India Practice Lawyers See No Quick End to Downturn
“We are hedged in a way, because the Singapore office is a regional practice,” he says. “If one country or jurisdiction slows down there are others that keep us active. It’s always a challenging environment, obviously, and we follow the work.”
Yeomans, who transferred from Australia to Singapore earlier this year, agrees, noting that India is now part of a broader regional practice for her.
And some think the current economy may also create opportunity. White & Case Singapore counsel George Cyriac says the weak rupee is starting to draw private equity eyeing bargains in certain sectors. He and several other lawyers also say some clients continue to make long-term investment in manufacturing, consumer goods, and infrastructure.
But the Indian economy has structural issues that changes in Fed policy can’t alter. Efforts to open the economy to foreign investment still clash with protectionist impulses. Onerous but inconsistent regulation continues to delay much-needed infrastructure projects. Massive corruption scandals in the mining and telecommunications industries have also shaken the confidence of international investors. Much blame has fallen on the current administration of Prime Minister Manmohan Singh.
This has created an environment of uncertainty that has put investors in “wait and watch” mode, Jones Day London-based partner Sumesh Sawhney. There is some hope that the next election, planned for early next year, could change things, but there is also plenty of cynicism.
"What people will look at is, will the next government take positive steps that help business in India,” says Cleary Gottlieb Steen & Hamilton London-based India consultant Shreya Damodaran. “If we’re stuck with a coalition, nothing is going to get through because it will just hold everything up” as it did before.
“It’s a question of how big a mandate they have from the voters,” she says. “Whether the newly elected government will have the mandate and initiative to ensure such continuity and clarity remains to be seen.”
Right now, says Khaitan & Co. Mumbai partner Rabindra Jhunjhunwala, no party looks like it will get a clear majority or a strong enough coalition to push through much-needed reforms, which would result in the same deadlock that hurt the Singh government.
“The biggest concern in my mind is what will India be after the elections,” says Jhunjhunwala. “Stability is key.”
Even in the best-case scenario of a government committed to reform, Baker & McKenzie India practice head Ashok Lalwani says it would take months for the effects to be felt in the market.