Editor: Mr. Wakhariya, would you tell us something about your practice?
Wakhariya: Our practice is focused on the representation of international clients wishing to do business in India. We are able to offer that representation across time zones seamlessly, and between our lawyers in Mumbai and New York, our services are available around the clock. In addition, I think we are able to provide a comfort level to our international clients that is not always available to them from our local competitors in India because we have a familiarity with what they expect of their lawyers in their own jurisdictions.
Editor: When we last spoke, you addressed the opening of the Indian economy to global trade over the past 15 years. During the past year that process has gained even greater momentum. Would you share with us your thoughts about what is driving this development?
Wakhariya: The main factor behind this development is, I think, the fact that India continues to have the largest population of consumers in the world. Whether India is seen as a developing country or an emerging market, constantly increasing consumer demand drives growth across all industry sectors.
Another important contributor to India's economic growth is a steady decrease in governmental interference. Over the last few years the government has progressively backed away from the regulation of business, and the result has been the emergence of a true free market economy.
Finally, a skilled labor force gives the country an enormous advantage competitively. This has been true since the opening of the economy to global trade 15 years ago, but it has gained even greater momentum in recent years.
Editor: Please tell us about investment opportunities in India. What are the hot sectors?
Wakhariya: Telecom is at the top of the list. Very recently the government announced the opening of new licenses, and more than 200 applicants most with little or no experience in the industry applied. A few months earlier the Vodafone Group paid a huge premium to acquire a stake in an Indian cellular business through the acquisition of Hutchinson's share of the business.
Pharmaceuticals, insurance and real estate are also booming. Generic pharmaceuticals constitute a very big business in India, and globally Indian generics are the largest players in the field. This is an extremely interesting development because, as you know, the West has been heavily engaged in pharmaceutical research and development, and hence has invested in patent protection. India is new to the world of patent protection, and a recent court decision disallowing patents for newer versions of the same drug is probably going to permit the generics even greater latitude over the years.
We have also seen a lot of activity in the infrastructure sector, such as subways, railroads, bridges, port development, aviation, and airport development, including the privatization of airports and private operation of airports. Travelers to Mumbai will see a remarkable difference in the operation of the Mumbai airport, which is now handled by a private partnership.
Editor: In recent years, one of the principal topics of discussion has been the flow of business process outsourcing to India. Just recently that flow has started to decrease. Why?
Wakhariya: I don't entirely agree that business process outsourcing to India has actually decreased. At the top end, for the established players, outsourcing is still growing even though the pace may be slower than previous years. The "upstarts"-small operations looking to make money quickly-are beginning to realize that they do not have the long-term staying power for this business and are probably dropping out. In addition, to the extent that competition for the business has been on the increase in destinations other than India, the margins have eroded. Together with an appreciation of the Indian rupee against the dollar, that creates a somewhat artificial perception that business process outsourcing to India is in decline. This is not really the case.
Editor: What about the kind of outsourcing that a North American law firm or corporate legal department might assign to India, say due diligence or document review?
Wakhariya: I should have mentioned legal process outsourcing as one of the hot areas. Law firms and corporate legal departments are beginning to realize the tremendous cost advantage of outsourcing legal processes to India. Due diligence is one of the easiest things to outsource because, particularly in the transactions area, local corporate or legal knowledge is unnecessary. On the litigation side, deposition digesting, expert witness transcriptions, and even legal research are among the most important services offered. Some fairly sophisticated contract review-even very complex M&A transactions-are also being outsourced.
Editor: What role does technology play in the management of this work?
Wakhariya: Technology can accomplish a great deal. Working with large databases, high-speed Internet allows us to centralize resources across law firms in multiple jurisdictions. It is essential to be able to do this for large international clients that litigate across a variety of jurisdictions. Even in corporate transactions, with a corporate legal department residing at corporate headquarters in one location and branch offices across the world and everyone uploading their data onto a central database, Indian LPOs can access the data and process it. Video conferencing and the like make training for and management of these transactions very easy.
This is not to say there are no challenges. The people who do this work must be trained to do things in a certain way, and to understand the technology involved, in order to put processes in place for security and confidentiality. There is still a significant language barrier despite having an English language work force because the writing style of the majority in India is still archaic and almost 19th century-ish.
Editor: Outbound investment is also a new and increasingly important development for India.
Wakhariya: This is a remarkable development. The recent Tata acquisition of Corus in the UK has received considerable press attention, but there are many acquisitions, joint ventures and strategic partnerships being entered into by Indian enterprises across other industries and across the world that have not been in the spotlight. The UK, Europe and the U.S. are favorite destinations, but even Africa has received a great deal of Indian outbound investment. Just recently it was reported that India is Nigeria's largest trading partner. So you see, Indian enterprises are looking at every corner of the globe to do business.
Government policy has been very supportive of this development in recent years. In the last year alone, India has liberalized its overseas investment policies on several occasions. Just recently the Reserve Bank of India announced that an Indian business could invest up to 400 times its net worth overseas without needing prior approval. That represented a doubling of the previous amount. In the past such a step would have entailed a public debate and a lengthy parliamentary process. Today, with a favorable balance of payments and the liquidity to permit business acquisitions all over the world, the government of India is reasonably confident that Indian businesses will act responsibly.
Editor: What about the U.S. as an investment destination?
Wakhariya: The U.S. has a fair amount of Indian investment already, but investing in the U.S. is still something of a challenge. The extraterritorial reach of U.S. corporate disclosure and compliance requirements in, say, making an acquisition in the U.S.-I am thinking of Sarbanes-Oxley and the regulatory structure that derives from that statute-continue to have somewhat of a deterrent effect on inbound investment to the U.S. Overseas investors are apprehensive about potential personal liability of directors.
Given the stability of the relationships between the U.S. and India, and the many common business values that we share, Indian businesses will continue to focus on the U.S. as an attractive investment destination. Nevertheless, the perception is that the flow of such investment would be greatly enhanced if government in the U.S. were perceived as more business-friendly from a regulatory standpoint.
Editor: What kinds of overseas project do Indian investors find most attractive?
Wakhariya: The type of project does not matter so much as the ability to be in control of it. That means either 100 percent ownership or a controlling stake. Indian businesses are particularly good at leveraging their assets across world markets, and a minority interest in a project is only going to dilute that effort.
Editor: How is this affecting your practice?
Wakhariya: Our practice is very flexible because we have not focused on any one specialty. If we have a focus, it is on client satisfaction. We work hard to build and then sustain a relationship of confidence and trust with our clients. With this in mind, we are very comfortable working with law firms across a variety of jurisdictions, and we find that they are comfortable working with us. Indeed, much of what we do in India is referred to us by competing law firms in the U.S., the UK, Europe and South Africa.
Editor: Would you tell us about the arbitration and mediation services that you provide the firm's clients?
Wakhariya: India has a good Arbitration Act, but arbitration in India is generally slower than international arbitration. I think we have a way to go before arbitration in India is effective and regarded with the same confidence as international arbitration.
On the international side, we have represented clients in international arbitration proceedings in various jurisdictions. London is a particularly popular arbitration destination for our clients, both Indian and international.
Editor: When you are called upon to litigate in India, how do you find the court system?
Wakhariya: On the whole the Indian judiciary is impartial and objective, although there are occasions when there are lapses. Often one has to go all the way to the Indian Supreme Court to be assured of justice. The wheels of justice turn slowly in India. That is why international arbitration is usually the vehicle of choice for clients, both Indian and international. However, if I am given a choice between Indian arbitration and Indian litigation, I would advocate Indian litigation.