pandey explains. There are also some who are concerned about the level of competition in the Indian law firm sector that may come from liberalisation of the market. “Of course, we would love to see the sector grow and evolve as long as the growth is symbiotic for Indian lawyers and law firms as well, who should be allowed a level playing field with their foreign counterparts in terms of relaxing some restrictions. If India is to continue to grow as a global superpower, it will need to balance the interest of domestic lawyers and law firms along with welcoming our foreign counterparts through the liberalisation of the legal sector,” SNG’s Gupta explains. But what about the other direction? What are Indian law firms’ plans for the Japanese market? Paul says Japan is a fertile market for Indian law firms looking to expand their international footprints. “Japan’s economic landscape is characterised by a competitive and stable business environment that is increasingly adopting a global outlook. This, combined with Japan’s position as a prominent player in sectors such as robotics, factory automation, and semiconductors, underscores the nation’s commitment to innovation and technology,” Paul explains. “Given that there is a vast potential to unearth by establishing a presence in Japan, Indian law firms are increasingly considering the regulatory landscape and exploring avenues for entry into the Japanese market, primarily through strategic collaborations and reciprocal arrangements with established law firms in Japan,” she adds. CHALLENGES IN THE FUTURE While economic growth is strong, stark cultural and language differences, different legal and judicial systems often confuse investors on both sides of the relationship. “India is a common law country, and Japan is a civil law country. The way of looking at matters from a legal perspective is fundamentally different. There is still a perception that foreign companies face difficulties to effectively pursue legal remedies in Japan. Meanwhile, Japanese legal experts still find it difficult to understand the federal structure of India. The constant changes and tweaking of laws in India compounds the problem,” explains Jejurkar. One prominent area of concern is investment protection, says Paul. “The anticipated surge in Japanese investments in India’s infrastructure, manufacturing, and technology sectors necessitates the establishment of robust legal framework that ensures the protection of intellectual property rights, ease of repatriation, lessen compliance burden, lower tax incidence, obviate fraud and offer efficient dispute resolution mechanisms to maintain and boost investor confidence,” she adds. Another problem faced by Japanese clients in India is the favourable treatment given to local manufacturers for public procurement. “The current regime of public procurement in India is chiefly driven towards indigenisation and preference for local manufacturers, with various terms and conditions for foreign investors such as lowest commercial bid condition, performance guarantee from foreign parent entity, and compulsory transfer of technology etc., which have impacted greater participation by the Japanese entities in public procurement projects in India. Despite such limitations, there have been several cases where the Japanese companies have participated in public procurement in India and are doing fairly well,” Pandey says. Bureaucratic delays can often turn away Japanese clients, explains SNG’s Gupta. “With continued economic expansion, it must be ensured that Japanese companies looking towards India or expanding their footprint in India receive bare minimum – if not no – bureaucratic delays and the correct legal and business advise from inception so as to ensure the growth of a successful business.” “What the Japanese companies are looking for is hand-holding and correct guidance. Japanese people are very professional and thorough in their work and believe in building long-term relationships. They expect their lawyers to also act as strategic business advisors apart from representing them in legal matters.” — Rajesh Gupta, SNG & Partners
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