Category: Features

As the world’s second most populous country, India accounts for 17.5% of the world’s population. It lags behind China by just over 50 million – a hair in the grander picture. And it’s rapidly catching up: on an annual basis, India’s population growth rate of 1.2% is more than double that of China – as the latter still tries to recover from the rigours of its one-child policy.

But while population growth is largely seen as a means of economic development, so too can it signal demise. The burden on cities, services, and infrastructure must be both navigated and alleviated if a rapidly growing population is to reach its full potential. The need is such that the infrastructure question was a cornerstone of this year’s election, with impending change already apparent: the Bharatiya Janata Party, led by returning Prime Minister Narendra Modi, pledged $1.44tn towards infrastructure in stark contrast to its primary opponent, the Congress party, which instead planted a flag on the war on poverty and the battle to create jobs.

These projects – and the negotiations, deals and relationships behind them – are quite unlike anything that legal teams in other industries might face on a regular basis. Often spanning years, bordering on decades, helping guide these projects to fruition requires a different kind of legal management – and, for the teams that can thrive in this space, it provides the opportunity to play a vital role in the ongoing development of one of tomorrow’s most critical economies.

National Importance

When it comes to the development of infrastructure, the work being done by legal teams takes on an added importance, especially in a country such as India, where the infrastructure question is so closely tied to the nation’s future economic prospects. According to the India Brand Equity Foundation, India requires over $777.73bn worth of investment in infrastructure by 2022 if it is to enjoy sustainable development. And there is much work to do. Despite its massive potential, in 2018, India ranked at 44 out of 160 countries ranked in the World Bank’s Logistics Performance Index, a measure of countries’ performance in categories such as trade and transport infrastructure, and competence of logistics services.

The issue of electrification, for example, is one of the foremost priorities for India’s infrastructure, not least due to the fact that India’s 263 million farmers – those least likely to be connected to the grid – represent one of the country’s most significant voting blocs. A scheme to electrify all households in India by December 2018 garnered much attention when it was announced in September 2017. This was no small undertaking: government surveys at the time counted 40 million households without power. The goal was deemed by the Prime Minister’s Office as satisfied in December 2018, though the target was trimmed to encompass only those households who had applied for the scheme – some 25 million – and millions of households remain without.

‘Most of the countries who have experienced GDP growth have been coupled, historically, with increases in electrification. You have to provide power for industries to run, and for people to be employed,’ explains Tejal Patil, general counsel for South Asia at GE. Patil has advised many areas of GE’s multifaceted business, and as such, has seen the many ways in which infrastructure affects conditions on the ground.

‘The power sector is huge in India because of the size of the population – as is the case with industries like aviation and healthcare. A lot of what is being generated here is being consumed domestically, and that’s the enabler for GE – it plays a crucial role as enabler in critical growth sectors, which is really exciting.’

Being a critical adviser in an industry at the centre of the government’s largest concern – infrastructure – means that business is good and counsel are busy.

‘The government being interested in infrastructure is actually the best thing to happen to all construction companies, and that’s why so many international companies have come into the markets,’ explains Rashmi Kathpalia, legal head at TechnipFMC India.

‘It’s the opening of the infrastructure sector, which is very important to the growth of the country. When you are working on real Indian projects, you feel like you are in the mainstream, and contributing to the development of the country – because the country is nothing without its infrastructure.’

Grappling with Government

It is therefore critical that projects are awarded to contractors with the ability to deliver them to prescribed timelines and tightly managed budgets. In that respect, the government has its own role to play in ensuring India’s vision for the future is realised. As a contract partner, it is in the government’s interest to be as supportive as possible, something that Kathpalia has seen first hand.

For TechnipFMC, a recent example is the award of contracts for two fertiliser plants in Jharkhand. Enormous undertakings, the plants are designed to produce 2200 tonnes of ammonia and 3850 tonnes of urea per day – two products in high domestic demand. The project’s status as one of national importance has helped TechnipFMC throughout its lifecycle.

‘These fertiliser projects have been promoted by the Prime Minister’s Office. There was a public sector consortium entity that was created for the bidding, and because it comes with the promotion of the Prime Minister’s Office itself being interested in these two fertiliser complexes, the ministries work very well and very fast – negotiations are very fast,’ explains Kathpalia.

‘Government tenders can oftentimes take very long initiating and proofing and, at the end of it, the timelines that are required can become very difficult to achieve. In that case, very often what happens is that it is delayed for some reason – oftentimes leaving the contractor quite helpless. This can enact clauses included which mean you are not going to be paid any compensation for any delays, despite whether or not you are at fault.’

