India Business Law Journal – June 2023

The subtle art of self-regulation

Differing priorities complicate the process

Recent months have seen supportive messages from Reserve Bank of India (RBI) Governor Shaktikanta Das and his deputy governors favouring self-regulation as a way forward for the fintech sector.

The industry is poised to do especially well, with India having the fastest growing companies, and Invest India forecasting it will be worth USD2.1 trillion by 2030. The regulator is striving to find a middle ground to promote growth and innovation in the industry while addressing the unique risks posed in areas such as cybersecurity and
consumer protection.

However, as our Cover story finds, the industry has found it hard to organise, with a key challenge being its diverse nature, including apps that rely on the Unified Payments Interface to mobile wallet companies, ATM service providers, clearance corporations etc. The sector also receives differing levels of attention from the regulator, with digital lenders, for example, receiving greater scrutiny.

The benefits of self-regulatory organisations are manifold, with the bodies being able to establish codes of conduct and behavioural standards for market players in addition to reducing excessive regulation. For the bodies to function properly, those on the governing body will need to avoid conflicts of interest and represent the interests of its myriad members, from the startups to the giants.

This month’s Spotlight looks at how the Indian government is positioned to reduce carbon emissions within the shorter timeframe of 2030. The government had pledged its commitment to reaching the net-zero goal by 2070, which is harder to assign accountability for, given it is a long way off. The country faces a dual challenge of being a significant greenhouse gas emitter and one of the most vulnerable countries to the anticipated impacts of climate change.

The article, which canvasses a cross-section of experts ranging from academics to lawyers specialising in environmental law, seeks to establish whether the green goals were set realistically, or were the result of hurried commitments. While details of a 2030 plan are lacking, if the right policies are put in place this decade, India could still add significant low-carbon capacities in the next two decades.

Our Vantage point article argues that India needs inventor remuneration laws to increase the number of patents filed in the country. Compared to more advanced economies of the US, South Korea and China, India has a much lower commercialisation of patents, as well as patent filings.

Author Balwant Rawat, the head of IP at Mercedes-Benz Research and Development India, calls for remuneration laws that can work in favour of the inventors, given that currently companies reap huge economic benefits, while inventors are only levied moral rights. The article also points to success stories in other Asian countries where inventor remuneration laws catalysed more patents to leverage the urgency of this matter.

In Full speed ahead, we query which are the best foreign firms working in India amid the backdrop of India surpassing the UK to become the fifth-largest economy in the past year, as well as the Bar Council of India permitting international law firms to practise in the country. The liberalisation of the Indian legal market has elicited mixed reviews. Early responses tell us that while a few firms are eager to take the plunge, many have employed caution. There are also major developments afoot for foreign firms, with Allen & Overy in talks with Shearman & Sterling to create A&O Shearman, a behemoth transatlantic partnership with nearly 4,000 lawyers, including 800 partners across 49 offices, and a combined revenue of USD3.4 billion.

Dentons and Link Legal also formalised their partnership in the first official combination between an international and an Indian firm. It is in this environment that India Business Law Journal showcases the achievements of the top international firms that have steered their Indian counterparts in the right direction, adeptly guiding them through significant transactions and demonstrating their commitment to forging successful partnerships in an evolving legal landscape.

In Hanging in the balance, we analyse the Jan Vishwas bill, which aims to decriminalise many business laws. At present, out of 69,233 rules, more than 26,000 can result in imprisonment for violations. The worry of imprisonment hangs over the heads of businesses like the sword of Damocles, and also affects foreigners doing business in India.

The Commerce Ministry’s Department for Promotion of Industry and Internal Trade (DPIIT) has sought to bring in reforms to improve ease of doing business and alleviate compliance burdens. By September 2021, the DPIIT reduced 22,000 compliances, simplified 13,000 processes, and digitalised more than 1,200 operations. Lawyers say that while the bill and the DPIIT’s measures have provided breathing room for businesses, more needs to be done to improve the situation.