India's capital markets are suffering from a lack of
decision-making among politicians and regulators.
Speaking at Asialaws Southeast Asia Summit 3is
Asia head Anil Ahuja said over the last 18 months India had
become a case study for how not to run a country.
From the Commonwealth
games fiasco to fights among
army chiefs its a long list of one
bullet in the head every quarter, he said. Add to
that the issues we faced with political indecision and
weve now reached a point where weve missed the
golden opportunity presented from being the darling of global
BMR Advisors tax director Sumeet Hemkar said
slow decision-making had caused Indias regulators to take
much longer to approve transactions. They are also not
spelling out the rules of
the game which is making it a
more challenging environment to try to do business in, he
Ahuja said if regulations could be introduced that an
intelligent person could read and understand it would change
the whole country.
Hemkar said deals were currently being discussed down
to the wire in terms of issues that could arise in the future.
All of these uncertainties are creating a time lag and roadblocks, he said
Luthra & Luthras Mohit said it was a market in
which there was no hurry to close because elections were one or
two years away. People are delaying, he said.
And every time you delay a deal, you actually get the
deal at a better price because of economic issues
Ahuja said people now questioned why they should invest in
India. They talk about risk premium and its an
The country had seen a big drop off in international capital
markets deal activity since 2010. Immediate economic concerns
with India, coupled with general corporate governance issues
and uncertainty around recent tax decisions has prompted a
cooling of investor appetite. Companies want to go public but
not many are getting deals down.
Hemkar said that the
Governments recent tax decisions including changes to the legislation
changed the rules of the game. At a practical level, Investors
need to recognise the Governments philosophy of moving
to substance over form and also that tax cost is not
something that can be done away with by clever deal structuring
in this era, he
Saraf said India was paying the price for being a big
Democracy brings a lot of good things, he said.
But the numbers are what matter in electoral reform.
Because of the numbers, and the economic issues, reform has
Indian people have not benefited from economic
liberalization as readily as they have in China, he said.
The trickle down in democracy takes a lot of
Even so, he stressed the right statement were being made.
The country is headed in the right direction; I
dont think it has lost its way, he said. We
will still grow at 7% and 8 % but it will be a consistent
Every sector promises growth, he said.
Hemkar said owing to the
global economic downturn, investment options outside of
India are limited and this
continues to prompt investors to look domestically (within India) for good deals.
I am seeing a lot of strategic interest in the country
and strategic investors are not short-term players, he
said. They have a long-term view on the country and a
positive outlook on what India could offer in terms of
return on any investment.
Davis Polk & Wardwells partner Kirtee Kapoor said
the fundamentals of the country were strong.
But there remains too much confusion and haziness when it
comes to doing deals, hampering peoples ability to look
forward. Nobody wants to make decision without a clear
view, then it becomes a leap of faith, he said. The
market can be wrong longer than you can be solvent.
He remained hopeful, however. In India they say all
will be fine in the end, and if it is not fine yet it is not
the end yet, he said.