‘But if the Prime Minister is interested in that particular project then it becomes a lot easier for the whole process to conclude, so that the execution actually starts and concludes within the timelines – because they release the finances fast enough and, as we complete our work, the finances keep coming in with each phase.’

This is echoed in Patil’s experiences at GE, particularly when it comes to energy infrastructure projects, though she admits that having over 60% of the company’s work coming from the government has its pain points to go along with the positives.

‘There are pluses and minuses. I think one part of this is the entire government process. It is a public tender process that leaves little or no room for negotiation. The terms and conditions are pretty much set in stone and must be adhered to. There is a window to attend pre-set meetings where everyone sits together and explains their deviations. It’s not really a private contract, so from a legal standpoint it’s more about managing the risk rather than negotiating a very beneficial position. If all the bidders meet the technical specifications, then the one with the lowest price wins – there’s no other negotiation,’ she explains.

‘As the government is interested in infrastructure development, the size of these projects ensure focus. So, if you have obstacles or difficulties during the project execution, they can be addressed at the highest level since the government too becomes a key driving force to ensure successful completion of the task.’

Legal Engineering

When a large construction company closes a deal with the government to deliver a critical infrastructure project, the agreement between the two parties is often a far different creature to a typical B2B contract. These are agreements, for example, to build and maintain miles upon miles of railroads for a number of years, often decades. The in-house teams drafting and negotiating these agreements therefore need to have a firm grasp on the operational requirements of the project. What amounts of materials are required? How much labour will the project call for? Does the company have the technological capabilities required to deliver the project on time and on budget?

Kathpalia explains that all of these requirements mean her department must be of a different character to your typical legal team.

‘We have to understand how robust the project execution team is to be able to undertake that task, and so it’s not just regulatory. Our exposure is not just in terms of the price, but each contract comes with a particular timeline stating that it has to be concluded in X number of months. If our team is not going to properly assess the number of man hours required, or the price, or procurement requirements, or things like that, then we would be completely out of pocket,’ she says.

‘If you look at the bigger picture, when we assess the contract and then price the contract, when we understand the risks within the contract and we understand the full scope, legal is not just understanding what the contract says, legal has to understand from the risk and the project execution department what the exposure is. If, for example, it’s a revamp [of an existing facility], we cannot afford for the property that already exists to be damaged. Sometimes the owner may be having the indemnification for it, sometimes not, sometimes we may get insurance cover for it, sometimes not. So we have to work with that.’

GE’s Tejal Patil voices a similar sentiment: ‘In terms of anticipating risk, you cannot review these contracts in a vacuum – there has to be a return on experience. For example, you need the supply-chain members telling you whether they can supply something in time in order for you to accept a liquidated damages clause. If a lawyer reviews contracts in isolation, sitting at a desk, you’re never going to be able to assess the true risk.’

Building – and Maintaining – Bridges

For those companies delivering enormous infrastructure projects to India, the list of potential clients is a short one. The majority of the work will come from the government directly, but even in those instances where a company like Tata Steel, GE or TechnipFMC will be contracting with other private entities, there are very few players in the market with which to engage. Because of this, relationships are key, and disputes must be approached carefully.

‘Traditionally, India is a litigious country and the process of dispensation through the legal system is slow. Most companies will be straddled with a number of cases. Depending upon the industry, the portfolio of cases varies,’ says Dipali Talwar, former group general counsel of Tata Steel, who also spent several years at Pfizer.

‘I think the requisite skills for lawyers and particularly in-house counsel would be their ability to take a proactive call on risk and foresight to ensure no dispute arises in the future. Counsel must excel in applying their judgement on current legal trends, impending legislation as applied to their industry and, more particularly, the business process and agenda of the corporation they are part of. The unique ability and opportunity of the in-house counsel is to be able to prevent disputes or non-compliance. In-house counsel should also be able to partake in discussions on an area where impending legislation may result in change.’

Another wrinkle in the disputes issue is the complexity and long-term nature of these projects, where all too often it’s not until years down the track that grounds for dispute are discovered.

‘When the going is good, everything is good,’ explains Kathpalia. ‘It’s only at the end of the project that you realise you are out of pocket, or that you have been short-changed and you want to raise the claim, whether it’s against the owner, or against your consortium partner or a sub-contractor. This means that, as a team, we have to be engaged and ensure we are operating partners throughout the lifecycle of the project.’

