Friday, October 03, 2008

210? Better to jump ship!

Proposed amendment to Indian law is not sensible
Rarely would we have imagined, even a decade ago, that an amendment to Indian M&A law would have such far reaching implications across the globe. But with so much dependence on the Indian economy now, this comes as no surprise today.

The Indian government has come under the scanner for introducing merger control amendments to its competition act of 2002. As per the provisions, any company which does business in India will have to seek permission from the government in an event of it being involved in M&A activity, even when it does not involve Indian operations at all! It is believed that the government has brought these changes to safeguard interests of domestic companies. The us and several other bar associations have voiced severe concerns. The matter has even reached the us Congress in order to pressure India. According to Rajesh Menon, Senior Director, CII, “This would lead to the possibility of some deals not fructifying and eventually slowing down the process of economic growth in India.” Also, the whole process of notification will take any where between 30 to 210 days. The industry fears a loss of competitive edge during the gestation period. Evidently, global M&A activity could be substantially hit. Jyoti Vij, Director (Financial sector & corporate law), FICCI, said to B&E, “There is a genuine concern in the industry (in India & abroad) as it is not clear what all is in the ambit of the amendments and how things like group consolidation and takeovers will be affected.”

M&As have the potential to bring positive gains to the Indian domestic industry through transfer of technological & business expertise. Concerns relating to foreign companies engaging in M&As might be genuine, but such an amendment will surely prove to be the wrong way to address it. Guess India must search for better ways to exercise its global clout than this!

For Complete IIPM Article, Click on IIPM Article

Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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