Failure to enforce contracts damages Indian FDI

Author: Brian Yap | Published: 11 Oct 2016

The biggest risk when it comes to investing in India is the enforcement of contracts, according to panelists at this year’s IFLR India M&A Forum in Mumbai.

The first half of this year saw an increase in M&A private equity (PE) transactions in India in terms of deal value compared to the first half of 2015. Specifically, the amount of capital generated by these transactions combined jumped to $21.8 billion from the $21.1 billion record in the same period last year.

But panelists argued that the lack of legal recourse onshore to facilitate the enforcement of rights by foreign and domestic investors alike continue to pose a stumbling block to foreign direct investment (FDI). This is reflected in the World Bank’s latest economic rankings, which ranks the country 178th in the world for the enforcement of contracts, only eleven places higher than the...