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Policy and Judicial Blueprint for a Post COVID19 India
India should figure out a way to stabilize policy and improve her legal system swiftly. And roll out a “red carpet” for investment!
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The POST COVID (PC) world opens up a host of opportunities for India. Geopolitically, the significant anti-China sentiment across the globe opens a wedge that we as a nation can turn to advantage! Businesses in the US Centred Triad and Quad are looking for Global Supply Chains that pass through India.
India is potentially a solid alternative. Yet, international companies are choosing Vietnam, Cambodia, Thailand and Bangladesh as alternatives over India.
Why is that happening? What can India do to attract international companies? In addition to improving basic infrastructure, stabilizing the financial system, accelerating the adoption of exponential technologies, and encouraging a meritocratic work culture, there are two fundamental things that India can fundamentally transform to make Her an investor friendly destination:
1. Stable policy
2. Stronger judiciary
India’s policy orientation has been highly volatile. This makes international investors vary. Sudden policy changes particularly those that are retrospective in their application are detrimental to the long term prospects of the country. India’s $5Trillion GDP goal, can be realized through self-creation and consumption, and by being a dependable partner globally. The global economy today is very intricately interlinked. We need foreign investors. We need foreign partners. We need to become a large net exporter.
Several things that India has done in the last few months can be tweaked to make a positive perception emerge in our favour. Putting a suspension on Chinese apps may be a signal but goods that have already been paid for by Indian importers must be cleared faster than ever before!
Large American companies like Apple that have manufacturing bases in China will only move when we can convince them that quality manpower with the requisite skills is available in plenty here. A stable and enabling Policy environment will encourage Apple to have a large manufacturing presence in India.
Another example is the policy change in the ecommerce space when Walmart acquired equity in Flipkart. Amazon, which finds the Indian opportunity very exciting will bring in massive investments if the long term inevitability of omni channel retail is recognised! Walmart made the Flipkart investment with a long-term goal in mind and so will Amazon. Indian policy should pivot to ensure inclusion of the existing retail enterprises in the domestic doorstep contactless delivery paradigm! The idea should be to reorient policy but to do so through an inclusive dialogue with all key parties involved.
The issue of stable and inclusive policy pivots applies to both central and State Governments. Regime changes at state level must respect policy continuity during the entire investment cycle and a desire to honour promissory estoppel. National interest may necessitate renegotiation but the process of doing so should be fair, transparent and meritocratic.
In addition to stable policy, India can move quickly to improve the speed of justice!
Just an adoption of e-courts, robot judges using Machine learning and Artificial intelligence to swiftly deal with repetitive cases like the Cheque bouncing cases can dramatically alter perceptions. This is India’s low hanging fruit. All justice in six months and no grant of more than one adjournment will make justice seen to be speedy and valuable!
• Arbitration must close in six months, Government litigation must be very strictly accountable and conciliation must always be the most used option. The incentive to delay justice can be completely eliminated. Bunching of like cases, the issuance of speaking judgements without extensive quotes from past cases and a mandatory ‘speech to text’ facility for every judge can be the new enablers.
• If all cases are immediately available to view on the internet, transparency will be established. Video recording of all court processes will be the best insurance against wilful procrastination, multiple adjournments and an ill prepared defence!
• Frequent changes to law should halt. The movement towards sunset for redundant laws must be accelerated. Today a business needs to fulfil 58,000 compliances of which 8,000 May lead to jail terms! This regulatory cholesterol must be severely limited. The law ministry may issue a APP which harmonises and simplifies compliance. Uploading of these compliances with documentary proof will eliminate ‘inspector Raj’ and usher in wholistic e-governance. All laws should be clarified i.e. made transparent and frozen for the next 5 years. There is a need to remove any uncertainty in application of laws through advance rulings. There should be no retrospective amendments ever.
• Better talent in the court system w.r.t. complex matters, as discussed above, is needed. Focus on training with the intention of swift, accurate resolution and a goal that no case must be left unfinished after six months of filing. Speedy justice is a sine qua non for FDI.
• Outdated laws, specifically in the manufacturing space, need to be eliminated!
While the issues in the Indian legal system as discussed above are real and need to be addressed, one should also remember that some of this could purely be perception, which needs to be addressed and solved for separately.
In conclusion, India should figure out a way to stabilize policy and improve her legal system swiftly. And roll out a “red carpet” for investment!
Addressing policy and judiciary will go a long way in providing confidence to foreign investors that India should be their manufacturing and services’ destination of choice. There should be no reason why a foreign investor should choose a Cambodia or a Thailand over India. We have a smart, entrepreneurial, young, English-educated population. We are eager to learn. Eager to grow. And eager to help our nation grow to $5B in GDP and beyond.
Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.
The author is a Chartered and Cost Accountant, an Internal Auditor and a Certified Financial Planner & Fraud Examiner. He is a well-known thought leader on the Indian Economy and Public Policy. He is a Board Chairman, Audit Committee Chair and Independent Director at some of the country's most preeminent organizations.More From The Author >>