Because the industry runs on low-volume, high-value, project-based contracts, there are very few bridges available to be built and burned. Fortunately, this is a reality that is largely accepted by all corners of the sector.

‘Most sectors are small and close knit, so it’s important to find a way to collaborate and have meaningful dialogue and resolution with relevant stakeholders – be it the government, competitors, vendors, channel partners or customers,’ says Talwar. ‘It is often not worth the cost or the time to enter into formal disputes – litigation or arbitration.’

‘The organisations are used to supplier disputes,’ adds Patil. ‘Even if you have a dispute, it doesn’t prevent you from getting the next order, because they understand that it can sometimes happen in large contracts. The public sector undertakings in India don’t like to settle claims (sometimes even large claims) during execution – account reconciliation is usually at the end of the project. It may be ok for a large corporation like ours but, from a cash-flow perspective, for a smaller company, it gets challenging if the payments aren’t made in time or the dispute isn’t settled along the way.’

Given the cost associated with pursuing disputes in this industry, and the particular need to protect vital relationships, the focus must necessarily shift from reacting to disputes themselves to preventing them in the first place. This, explains Kathpalia, is an art in and of itself:

‘While there are many companies that will put some amount towards disputes expenses, we rely more on our execution: that our execution should be so masterful that we should not have to go into claims at the end of the project; to bring it to light on a regular basis so that the client too can assess what the changes are. And so, I hope I’m not speaking too soon, but so far we do not have any litigation or arbitration pending as far as our projects are concerned.’

Arbitration

One less adversarial method of dispute resolution is, of course, arbitration – a mechanism that is becoming more common in these industries. But the usefulness of an arbitration clause is restricted by the infrastructure that is in place in the relevant jurisdiction, and India, like many countries, is beefing up its capacity to meet the needs of businesses in this respect.

A judicial committee convened in 2017 highlighted the barriers to the development of arbitration in India: namely the time taken for such proceedings to progress through the courts, and what was called ‘an excess of judicial involvement’. The committee recommended a reformation of arbitration in India with a view to establishing the country as a globally competitive arbitration destination. These recommendations were approved and resulted in amendments to the Arbitration and Conciliation Act 1996. Among the changes were the establishment of the independent Arbitration Council of India to promote the use of arbitration and other alternative dispute resolution methods, and the introduction of time limits for the presentation of submissions before arbitral tribunals.

‘Arbitration as an alternate dispute resolution avenue is growing. There are about three new arbitration centres which have been established in the last few years. You have the Delhi Arbitration Centre, the Mumbai Arbitration Centre, and a couple of private arbitration centres, and they’re expanding with many retired judges and lawyers on their panels. Where there is still a bit of a gap, is technical expertise,’ says Patil.

‘For disputes of this nature, you need a technical person on the panel. Recently we have some good experiences. Major disputes tend to use what we call ad-hoc arbitration, where one party appoints one arbitrator, the other party appoints a second and then a third who is chairman of the panel is appointed by both. These usually tend to be retired judges of the Supreme Court, High Court or eminent jurists.’

These ad-hoc arbitrations – as opposed to institutional arbitrations held in the kinds of large centres now opening – are still the primary preference in India, despite a finding by PricewaterhouseCoopers and Queen Mary University of London in 2008 that 86% of global arbitral awards in the preceding ten years had been from arbitral institutions. The committee was sceptical of the use of ad-hoc arbitrations in its 2017 report, citing the time taken for such arbitrations to conclude and the high costs associated with them. But with a concerted effort by the Indian government to make institutional arbitration a viable option, this may change.

‘The positive change we’re seeing is the government moving towards institutional arbitration in its contracts. In the past, there were contracts stipulating a single arbitrator, who would be a government employee,’ says Patil.

‘These three centres are growing. We have not used them, but we are looking into their services as more government contracts are incorporating them now.’

GC: What do you think should be the priority areas/sectors for the re-elected Indian government?

Shailendra Singh (SS): The long term priorities of the government should be environment, affordable housing, drinking water and sanitation, waterways development, financial inclusion and development of hard infrastructure.

Capital investment in hard infrastructure development, drinking water and sanitation, renewable energy and energy efficiency schemes, among others should be in focus. Electricity distribution should be another focus area.

GC: Which steps taken by the previous government in the infrastructure sphere need a further push by the re-elected government?

