The Government’s focus continues on improving various aspects of India’s overall outlook to foreign investors. This month there appeared to be an increased focus on social development and various treaties were signed or made operational. Bar Council of India shared the draft rules for entry of foreign lawyers in India giving legitimacy to last year’s thought process.
FDI in Indian Stock Exchanges – The Union Cabinet (chaired by Prime Minister Narendra Modi) has given its approval for raising the foreign shareholding limit from 5% to 15% in Indian Stock Exchanges. The Cabinet has also approved the proposal to allow foreign portfolio investors to acquire shares through initial allotment, besides the secondary market, in the stock exchanges. The approval is in pursuance of implementation of the Union Budget announcement made by Finance Minister Arun Jaitley regarding reforms in FDI Policy with respect to the enhancement of investment limit for foreign entities in Indian stock exchanges from 5% to 15% on par with domestic institutions.
Social Security Agreement with Japan – The Agreement on Social Security (SSA) between India and Japan shall come into force with effect from 1st October 2016. The Union Ministry of External Affairs, along with the Employees’ Provident Fund Organisation (EPFO) – the competent authority for negotiating and concluding SSAs have completed the formalities for the Agreement to enter into force.
The Social Security Agreement between India and Japan was signed in Tokyo on November 16, 2012. This will favourably impact the profitability and competitive position of Indian and Japanese companies with foreign operations in either country by reducing their cost of doing business abroad. Thousands of Indian and Japanese workers who are working in Japan and India respectively will benefit from the agreement. The SSA will also help more Japanese companies to consider India as a destination for their manufacturing investments.
Bilateral Investment Treaty between India and Cambodia – The Union Cabinet has approved Bilateral Investment Treaty (BIT) between India and Cambodia. The Treaty seeks to promote and protect investments from either country in the territory of the other country with the objective of increasing bilateral investment flows. The Treaty encourages each country to create favourable conditions for investors of the other country to make investments in its territory and to admit investments in accordance with its laws.
India Belgium Double Taxation Avoidance Agreement – The Union Cabinet has approved the signing of a Protocol amending the Agreement between India and Belgium for the avoidance of double taxation and prevention of fiscal evasion with respect to taxes on income. The amendment in the Protocol will broaden the scope of the existing framework of the exchange of tax-related information between the two countries, which will help curb tax evasion and tax avoidance. The Protocol will also revise the existing treaty provisions on mutual assistance in the collection of taxes.
Rules for Entry of Foreign Lawyers in India – The Bar Council of India (BCI) has drafted the rules for the entry of foreign lawyers in India. The Union Law Ministry has held meetings with BCI and other concerned ministries and organizations recently to discuss these draft rules.
The draft rules propose to allow foreign lawyers and firms to set up offices in India after registering with BCI and paying registration fees between $25,000 for individual lawyers and $50,000 for law firms. Further, it is proposed that individual lawyers will also have to pay a security deposit of $15,000 and law firms $40,000.
Foreign lawyers would be allowed to do all non-Indian legal transactional work and hire Indian lawyers or go into partnership with Indian lawyers — activities that are all currently forbidden under the Advocates Act 1961 that only allows persons who are Indian nationals to practise law in India.
However, foreign lawyers would not be allowed to provide any legal advice relating to courts, tribunals, boards or statutory authorities; however, they would be allowed to appear as counsel for overseas clients in international arbitrations held in India, irrespective of the type of law the dispute falls under.
In another development, it was reported by India’s leading business newspaper, Economic Times, that foreign law firms have commenced preparations for entering India. They have engaged recruitment firms for talent mapping and updates on Indian lawyers.
