With a slowing economy and the political landscape unsettled, we ask leading international partners with noted Indian practices for their prognosis on the country and whether tougher times will shake up the local legal market
Policy paralysis
‘It is the understatement of the year to say that India has been having problems.
At the beginning of the year there was policy paralysis; there were taxation problems which caused a negative reaction and the budget wasn’t well received. The growth rate is slowing down and inflationincreasing. The dollar-rupee exchange rate fell and had a negative effect on the economy, making outbound deals more expensive. People are being cautious ahead of the election.
However, the fall of the rupee has curtailed. We’re seeing an increased pipeline of M&A and even capital markets in recent months. If an Indian corporation has foreign capital available, the value of the rupee is less of an issue.’
Sidharth Bhasin, partner, Shearman & Sterling
Sluggish economy
‘Although the Indian economy has slowed somewhat from the high rate of growth over recent years, we continue to act on a significant amount of India-related work. For example, we have seen significant growth in India-related arbitration work recently. We continue to work with Trilegal following the loosening of our relationship with them but we also work with all the other major Indian law firms.’
Ian Stanley, partner, Allen & Overy
Slow and steady
‘We have a non-exclusive “best friend” referral arrangement which we entered into with Indian Law Partners in 2011. We do, however, continue to work with other Indian law firms such as Amarchand, Khaitan & Co and AZB. Market commentators have told us that we appear to have found the right solution. I am not optimistic about the market liberalising in the short term, but pressure is building up from inside India, from major Indian corporates who want immediate access to foreign law firms on the ground and from highly talented young Indian lawyers who aspire to have their careers with an international law firm inside their own country. When change comes, it will come slowly.’
Richard Gubbins, partner and head of India business group, Ashurst
Keep it local
‘Client demand for services is influenced by a variety of factors and there seems to be a cyclical reduction in inbound investment into India and capital markets activity but international arbitration work has increased. Our basic plans for India remain the same. We do not have any agreement or understanding with any Indian law firms about referral of work to them. Whenever our clients need advice on Indian law issues, our clients hire Indian law firms and, if requested by our clients, we assist them in selecting an Indian law firm. Without a referral arrangement with any one or two Indian law firms, we have the freedom to recommend the law firm and lawyers within such firms who are best suited for a given transaction both in terms of skills and attentiveness. This approach has served us and our clients well and we have no plans to change this.’
Nandan Nelivigi, head of India practice, White & Case
‘India remains an important market for us, but we are taking a mid to long-term view of India in light of the recent economic and debt problems, as well as the forthcoming election. In the short term, we remain in close touch with our clients and contacts and continue to visit India and advise on India-related matters. We do not currently have and have not in the past had any referral arrangements with any Indian law firms. Our mandates are usually client-driven in terms of local law firms’ selection, or we tend to select the law firms from a small pool with whom we have worked in the past and are comfortable.’
Kamal Shah, partner and head of the Africa and India groups, Stephenson Harwood
Playing it safe
‘Undoubtedly there have been far less outbound transactions as everyone is nervous about the exchange rate. We had a good year in India advising ONGC Videsh and Oil India on acquisitions in Mozambique, although it has been quiet since these closed. Whenever it’s close to an election things slow down due to uncertainty, as people don’t want to risk doing transactions. The uncertainty plus rupee devaluation leads to a slowdown.’
Colin Leaver, partner, Simmons & Simmons
Opportunity knocks
‘There are some challenges in India but also great opportunities. The consumer base is increasing dramatically. The middle class is projected to grow from 150 million to 600 million in ten years. When there are challenges in India, major Indian corporates want to grow their business internationally. We have not seen a slowdown in our practice. We continue to be very busy – M&A is as busy as it’s ever been, although there is some slowdown in domestic deals.’
Chris Parsons, head of India practice, Herbert Smith Freehills
Exercising caution
‘An election is coming up. Inbound transactions are affected by the political framework and the lack of predictability of government measures. India has a new well-regarded governor at the Reserve Bank of India and the hope is he will help to stabilise the economy and the currency.’
Nilufer von Bismarck, partner, Slaughter and May