SS: Over the years, the speed of road construction has become the benchmark for India’s infrastructure creation. Now, the central government has set in play a new integrated infrastructure programme, which involves building roads, railways, waterways and airports. The centre has also been trying to leverage roads, railways and waterways to bring India’s logistics costs down to 8%, to make the economy competitive. India has long grappled with high logistics costs at 14% (as a percentage of product cost), which make exports uncompetitive vis-à-vis those of China, where logistics costs are about 8-10%.

The last five years have seen massive spending in roads, railways, water, irrigation and urban infrastructure. Where roads are concerned, 52 projects worth 37,019 crore were awarded between 2015 and 2018, under the new 30-year lease toll-operate-transfer (TOT) model introduced to recycle capital and auction operating road assets to private equity investors.

With the view to reducing India’s carbon footprint and ensure faster movement of goods, inland waterways are being explored as an alternative. The continued push for transport through waterways is required to make it competitive and a viable option. The development of terminals at Varanasi, Sahibganj and Haldia, and the development of NW-1 needs to be expedited.

Further, to ensure faster and more predictable enforcement of contracts, the arbitration and other alternative dispute resolution mechanisms have to be given a recognised statutory basis. Sectoral regulators promised for certain infrastructure sectors such as MRTs and coal should be implemented as soon as possible.

GC: What are the key areas of focus in the power sector and what steps can be taken to increase usage of renewable energy and ensure global commitments to reduce India’s carbon footprint?

SS: Reforms in the power sector are necessary to ensure that all stakeholders improve their financial health. The regulatory commissions have to be made more professional to implement in spirit the mandate of the Electricity Act, too.

With regards to the renewable energy sector, while the mandate under the existing laws is clear on renewable purchase obligations that must be met by the distribution licensees in the procurement mix; the enforcement of the deterrent needs improvement. The distribution licensees must be held to strict renewable procurement obligations, as well.

GC: What are your thoughts on the potential of public-private partnerships (PPPs) and the impetus that the government should give?

SS: Funding India’s wide-ranging, $500bn programme of infrastructure expansion over a five-year period is likely to be beyond the means of total government funding, so policies have been designed to facilitate private investment to the maximum level possible. If the Indian government’s targeted level of private sector involvement and investment are met (approximately 30%), the quantum of funding required would be around $150bn – dwarfing the investment achieved over the past decade.

The government has, in the last three years, undertaken some noteworthy steps to strengthen the PPP framework and the enabling ecosystem in India. This includes formulation of guidelines for new innovative PPP models, with due consideration to the extant risk outlook and investor appetite, like monetisation of publicly-funded highway projects worth approximately 35,600 crore under TOT and construction and expansion of over 60 highway projects under Hybrid-Annuity-Model (HAM). With the implementation of PPP models like HAM and TOT, the government has taken over the project implementation risk and thereby revived the interest of private players and financial institutions to a considerable extent. Furthermore the government has liberalised the exit policies for concessionaires to free up equity for re-investment into new projects, approved the policy of railway station development through PPP and is currently in the process of formulating suitable PPP policy for newer sectors and asset classes.

Some of the other measures include the setting-up of a National Infrastructure Investment Fund (NIIF) to channel foreign institutional funds into infrastructure; introduction of a PPP component in the new metro policy; amendment of the Arbitration and Conciliation Act 1996 to make dispute resolution more cost-effective and time sensitive; 2.11 lakh crore plan to recapitalise public-sector banks aimed at reviving bank-lending; and introduction of ease of doing business (EODB) state-level ranking, to help the government to push through reforms in sectors that are primarily state subjects.

GC: What legal impediments do you foresee for a prospective investor in infrastructure?

SS: For any prospective investor, certainty of the regulatory regime is of prime importance. Regulated sectors generally assert the rules of the game upfront and there is regulatory certainty of the trends that one can expect in the sector. To improve investor confidence, sectoral regulators need to be actually set up – a mere policy announcement will not do. This also assumes significance since there is an arms-length distance between the government and the participants of that sector. Therefore, existing sectoral regulators such as AERA need to be strengthened and new ones for urban transport and coal, for example, needs to be set-up to increase investor confidence.

Also, overlapping jurisdictions in the context of multiple statutes needs to be addressed. For example, the Specific Relief Amendment Act that was recently notified seeks to cover a gamut of infrastructure projects within its ambit that are specified in the Schedule to that Act. However, a bare reading of the Act raises three primary concerns: one, the said statute is applicable to a ‘contract relating to an infrastructure project’, making it sweeping in nature to potentially include within its ambit sub-sub-contractor(s)-level project agreements. Second, since the provision is limited to suits for specific performance under the Specific Relief Act, it may have a limited impact since any contract that has an arbitration clause would effectively be out of its ambit. Third, since many, if not all, infrastructure sub-sectors annexed to the Schedule of the Amendment Bill are governed by their respective sectoral regulators, the interface between sectoral regulators, the players/elements of the sectors that are regulated and the contractors who can avail the protection provided under the proposed regime would throw complex and myriad legal issues.

