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India’s economy is currently experiencing one of the most dramatic growth spurts of any in the world.
This has most clearly been evidenced by the recent news that the county’s national stock exchange (the NSE) has now been earmarked as a very likely replacement for Hong Kong at number 7 of the global stock exchange rankings. This comes amidst an 8.1% rise in the NSE over the course of just one month.
The NSE’s market capitalisation now stands at a staggering $3.7 trillion – just $0.2 trillion away from the Hong Kong exchanges, and likely to overtake it very soon . This is especially due to how reliant Hong Kong has been on China for its economic growth – China’s economy is not currently growing at rates comparable to India’s, whereas in the past they had tended to move together.
The current standings are as follows:
As illustrated above, the US clearly leads the way (the Nasdaq and NYSE combined are worth around $47 trillion, whereas the next entry on the list, the Euronext, is worth $7.2 trillion). The UK’s position below India (now a gap of almost half a trillion dollars) is also worth noting.
The Indian economy as a whole has been experiencing dramatic growth. Many analysts have pointed to the notable rise of the middle class in India to explain this phenomenon – specifically in relation to the increased tendency of the Indian public to spend big on consumer goods and services.
Mirroring the growth in consumer demand, manufacturing has started to take hold in India in a manner which can naturally only be understood via comparison with China, which has, for a long time, been known as the world’s manufacturing hub (think of how many ‘Made in China’ products you have encountered over the years). Apple recently made headlines for moving iPhone production from China to India, and Tesla are similarly looking to move significant manufacturing plants to the region.
Commercial awareness is crucial for aspiring lawyers applying for legal opportunities such as vacation schemes, training contracts, mini-pupillages and pupillages (or even smaller opportunities like open days/insight events). Applicants are often encouraged to leverage their knowledge of real-world events and demonstrate how these events will impact the legal industry. This is true both at application form and interview stage.
As a result, it is imperative for candidates to go into their applications with a baseline knowledge of macroeconomic trends such as India’s economic growth, and be curious in asking questions about the consequences. Below are some key points of consideration:
A number of UK-headquartered law firms have significant operations in India, whether on the ground or remotely. The Legal 500 rankings for foreign firms in India is indicative of this trend – band 1 firms include Magic Circle heavyweights such as Allen & Overy and Linklaters (clients such as Bharti Airtel Limited Bhartiartl), alongside elite US outfits including White & Case (clients such as CLSA India).
The increased economic growth in India is likely to open up new avenues of opportunities for British law firms to expand further there in order to meet the demand. There may be tasks law firms have to address when considering the move. For example, this could include developing knowledge of the jurisdiction, sourcing local talent, or understanding cultural nuances which might affect how business (including legal services) is conducted on the ground.
Many law firms also debate whether to partner with an Indian-based firm, or whether to attempt to set up shop independently. This is a complex business decision with pros and cons both ways, though legislation makes the latter option very difficult to achieve without some kind of local partnership, so most British law firms just operate remotely from neighbouring countries if going independent.
The growth of India’s economy is likely to offer a greater amount of work for British law firms to take on from home, too. For example, British private equity or investment funds might be looking at Indian companies increasingly often in order to target new M&A opportunities. Lawyers therefore need to understand these markets (and the challenges that they might bring) in greater depth than they may have before.
Different markets have different needs, and the meteoric rise of India’s economy will ask different legal questions to those that have come before. For example, India has recently solidified its status as a leading producer of vaccines (especially since Covid), and as a result has grown its life sciences industry rapidly. Law firms need to respond with capable intellectual property (IP) teams ready to advise on drug patents issues.
Another example could be found in competition law, where newly proposed legislation seeks to clarify a very contentious area of the law. Finally, tax teams have seen increased work since the Indian government increased customs duty on Chinese imports (seen as a way to encourage greater internal growth of manufacturing processes – as already discussed above, this does appear to be reaping excellent results). The legal implications of all of these developments will need to be advised upon in some detail.
In short, the significant recent growth of India’s economy (as evidenced by very recent news on its stock market position) will likely have large, material consequences for the legal industry. This is a developing story which aspiring lawyers are encouraged to follow in order to improve their knowledge and understanding ahead of applications.
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