Lawyer Kosturi Ghosh met with SICF to go over the measures taken to boost the Indian economy
In the past few years, the Government of India has led a number of initiatives aimed at developing the country’s economy and creating a favourable environment for foreign investment. The breakfast meeting hosted by the Council Foundation and Indian law firm Trilegal served to analyse those initiatives and gain a deeper understanding of their effects, as well as identifying investment opportunities for Spanish companies.
Kosturi Ghosh, a partner at Trilegal, pointed out that the measures taken seek to ensure investment-friendly economic governance, simplify the regulatory framework, minimise government interference and build a transparent ecosystem.
To this end, as well as introducing legal and tax changes, the Government of India has worked on making it easier to do business, increasing digitalisation with the “Digital India” initiative, developing the national manufacturing industry with the project “Make in India” and fostering SMEs and start-ups, which are “indispensable for the country’s technological development.”
Kosturi Ghosh analysed some of the most recent legal and tax reforms in detail, including the implementation of GST (Goods and Services Tax), a nation-wide tax introduced to create a common internal market within a federal state, thereby reducing the cost of goods and services and fostering business.
More than six months after its introduction there are still some issues around GST, including the various different tax rates involved (ranging from 0% to 28%) and the taxation system used for certain products such as tobacco and top-range vehicles. In spite of this, and even though revenues from the GST have gradually decreased since its introduction in July 2017, the forecasts are optimistic and, according to the lawyer, “the benefits of this unified system will become apparent in the long term.”
Additionally, the Government has undertaken legal reforms in areas such as insolvency and bankruptcy procedures, which offer an opportunity for foreign investors to acquire assets at a compelling price with clearer legislation. Reforms in the field of arbitration and conflict resolution have accelerated procedures, reducing the need for legal action and increasing protection for investors.
Lastly, Kosturi Ghosh also analysed the demonetisation process that took place in India at the end of 2016. Despite failing to achieve many of the goals set, it did have a positive impact on the development of the digital economy in the country. Digital payments went up by 56% and zero balance accounts went down from 77 to 21%. Tax returns also increased by 15%.
The importance of developing India’s digital economy is clearly reflected by the fact that the Government has included financial support for fintech in its 2018 budget, as well as a greater emphasis on the “Digital India” project and a 30-billion euro investment in the tech industry. These measures make India the second fastest country in the world to adopt financial technology. This recently liberalised sector offers many opportunities for foreign companies, according to Kosturi Ghosh.
The results of all these measures and initiatives will be seen more clearly in the coming years. For now, Ghosh said, India has scaled thirty places and moved into the top 100 in the World Bank’s global Doing Business ranking, which ranks economies based on their ease of doing business.