From a contracting perspective, the contracts in the infrastructure contract need to be more balanced and both the oncessionaire and the authority must share risk and reward appropriately. The idea that all risks need to be passed on to the concessionaire, while tempting, from the government point of view must be resisted to produce much more bankable documents and to encourage global participation.

GC: What are your thoughts on the recent amendments to the Commercial Courts Act and its implications for infrastructure development?

SS: The government, on 3 May 2018, promulgated an ordinance amending the Commercial Courts, Commercial Division and Commercial Appellate Division of the High Courts Act, 2015 (Act). These amendments are an attempt to expand the scope of commercial courts in India. It reduced the dispute value that can be settled in the commercial courts to 3 lakh rupees from the earlier 1 crore rupees limit, and, it introduced mandatory pre-institution mediation.

This would bring a large number of disputes within the ambit of the commercial courts which were previously outside their scope. It appears that the intent is to meet the parameters used to gauge enforceability of contracts in the World Banks’s Ease of Business Report, since the cases considered for the report are the ones with claim values worth 200% of income per capita or $5,000, whichever is greater. With this change, it is expected that the data of the commercial courts constituted under the Act would now be used as the pecuniary jurisdiction starts from 300,000 crore. However, specifically as it regards infrastructure, it would have limited impact since the cases that would fall within the realm of the Act would be disputes arising at the SLA level and the key project contract and the disputes thereof would still be the subject matter of the sectoral regulator.

GC: What are your views on the impact of the GST regime on the infrastructure sector?

SS: The biggest bugbear that GST poses to the infrastructure sector is the restriction on availment of credit of input side GST, if it has been incurred for construction of ‘immoveable property’ (other than ‘plant and machinery’, as defined). For several large infrastructure projects which are coming up on a PPP basis, the cost of the construction of the project assets is significant – the GST incurred on this cost of construction being unavailable as credit against output GST by the project SPV leads to significant spikes in project cost, followed by litigation to invoke ‘change in law’ provisions under the relevant concession agreement to pass on the cost to the end-customers/users. This aspect ought to be remedied soon if investment in infrastructure, especially on a PPP basis, is to be boosted.

Further, while no GST is payable on advances for goods, GST becomes leviable on advances for services even though the credit of such GST incurred on advances for services is available at a later point when the services are actually received. This is effectively the proverbial double whammy, leading to significant cash-flow issues, especially for construction-sector players.

More specifically, ambiguity prevails over applicability of GST on concession agreements for construction of roads, especially under the HAM, which needs to be clarified along with clear guidelines about recouping such GST (if any) by the private concessionaires from National Highways Authority of India (“NHAI”), the nodal agency of the Indian government in charge of construction of national highways.

Also, there prevails a lot of ambiguity apropos GST applicability in solar and wind power projects despite several representations and recent amendment. Here too, we at Advaita Legal have represented the Wind Turbine Manufacturers’ Association before the Delhi High Court, seeking to achieve greater clarity and a more beneficial GST implication for wind power projects.

GC: What are the key contractual disputes that are arising out of the Goods and Service Tax regime?

SS: In our experience, there are a number of instances where contractual disputes have arisen owing to the onset of GST:

• Impact of ‘change in law’ benefit: in calculating the change in contract price necessitated by a ‘change in law’, disputes frequently arise as to whether there is actually an increase in tax burden or the other contracting party is trying to profit from a change in the tax regime. Disputes of this nature are not only leading to arbitration claims but also to scenarios where the recipient threatens the supplier with a complaint to the anti-profiteering authority as a strategy to avoid arbitration.
• Delay as an excuse to nullify a ‘change in law’ benefit: construction contracts provide that in the case of a delay on the part of the contractor, the employer is not liable to pay increased tax rates or new taxes. Therefore, if the employer is able to prove that the project was delayed by the contractor then the whole incremental tax cost due to GST or any change in GST rate will have to be borne by the contractor. However, establishing such a delay is a lengthy process often leading to arbitration, and until then the contractor has to bear the burden of incremental taxes. This is emerging as a serious challenge in large construction contracts.
• Forcing the contractor to adopt or continue old contracting structures: before GST, the conventional wisdom in tax structuring of contracts involved splitting a turnkey scope of work into separate supply and services contracts. However, after GST such structuring has mostly been rejected by advance ruling authorities, who treat the multiple contracts together as one composite or mixed supply. Such collapsing of separate contracts leads to a higher GST liability and unless a clear indemnity is pre-negotiated, this leads to heated contractual disputes (and at times arbitration claims) in respect of such incremental GST liability.

