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Pratibha Jain, Partner and Head of the New Delhi office of Nishith Desai Associates, recently spoke at the 2019 World Economic Forum in Davos, Switzerland on the topic ‘Role of Law and Legal Institutions for developing a strong trade and investment Environment’.
Jain, an Oxford and Harvard trained lawyer, was the only Indian lawyer speaking at this year’s Forum at Davos.
Her presentation focused on the importance of a rule of law based society for the growth and development of a business environment in any country. She said,
“India is a very good example of how a society based on the rule of law and liberal democracy can attract long term investment. This year, India has overtaken US and China in attracting the highest greenfield foreign investment.”
Businesses that look at India for investment see a strong and independent judiciary; a stable democracy with free and fair elections and the passing of power to a new government; an independent central bank and other financial institutions that work based on laws created by the Legislature, which also stand the test of the Indian Constitution and judicial process.
The fact that the Indian government is the largest litigant is also proof that laws framed by the legislature are constantly tested and challenged in Indian courts on the principles of natural justice and non-arbitrariness. She however cautioned that to sustain this we will need to maintain the independence of our institutions and ensure we remain strongly embedded in the principles of democracy and the rule of law. She noted that investors were watching India closely and were already voicing concerns on arbitrary changes in regulations that hinted towards growing crony capitalism in the country. To counter this, a strong political and judicial will is required.
Investors look for two main things – clarity and certainty of laws and their transparent and effective implementation. India has fared well so far and its model of development has become an example for many countries to emulate. However, any compromise with respect to independence of institutions and certainty of implementation of laws, rules and regulations that govern businesses can quickly turn the investor sentiment against India.
Jain further observed,
“India’s strengths are its vibrant democracy and the rule of law, demographic advantages with a large young population, a growing middle class with higher levels of education and skills, and the evolution of independent and democratic institutions including an independent judiciary and a free media. These aspects position India not only as a vibrant economic power, but also a promising nation for entrepreneurship.”