regime has become increasingly onerous in the last year. At
last week’s IFLR India Outbound Investment Forum,
issues with regulators were discussed at length.
Here’s what market players think.
A strict regulatory regime is
undoubtedly difficult to deal with. Nonetheless, both
practitioners and in-house counsel at the IFLR India Outbound
Investment Forum were more concerned with regulatory
Sharma, Deutsche Bank’s head of legal for the
Indian subcontinent and Mauritius stated his personal view.
He believed there were two levels of Indian
regulatory concerns. "One is about restrictions and the other
is about ambiguity in regulations," he said. "What I react to
more strongly is the latter – the ambiguity in
Others agreed. Priya Mehra, a
senior associate at Gibson Dunn, said that when
she’s doing a transaction, regulatory uncertainty
was an issue that came up repeatedly. "In the last six months,
in deals we are involved in, we’ve had to postpone
the deals or the signings based on regulatory changes. GAAR
(General Anti-Avoidance Rule) and Vodafone all represent a
frustrating and lengthy process," she said.
tax regime was of utmost importance to Indian practitioners.
draft guidelines for GAAR were circulated last week with a
proposed implementation date of 1 April 2013. India is also
looking to renegotiate its tax treaty with Mauritius to close
favourable tax loopholes.
Another issue that has generated
uncertainty is the Securities and Exchange Board of
India’s (SEBI) stance on whether put and call
options are enforceable. Market players have expressed
frustration over SEBI’s inconsistent position on
this long-standing issue. Practitioners expect an announcement
from both the Reserve Bank
of India and SEBI regarding the matter soon.
But, taking a long-term view, Citigroup managing
director and India head of capital markets origination, Sanjay
Nayar, was optimistic. "I think what we’re seeing
today is a slowdown that’s driven more by the ebb
and flow of the markets," he said. "I do think that
cross-border acquisitions will continue to grow. The challenges
around these transactions are less to do with regulations and
more to do with commercial considerations."
For more from IFLR’s
India Outbound Investment Forum:
Indian natural resources M&A: what lawyers want to
How Indian corporates can benefit from the euro
India outbound M&A financing: Why corporates should look
India M&A: how to handle the aftermath of an outbound