Rajesh Narain Gupta, managing partner at SNG & Partners, an Indian law firm which works with major banks, corporates and multinationals, talks about India’s economy and investment climate.
What are your thoughts on the improvement in India’s economy?
India’s growth story is robust. Foreign direct investments in various sectors is expected. As a law firm and while interacting with other professionals, a substantial engagement with overseas potential investors is noticed. The expected growth in GDP, the accumulation of foreign reserves, the reduction in oil pricing, the prime minister’s deep focus to develop India into a manufacturing hub, is receiving global attention. There is a serious story around the infrastructure development which required foreign participation in a big way. The government has focus on IT, education, defence, banking and insurance as well. In short, there is a strategy for development at all levels in all possible sectors. The government has been able to give a strong signal on no tolerance on black money and corruption. Strong commitments are being made on the ease of doing business in India.
What are some other important factors?
Nobody in the government has a magic wand to change the social, economic and political conditions overnight. One has to see and believe in the political will. There is a commitment to override or repeal the old laws and to come up with required amendment in laws, to set up fast- track courts on commercial litigation and to come up with strong bankruptcy laws. Reserve Bank of India, SEBI (Securities and Exchange Board or India) and other regulators have given robust signals of good governance and all this adds up to make India a strong favourite globally.
Are there challenges that remain and what are potential hurdles that could hold back India’s economic recovery and the investment climate?
India runs “key man” risk right now as Mr Modi has emerged a single strong personality who is pushing all these reforms. The tax reforms situation is still complicated and is not giving comfort to international players. The government has not been able to put the formula right which may make the tax issues a thing of past. The professionals, the investors and the tax department are struggling with the retrospective/prospective issues and there is a discomfort on the tax side which is a very serious issue. At times the government is sending knee- jerk messages, for example the move to track foreign travels, foreign accounts, by changing the requirement to disclose many additional items.
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