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Legal eagles on business hurdles

Doing business in India has become difficult because of overactive regulatory agencies that hound businessmen, financial and legal experts alleged during a discussion on the newly-promulgated Companies Act on Friday.

“The World Bank has listed India as one of the worst countries for doing business. The new act (Companies Act 2013) has proposed various provisions which are detrimental to the cause of promoting business and will worsen the situation,” N.G. Khaitan, a partner in Khaitan and Co., one of the oldest law firms in the country, told Metro on the sidelines of the seminar.

Khaitan and Co., which is more than 100 years old, organised the discussion.

At the seminar, partners of the firm, Anand Mehta and Sharad Vaid, explained various facets of the Companies Act 2013, while another partner, Daksha Bakshi, spoke about succession planning. N.G. Khaitan spoke on both the issues. Another partner, Padam Khaitan, spoke on corporate social responsibility.

N.G. Khaitan dubbed as “terror tactics” steps like identifying violations of statutory provisions as cognisable offences under the companies act, and excise or income tax laws, and arresting company directors for such violations though they are unaware of daily operations of the organisations. “Nobody wants to be director these days,” the expert observed.

The experts plan to appeal to the new government at the Centre to make appropriate changes to the relevant laws. “These (legal provisions impeding business) have happened mainly because of over-zealous bureaucracy. Political leaders hardly have any role. Prime Minister Manmohan Singh is quite sympathetic to industrial growth, while Narendra Modi has recently observed about taxation terror… we will definitely appeal to the new government on the issue,” said N.G. Khaitan.

A legal expert pointed out that India is setting up hindrances to business with these legal provisions at a time it aspires to become one of the biggest economies of the world. “It’s not that the businesses do not have black sheep or that there is no corruption and irregularities. There are, but one should not generalise. It seems our regulatory agencies either under-react or over-react,” said the expert.

“Take for example the bribery issue. On the one hand Transparency International says India is the worst in this respect and nothing moves in this country without bribe. On the other, you may be arrested for giving a bribe. How the businessmen will operate here?” asks another.

The meeting also discussed the succession issue in the context of Indian business. “More than 85 per cent of the businesses in India are family businesses,” pointed out an expert. “We are trying to drive home the need for successful succession planning as nearly 90 per cent Indians never change their wills once done. In contrast almost half of the South Africans change their wills thrice or more,” observed N.G. Khaitan.