Special Focus
India Annual Review 2012

Special Focus Archive

Draft rules raise benchmark for potential entrants

The RBI has released a new set of draft guidelines for licensing new banks to better regulate the banking sector in India. These will set a benchmark for accepting potential entrants to the Indian banking sector based on business profiles, holding structures, capital, foreign shareholding, and corporate governance. But some practitioners say that the guidelines are too harsh for foreign banks to follow
Industry needs bring relaxation to ECB norms

The Government of India has raised external commercial borrowing limits for various industry sectors across the country in an effort to boost the raising of funds at lower cost overseas. This is expected to help relieve these sectors from financial stress as raising funds domestically is difficult due to the high interest rate regime. Renminbi (RMB) loans could be the big beneficiary
Key project financings and restructurings
Leading banking and finance lawyers
Don’t bank on the sun

By Anjan Dasgupta and Navin Syiem, HSA Advocates
QFI route hopes for capital inflows

On January 1 2012, the Government of India introduced a new foreign investment route into India. The qualified foreign investor route carries with it expectations of boosting India’s low performing equity markets. But is this realistic?
Route offers diversification option

Bank of America Merrill Lynch’s general counsel for India, Abhimanyu Singh Poonia, gives his verdict on the government’s introduction of the QFI route for foreign investors
Regulators’ role in FCCB refinancing called into question

As the FCCB crisis in India brews, affected domestic companies, bondholders and prospective investors are speculating on what will happen to those issuer companies unable to repay their debts as their bonds mature
GAAR implementation raises P-noteholder concerns

Although implementation of the general anti avoidance rules has been postponed for a year, foreign institutional investors remain concerned that the holders of P-notes will be taxed under the GAAR regime. This is despite government assurances to the contrary
Key ECM and DCM deals
Leading capital markets lawyers
Multi-brand retail liberalisation unlikely in near future

Although foreign direct investment in multi-brand retail could address the high rates of food inflation and low revenue by Indian farmers, domestic players remain unconvinced
The need for patience

JSW Steel’s president and legal and group general counsel Girish Gokhale tells Canace Wong that Indian corporates need more time to fully understand the subject of competition law and its effects
CCI performance: Good start but early days

Since the Competition Act came into effect on June 1 2011, any significant acquisition activity that involves the transaction of Indian assets now needs prior approval from the Competition Commission of India (CCI) before coming into effect
Leading competition lawyers
Calm after the storm: Confidence returns following Vodafone ruling

The Indian Supreme Court ruling in the Vodafone tax case brought confidence back to investors by removing a great deal of uncertainty. Canace Wong reviews a case described by many as incomprehensible
The unique advantage of Singapore

SIAC’s head of South Asia and counsel Vivekananda N tells Canace Wong about the need for international institutional arbitration as a dispute resolution mechanism, and why investors should consider Singapore
Leading dispute resolution lawyers
Tax dispute resolution avenues

By Rajan Vora, Ernst & Young India
Stakeholder interests drive new legislation

The Mines and Mineral Development and Regulation Bill is awaiting final approval before being enacted. Although it aims to comprehensively regulate India’s mining regime, and increase transparency in the granting of mining leases, its execution is expected to be difficult and could have serious financial implications for mining operators
Regulatory insight

Having overcome a stream of regulatory hurdles during his company’s purchase of a majority stake in natural resources company Cairn India, Vedanta Resources’ vice president of corporate finance Ashish Garg reveals how the regulators are addressing environmental challenges
Leaked CAG report triggers coal licensing concern

India’s coal licensing process has been under intense scrutiny since the contents of a report by the Comptroller and Auditor General of India was leaked to the press. With some suggested amendments, such as auctioning coal blocks, having the potential to increase the cost of coal, developers are concerned
Leading energy and natural resources lawyers
Bill amendment sparks debate on land acquisition procedures

Amendment to the Land Acquisition Bill will provide India with its first national law governing resettlement and rehabilitation issues involved in land acquisition. While the new legislation will bring more transparency to the process of acquiring land, enabling foreign investors to better manage risk, it also has cost and timeline implications
Desperately seeking aid: Airline industry urges government to permit FDI liberalisation

Although eager to assist the country’s ailing airline industry, the Government of India’s proposals to date have not been well received. Players in the industry are however clear on the most effective medicine
Key infrastructure and real estate deals
International arbitration beckons over 2G scandal

Norwegian telecom operator Telenor is just one of many foreign investors adversely affected by the 2G spectrum scandal. The Government of India is now under pressure to find a solution to this unfortunate episode or face international arbitration
Leading real estate lawyers
Patent holders on alert over compulsory licence decision