The foregoing is not to say that contract structuring is are longer possible under GST – however, the principles underlying such structuring are often different under GST; the difference in such principles and the concept of ‘substance’ needs to be duly factored in, while planning any contract structuring.

• Forcing the contractor to pass on input credit agreed in the contract pre-GST: often, long-term contracts entered pre-GST would contain a stipulation that the contractor pass on a specified quantum of input tax credit to the customer. The amount agreed would, of course, be based on the earlier pre-GST tax regime and common sense would dictate that, post-GST, such terms should either be specifically re-negotiated or be agreed between parties as irrelevant or unenforceable owing to a change in the law. Unfortunately, many customers are pressing hyper-technical contractual interpretations to force the contractor to pass on the same pre-agreed quantum of input credit, failing which, arbitration claims are being raised or threatened against such contractors.
• Disputes on GST on liquidated damages: it has been internationally recognised that no GST can be levied on liquidated damages as they are in the nature of compensation or damages. However, Indian tax authorities (as well as advance ruling authorities) have taken a different stance. This leads to disputes between the contracting parties as to whether GST is leviable and other related issues.

Across the world’s business markets, the legal profession is stuffed to the brim with the cream of corporate minds, the elite of the elites. But, in India, that wasn’t always the case.

Despite being the first chosen career of icons like Mahatma Gandhi and Jawaharlal Nehru, by the latter years of the twentieth century, the legal profession in India had suffered something of a fall from grace.

‘The joke always used to be that you would only become a lawyer if you were the son of a politician, a gangster, or somebody who couldn’t get in anywhere else,’ recalls Navneet Hrishikesan, director of legal services for service provider, Asia Pacific and Japan, at Cisco.

‘Growing up in the late 70s, 80s or 90s, there was a general feeling in India that the quality of legal education was not very good and that people attracted to the law were not of the calibre that you would like.’

That all began to change with the creation of prestigious National Law Schools, providing a five-year legal degree for those who pass a challenging entrance examination, usually the Common Law Admission Test (CLAT).

‘Over time, the law got a reputation for excellence, it became known to be something people would aspire to,’ says Hrishikesan. ‘For people like us, who joined in the early days, it was a bit of a shock to find people actually knew why we were doing law, as opposed to laughing at you.’

The National Law Schools of India University Act 1986, under which the first National Law School – the National Law School of India University (NLSIU) in Bangalore – was founded, stated that among the school’s objects was ‘to make law and legal processes efficient instruments of social development’.

‘The idea was that you would have people trained in the law who would actually go out and then change the country and help people with problems, with justice, human rights and fight for the downtrodden and the sick. Our illustrious director at law school, the late Dr Madhava Menon, called it “social engineering”,’ explains Hrishikesan.

But as the Indian economy opened up in the late 1990s and early 2000s, the wealth of opportunities in the commercial arena began to tempt graduates, who found themselves suddenly in demand. And so the legal profession in India returned to the ranks of the elite.

Beyond the barriers

Social stratification in India is famously such that it is often said that India lives in several centuries at the same time – and the barriers to a legal career for less privileged hopefuls are many.

A legal education of 201,000 rupees a year (for general undergraduate students at NLSIU Bangalore during 2018-2019, for example) is prohibitively high for the average household income of less than 160,000 rupees (figure reported by Centre for Recording Indian Economy in 2015). It is perhaps no surprise that a 2014 survey of first year students at five of the top law schools conducted by Increasing Diversity by Increasing Access (IDIA) found that over 50% came from families earning an average annual income of a million rupees.

But the obstacles stray beyond the financial into the cultural, and even the linguistic, for less privileged aspiring lawyers. Despite not being the majority language in India – which teems with Hindi, Bengali, Marathi, Telugu, Tamil, Gujarati, Urdu and many more tongues – the importance of English for white-collar jobs means that large numbers of students are excluded from law school due to being educated in their vernacular.

An IDIA survey found that only five students from the top five law schools studied in vernacular medium schools, and that more than 70% came from families where both parents spoke fluent English.

