Rules of Engagement

Rules of Engagement

The book attempts to elucidate the complex regulatory environment in India when doing business.

At the core of the ongoing Tata-NTT DoCoMo legal tussle is a Reserve Bank of India (RBI) rule that forbids a foreign direct investor in an Indian company to make an exit at a pre-determined share price. The case - with NTT DoCoMo approaching international arbitrator - has assumed such significance that insiders cite its mishandling as one of the reasons for the ouster of Tata Sons Chairman Cyrus Mistry. However, many legal experts blame it (the Tata-DoCoMo row) on unclear and unsettled buyback rules when the two parties entered into a contract.

It is always difficult for a foreign entity to start a business in a country like India that has a maze of (sometime loosely worded and ambiguous) laws and a very slow (and often corrupt) bureaucracy. The Tata-DoCoMo legal battle is a reminder that entities entering India should have a better understanding of different rules and regulations guiding businesses in India, and that they should not depend only on Indian partners (if any) for the understanding of local laws. They need a ready reckoner on different Indian laws to begin with. Probably that was the objective of international lawyer Linda Spedding for compiling and editing India: The Business Opportunity, A practical Legal and Regulatory Handbook.

Aimed mainly at foreign businesses and entrepreneurs, the book is a compilation of articles written by 27 legal and tax experts from India on foreign investment regulations, competition laws, merger and acquisition, direct and indirect tax laws. Each write-up follows a similar format - an overview, a historical perspective, and existing rules and regulations. Given the mandate of the book, and the complexities of the issues discussed - in all 16 different rules and regulations - the 700-page tome is a handy guide for the legal fraternity, but certainly not an easy read for starters.

The overview and historical perspectives (and the case studies) help in explaining how laws have evolved over the years, and the 'logic' behind the evaluation (or absence of it). They also give a peep into the present corporate landscape in the country. The use of case studies is not very consistent. Some have even used quotes and ancient proverbs (check the chapter on 'Reputation Risk Management When Doing Business') to make their point.

Typically, with books on law and regulations, the most difficult part is to keep track of the abbreviations. This book, too, is interspersed with abbreviations - some of them hardly known (SOEs, for example) - expanded maybe in one chapter/page, but not in most other places, and they have been mentioned repeatedly. Many of the foreign enterprises and their legal experts may not readily know that SOEs stands for State-owned Enterprises. An index on abbreviations would have made reading a lot easier.

The language is largely simple (a big relief for starters, like this reviewer), though some parts of the overview and historical perspective chapters could have been crisper. The chapter on merger and acquisition is the most comprehensive, but the ones on direct and indirect taxes could have been more in-depth. A few case studies on tax disputes could have been helpful (I found none) in understanding the complexities of tax rules in India.

In its foreword, the Union Finance Minister, Arun Jaitley, has said that the book "will serve as a reference book for understanding legal and regulatory environment in India". But for a few minor glitches in the book, he is spot on. ~@Dipak_Journo

Published on: Dec 12, 2016, 2:09 PM IST
Posted by: Diksha Ramesh, Dec 12, 2016, 2:09 PM IST