Policy and Judiciary: A vision for post-Covid India

india legal system
India’s $5 trillion GDP goal can be realised through self-creation and consumption, and also by being a dependable business destination.

By Shailesh Haribhakti and Ram Kapadia

The Post-COVID world opens up a host of opportunities for India. Geopolitically, the significant anti-China sentiment across the globe opens a wedge that India can turn to its advantage. Businesses in the US-led Triad/Quad are looking for global supply chains that pass through India. Yet, international companies are choosing Vietnam, Cambodia, Thailand, and Bangladesh over India. Why is this happening? What can India do to attract international companies?

In addition to improving infrastructure, stabilising the financial system, accelerating the adoption of technologies, and encouraging a meritocratic work culture, there are two areas that India needs to transform to make the country an investor-friendly destination.

  1. Stable policy
  2. Stronger judiciary

India’s policy orientation has been highly volatile, which continues to make international investors wary. Sudden policy changes particularly those that are retrospective in application are detrimental to the long-term prospects of the country. India’s $5 trillion GDP goal can be realised through self-creation and consumption, plus by being a dependable partner globally. The global economy today is very intricately interlinked. India needs foreign investors and foreign partners if it wants to become a large exporter.

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Several things that India has done in the last few months can be tweaked to make a positive perception emerge in its favour. Banning 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 with manufacturing bases in China have also been impacted by the import ban. Goods from such companies too should be cleared quickly. Also, a company like Apple will only move to have a large manufacturing presence in India when it has a highly stable and enabling policy environment. They already recognize India’s quality manpower with requisite skills, which is a solid plus.

Another example here is the policy change in e-Commerce space when Walmart acquired equity in Flipkart. The policy change has been unfavourable to Walmart. Amazon, which finds the Indian opportunity very exciting will bring in massive investments if the long-term inevitability of omnichannel retail is recognised. Walmart made the Flipkart investment with a long-term goal in mind and so will Amazon. The idea should not be not to change policy at all, but that any reorientation of policy should be done through inclusive dialogue with all key parties involved.

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The issue of stable and inclusive policy pivots applies to central, state, and local governments. Regime changes at the state and/or local 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. What is clear is that the intention of all parties (central, state, and local) is positive and aligned. But the implementation is where India needs a better framework/structure that brings all relevant parties together across the board and execute cohesively and speedily.

One of the biggest issues that should be swiftly simplified and revamped swiftly is the land laws, the key to driving more manufacturing into India. Key areas of focus could be: simplify land acquisition processes and procedures, train and re-skill landowners and workers so that they can potentially take up jobs in the manufacturing setup, a comprehensive one-stop-shop portal with all available land listed and vetted, fast-track court for land-related cases, and special exemptions for companies moving to India under special circumstances e.g., moving from China to India.

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In addition to a stable policy, India can move quickly to improve the speed and quality of justice.
Some key things to consider are:

  • Adoption of e-courts, robot judges using machine learning, and artificial intelligence to swiftly deal with repetitive cases like cheque bouncing. This is India’s low hanging fruit. All justice in six months and no grant of more than one adjournment will make justice 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.
  • Incentives to delay justice should be eliminated. Bunching of like cases, the issuance of speaking
    judgments 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 the law should halt.
  • The movement toward sunsetting redundant laws must be accelerated. Today a business needs to fulfil 58,000 compliances. This regulatory cholesterol must be severely limited. The law ministry may issue an APP that harmonises and simplifies compliance. Uploading of these compliances with documentary proof will eliminate ‘inspector Raj’ and usher in holistic 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 the application of laws through advance rulings.
  • There should be no retrospective amendments ever.
  • Better talent in the court system w.r.t. foreign investment matters 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.

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Addressing policy and judiciary issues will go a long way in providing confidence to foreign investors that India should be their investing, manufacturing, and services destination of choice. After solving the above, India should figure out the right way to market and reach out to key countries and “invite them in”. Roll out a “red carpet” for them. There should be no reason why a foreign investor should choose a Cambodia or a Thailand over India. India has a smart, entrepreneurial, young, English-educated population, eager to learn and grow — eager to help the nation realise the $5 trillion GDP goal.

(Shailesh Haribhakti is corporate leader based in Mumbai. He is a chartered and cost accountant, and writes regularly on the Indian economy and public policy. Ram Kapadia is a thought leader and entrepreneur based in Mumbai.)

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