‘Those who speak better English find it easier to get into these colleges and also stay in them. They are educated well in English, so they find it very easy to express themselves,’ says Aditi Kamath, executive vice president at IDIA.

And, with the concentration of National Law Schools in cities, children in the myriad of small towns and villages across the country are further faced with transport and accommodation costs, even to access coaching and training for the entrance exam – prerequisites for the rigours of CLAT.

The reality for sizeable sections of the population, not to mention those with disabilities, is that a legal career is not on the radar of students who otherwise have the ability and drive to succeed in one – if only they had the chance.

Planting seeds

IDIA is one organisation which hopes to change all that. Founded in 2010 by legal academic Dr Shamnad Basheer, IDIA works to increase diversity in the Indian legal profession and empower underprivileged communities by creating lawyers from within their ranks.

‘[Basheer] was teaching at one of the national law universities and he realised there was not enough diversity in these schools. He knew of many students who came from towns and villages who wanted to study law but they had no access to a quality legal education. This is when he decided to do something about it,’ explains Kamath.

Comprised of chapters in 21 states, each with 20 to 30 student volunteers from the existing (more typical) law school population and led by a student team leader, IDIA conducts ‘sensitisation’ sessions with high school students, identifying and encouraging those with the potential to get into law school. It then trains them to pass the entrance exam over a period of one or two years and supports successful applicants throughout the process of training to be a lawyer.

‘In India, especially in small towns and villages, people don’t really know what a lawyer is able to do in the real world – the only representation is the lawyers they see on the television and in film. So when we conduct sensitisations for these communities, we make sure we tell them the various things you can do as a lawyer, which is not just argue in a court of law – you can join the public services, you can do policy work, you can have your own NGO and help people in your community. These marginalised groups that our scholars come from have faced a lot of injustice in their lives, so these are things that really push them to be able to say that: “I want to study law to be able to help my community to do better”,’ says Kamath.

‘What we look for more than anything is a passion to do better in your life. The fire in your belly. You can be taught things, but the passion and the drive cannot be taught – that has to come from within.’

After passing an aptitude test based on academic grades and a personal interview, as well as a means test, 50 or so students are enrolled in coaching centres to prepare for the law school entrance tests. IDIA fills out their forms and arranges for the coaching to take place for free, while current student volunteers tutor them in areas like logical reasoning and current affairs. Those needing to travel are given accommodation and expenses for transport, food and lodging. Currently IDIA has 35 trainees getting ready to sit this year’s exam.

The money tree

For those who pass the entrance exam and receive a law school place – like the 64 students currently receiving IDIA sponsorship – IDIA also funds their education. It’s a huge financial undertaking, and the organisation often struggles to find donors. Some leading schools have instituted fee waivers and scholarships for IDIA scholars, and others are in negotiations. Where schemes are not in place, IDIA taps into the legal fraternity in India.

‘At the end of the entrance exam, we know which ones made it through. Once that list is out, we make up their profiles, and we circulate them to our donor group. Usually a lawyer picks one of the scholars and says, “I commit to sponsor this scholar for the next five years of law school.” We have scholars who are being sponsored by a particular law firm or sometimes a corporate group – Citibank sponsors five scholars,’ explains Kamath.

She adds: ‘We still have a few scholars without committed donors though, and we often struggle to match donors with scholars. Donors are also more willing to contribute towards scholars, but not towards organisational expenses like paying salaries, organising events, publicity and outreach, etc.’

‘Every year, we file a biannual progress report to each of our donors, saying, “This is how your scholar is doing right now, these are the grades, these are the internships they were picked up on, these are the seminars they have attended.” At the end of the year, we tell them that “Yes, the scholar was accepted on to the next year and this is how much we need to pay this year.” We write to donors and we attach the entire projected expenses for the scholar for that academic year and they send in the funds.

Holistic support

The legal community also provides practical support to IDIA scholars in the form of mentorship and internships. Mentors are assigned according to the individual needs of scholars, and relationships often continue past law school.

Cisco is one such company that offers backing in this way, assisting with sensitisation sessions, occasional mentorship, and regular internships – although Hrishikesan would personally like to do more.

‘Actually, that’s one of my grouses with the Indian legal education system. In Australia, for example, we have interns with us for up to a year, and the same in Spain. Here in India, course restrictions mean that we are not able to keep them for more than two months or three months at a time, which I think is unfortunate, because to change the legal profession and to change the way we teach our lawyers, I think more practical aspects are what’s required, not more theories from books,’ he says.