Section 84 of the Indian Patents Act, which allows domestic companies to apply for compulsory licences, was recently tested for the first time by India’s Patents Office. Its March decision against Bayer Corporation has led many foreign pharmaceutical companies and patent holders in other industries to reconsider their India strategies
Impact of mandatory digitisation yet to be seen

A Bill aimed at digitising the cable industry in India by 2014 was passed in December last year. Although the Bill will introduce various mandatory changes to the cable industry, the verdict is out on whether it will encourage much-needed consolidation in the industry
Cable digitisation to deliver transparency for investors

New Delhi Television (NDTV) executive director and group CEO Vikram Chandra and legal director Ajay Jayaraman tell Canace Wong how the cable digitisation process will benefit everyone from subscribers to broadcasters to advertisers to the government
Tax Authority turns gaze on software industry

The Government of India’s decision to target the sale of packaged software as part of its broader retrospective tax initiative has already led to the formation of a software coalition group by global software companies. The next step may be a threat to reduce the amount of capital they invest in the country
Leading intellectual property and TMT lawyers
Opinion divided on significance of employee consent ruling

A recent Supreme Court judgment has clarified the rights of those employees caught up in mergers and restructurings that impact their employment conditions. What the likely impact will be on investors remains open to debate
Calls for trade union transparency following automobile strikes

India’s automobile industry suffered great financial loss as a result of recent industrial unrest. While it seeks measures to reduce the possibility of future strike action, the episode has also led to calls for improvements in the country’s trade union system
Globalisation – changing the face of the Indian labour scenario

By Namita Chadha, Chadha & Co
Merger control and takeover harmony desired

Investors face spiralling M&A transaction costs until inconsistencies between merger control regulations and the Takeover Code are addressed. But will India’s regulators act on investor concerns
Stronger pharma merger control depends on CCI performance

The Government of India wants to encourage foreign direct investment in the country’s pharmaceutical industry, but not to the detriment of domestic players. And while it sees the Competition Commission of India playing a key role in the control of prices, not everyone believes this will be sufficient
Key M&A deals
Leading M&A lawyers
Market Data
Recent challenges in the Indian M&A space

By Shardul Shroff, Gunjan Shah, Shruti Kanodia, and Arjun Ghose, Amarchand Mangaldas
Speculation over investor response to greater AIF regulation

Sebi guidelines allowing it to tighten its control over alternative investment funds in India were approved in April 2012 and have led to the first systematic regulatory regime imposed on private equity in the country. While the move follows a global trend of re-regulating alternative investments, the likely reaction of investors remains open to speculation
Short term hurdles, long term hope

Regulatory inconsistency and uncertain policy in various sectors has shaken investor confidence, says CLSA Capital Partners’ head of legal and execution Wayne Palmer. But the increased open offer trigger under the new Takeover Code has provided some clarity, and India remains a compelling growth story and key investment destination
New Code increases investor shareholding options

The new Takeover Code has raised the mandatory open offer rate and the open offer requirement rate. Private equity and strategic investors have generally welcomed its introduction as it permits them greater flexibility to increase shareholding without triggering takeover regulations
Key private equity deals
Leading private equity lawyers
Decampment of private equity investments

By Shardul Shroff, Raghubir Menon and Rishi Anand, Amarchand Mangaldas
Integrity of tax system threatened by prospect of retrospective action

The tax dispute between Vodafone and the Indian Tax Authority, which was seemingly settled by the Supreme Court of India in January, has dominated financial media since. Although not solely responsible for the recent decline in foreign direct investment, the proposal to amend the tax law retrospectively is deemed by many to be against internationally recognised principles
Seeking maximum return

Kaushal Kumar Sharma is the former director general of the Competition Commission of India and now heads an independent functional departmental unit within the Income Tax Department (ITD). He tells Canace Wong how his experience has been brought to bear with the recent controversy over the proposed retrospective amendments to India’s Income Tax Act
GAAR leaves investors feeling powerless

Although its implementation has been delayed by a year, the GAAR has left investors unable to plan their transactions with any degree of certainty. Canace Wong reports
Leading taxation lawyers
Profession rises to the challenge

The third annual India Awards, co-hosted by Euromoney Legal Media Group titles International Financial Law Review and Asialaw, took place at the Trident Hotel in Mumbai on July 5. Almost 150 leading practitioners from all segments of India’s legal profession attended this year’s awards ceremony

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