2021: Doing Business in India (Vaish Associates)
Doing Business in India
1. What is the current business climate in your jurisdiction including major political, economic and/or legal activities on the horizon in your country that could have a big impact on businesses?
As nations and economies were reeling under the socio-economic impact of the pandemic, the tremors of the impact were equally felt across the Indian legal industry. The legal community has witnessed one of the toughest times and has seen a huge economic downturn in the past year. However, we are gearing towards better times and are optimistic that the current year and beyond would be reflective of a better forecast as per global economic predictions.
The business climate in India is currently the best it has ever been. India has had a stable government since 2014, which has steadfastly focused on improving the ease of doing business in India, which steps have propelled India to 63rd place amongst 190 countries in the World Bank’s Ease of Doing Business rankings of 2020 in contrast to India’s 142nd place in 2014. India has improved its rank in 7 out of 10 indicators and has moved closer to international best practices. Recently, the government has also introduced a bill to abolish retrospective taxation which presents a clear and predictable taxation law to provide impetus to India’s aim of becoming a USD 5 trillion economy.
2. From what countries do you see the most inbound investment? What about outbound?
India is viewed as an attractive investment destination. India is the fifth largest recipient of inflows in the world. Between April 2020 and March 2021, India received the highest FDI equity inflow from Singapore (USD 17.42 billion), followed by the U.S.A.(USD 13.82 billion), Mauritius (USD 5.64 billion), the UAE (USD 4.20 billion), Cayman Islands (USD 2.80 billion), the Netherlands (USD 2.79 billion) and the U.K. (USD 2.04 billion).
Indian firms invest in foreign shores primarily through mergers and acquisition (M&A). With rising M&A activity, companies will get direct access to newer and more extensive markets and better technologies, which would enable them to increase their customer base and achieve a global reach. According to the Reserve Bank of India (RBI), India’s outward foreign direct investments (OFDI) in equity, loan and guaranteed issue stood at USD 6.71 billion in May 2021 and spread across the U.S.A., the U.K., the Netherlands, the UAE and Singapore.
3. In what industries/sectors are you seeing the most opportunity for foreign investment?
The industries/ sectors which are attractive to foreign investors are Services (Computer Software, Information Technology enabled services, Outsourcing, Fintech, Education and Consultancy), IT, Telecom, Chemicals, Pharma and Automobiles. Deal momentum continues to be robust, driven by transactions which are evidently led by new-age sectors such as technology, digital, e-commerce, Fintech, etc. India now ranks as the third-largest startup ecosystem globally and is home to over 50 unicorn startups in the new-age sectors and counting.
4. What advantages and pitfalls should others know about doing business in your country?
Factors that enhance the business opportunities in India are a stable government, large domestic market, favorable FDI policies and overall improvement in the business environment, introduction of various reforms for ease of doing business, high literacy rate, a comparatively large, affordable and young workforce, and increased consumption patterns. On the flip side, Indian laws and bureaucracy are quite intricate and cumbersome. It is, therefore, advisable to hire an expert or Indian lawyer or liaison, who can assist in navigating these intricacies.
Our own publication "India Business Guide – From Start-up to Set-up” is an exhaustive guide that provides valuable insight from years of experience about doing business in India. It can be accessed here .
5. What is one cultural fact or custom about your country that others should know when doing business there?
India is a diverse and complex country. Each person you meet will be a unique blend of Indian and western values. People from different socio-economic strata, educational backgrounds, class and religion may behave very differently.
Most Indians enjoy good conversation on a variety of topics. Even in business meetings, it is common and normal to start discussions with ‘small talk’ on other unrelated issues. In fact, this is seen as a way of building rapport and trust. Welcome topics for discussion are current affairs, cricket, films, and Indian economic reforms. While Indians sometimes tend to ask questions which can be perceived as too personal and intrusive, one must remember that basic inquiries about the other person’s family is seen as a sign of friendliness and genuine interest towards the other person. Conversation in India is as much an exchange of views as it is a mode of building and strengthening relationships. Consequently, complimenting and showing appreciation is quite normal among Indians. Indians usually do not express their disagreements openly and directly; as that would be considered discourteous.
With respect to doing business, the government-owned public sector companies are more often bureaucratic and hierarchical as compared to their private-sector counterparts.
In India, a financial year runs from April 1 to March 31 of the next year. Since the end of March is the time for closing the financial year, people are generally very busy. One must try to avoid scheduling meetings around this period.
Our Firm
1. What distinguishes your firm from others in your market?
Founded in 1971, Vaish Associates, Advocates ("VA” or the "Firm”) is a full-service law firm advising domestic and international clients and providing a broad range of legal, tax, regulatory and advisory services to the commercial, industrial and financial communities.
We adopt a practical and solution-oriented approach to legal matters and place tremendous emphasis on accessibility, quick turnaround time and client access to key partners at all times. VA is one of very few law firms in India having a unique combination of corporate law and tax practice and most of our attorneys are dual qualified. We firmly believe that this provides an edge, which is most critical for the success of corporate and commercial transactions. What sets the Firm apart is its insistence on dependable, quality professional services and practical business advice, leading to high client satisfaction.
2. What are three words that describe the culture of your firm?
Practical, relationship-driven, and inclusive.
3. How does your firm participate in Corporate Social Responsibility (CSR) and/or Environmental, Social and Governance (ESG) initiatives?
Our Firm spearheads various CSR initiatives through Vaish Associates Public Welfare Trust for the betterment of the under-privileged and neglected sections of society by providing holistic development to children and their families through several projects and activities that are aimed at their education, nutrition, mental and physical health and overall personality. We also run programs for pregnant and lactating mothers, vaccination, deworming, periodic health check-ups, and dental treatments for underprivileged sections of the society. We provide periodic scholarships for deserving students and have also set up a public library to inculcate reading habits and develop a zest for learning for all age groups. We also aim to teach children about ‘good touch and bad touch’ and equip them with self-defense training.
ESG initiatives are an extension of our CSR initiatives that Vaish employees and the firm financially support and spread awareness about these projects throughout the firm. It ranges from construction of toilets, using plastic waste to make stools, using foam waste to make mats and mattresses, using old clothes and household discards to create working tools for children’s art and craft activities, etc. We also have a policy of recycling paper, reducing use of printed material, and disposing of electronic waste responsibly. On the social front, the Firm has very gender neutral policies, wage parity and a robust anti-sexual harassment policy. All employees are encouraged to contribute to the underprivileged through financial and physical interventions via the VA Trust. Building a truly diverse and inclusive workplace is a key priority and business imperative for the VA leadership team. We have a workplace culture in which all individuals who work at VA feel respected and included and do not face obstacles to success owing to their race, gender, ethnicity, religion, age, physical ability, and socioeconomic background.
4. Are there any new and exciting initiatives, practice areas or industry focuses in your firm?
Apart from its traditional core practices like Corporate/ M&A and Tax, VA has developed a key practice area in Insolvency and Bankruptcy laws since the enactment of the Insolvency and Bankruptcy Code, 2016 ("IBC”). It has represented and strategically advised resolution applicants in some of the most celebrated big ticket acquisitions under the IBC - from the stage of conceptualization, structuring and drafting of plan, to hand-holding through the application process before the resolution professional and committee of creditors as well as before the National Company Law Tribunal for approval and post-approval stage litigations. In the process, VA has helped evolve the jurisprudence in respect to some of the intricacies encountered under IBC.
Our white-collar crime practice has also added a feather in its cap after the completion of a forensic investigation in one of the most complex mandates involving constant media glare and scrutiny.
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