‘Particularly in an in-house environment because, unlike a law firm, our deals and our engagements tend to go on for a while, so to be able to actually gain value from it you need to be involved in it for a while. I’m a little frustrated by the fact that the educators in India are not willing to consider different models for their law schools.’

A new world

But IDIA and its professional stakeholders also recognise that there is something even more involved in developing lawyers from underprivileged backgrounds. Although extraordinarily gifted, these students are crossing not simply an academic bar, or even a linguistic one – they are entering into a whole new world.

Yamuna Menon is in her fifth year at NLSIU Bangalore. Academically, she is currently Rank-1 in her batch and was recently selected by the Ministry of Youth Affairs and Sports in India to represent the nation abroad in a youth delegation. But, despite an English-medium education, as an IDIA scholar from a small town in Kerala, fitting in was a process of cultural adjustment.

‘I cannot deny that in the first few months here I actually questioned the decision I made. It was difficult to adapt to this place initially because there were people with a different cultural makeup; their inclinations and interests were different from mine. I was unable to understand things which were happening, like the context, or being part of normal conversations with people for that matter – just like being in a friend circle. They might have a joke and I might not get it,’ she explains.

‘I can never forget my roots and where I come from and what values I hold. But at the same time, I had to make some changes to myself for the professional environment that I am getting into, and I think that’s part of the process. So right now I’m really enjoying it, but adaptation has to take place and, in that journey, I have made some really good friends for the rest of my life.’

‘Mental health is also a part of concern for us, because they are coming to a big city and a big college, where students are well-informed about the world,’ adds Kamath. ‘At that formative age, where you are can be quite intimidating for the scholars sometimes. Some of our scholars do feel a little insecure and get a little bogged down, so we offer help in that scenario also – find them an accredited counsellor and we make sure they feel better.’

Hrishikesan, a classmate of IDIA’s founder Basheer, recalls that the movement could always be characterised as personal.

‘We had a classmate who was very smart and intelligent, but he came from a very humble background and struggled in law school as a result, because ultimately what happens is that the rest are a bunch of these westernised, well-to-do kids who have very little in common with you. It’s difficult enough being a teenager in a new place. On top of it, you are almost forsaken, nobody is really socialising with you, you probably struggle with English a bit, the quality of education is probably high compared to where you have come from and what you have been used to, you don’t read English books at home, and basically you struggle to fit in,’ he explains.

‘I think Basheer took a lot of that to heart, because he looked at it and said, “Ok, it’s not just about helping somebody to get into law school, it’s also about helping them through that process – how do you make sure that people don’t feel left out while they are in college?”’

The future

So, has IDIA set out to create a regiment of socially conscious lawyers, armed to tackle the injustices of society? Not exactly, although it describes its core aim as the creation of ‘community leaders and leading lawyers’. Many current and former students speak of a desire to use their skills to help their communities.

‘There are IDIA scholars who, while they are in law school, have taken on local mafia-type organisations and fought for the rights for villagers around,’ says Hrishikesan.

‘But I think it’s very much left to you, personally speaking, what you would like to do. And I think that’s the right approach. I don’t think there’s an expectation that you have to say no to the commercial sector.’

And the opportunities for graduates are certainly there. Menon harbours ambitions to complete an LLM abroad, perhaps Oxford, Cambridge or Yale.

‘I have had exposure to both [law firm and other organisation] areas. Definitely an aspect of giving back to society and making a difference is something that I can’t do away with but, at the same time, commercial law gives you a lot of opportunities in diverse areas, and I enjoy the same. I believe that there is no need to cut off commercial law from public policy, so I’m trying to balance it out.’

IDIA is up-front about its end-game, which is to ultimately render itself unnecessary – not only through the empowerment of underprivileged communities, but by also creating the circumstances whereby the more typical, privileged students are better equipped to carry the torch themselves.

‘Our idea is to become obsolete after ensuring that law schools – and national law schools particularly – become more diverse, and more people from marginalised and underprivileged communities get up and see that they have this opportunity open for them and that they can do a lot for their own community. We would love it if there was no reason for us to exist!’ says Kamath.

‘We want to produce better lawyers who have more empathy towards other groups, who know that not everyone comes from a privileged background and that people need help sometimes. It is very important to put them in a diverse environment so they can interact with these scholars from other, marginalised groups and find out how, as lawyers, you can work to create a better situation for everyone.’

(If you wish to support IDIA in any manner, write in to [email protected] to know more)