The Indian government ostensibly fosters foreign investment to fuel economic expansion, yet, stringent and unclear regulations often result in mixed signals for foreign investors, observed Brian K. Oh, a senior lawyer at major Korean law firm Jipyong.

"While the Indian government encourages foreign participation, particularly to strengthen the domestic manufacturing industry, strict compliance, especially in the tax system, poses significant obstacles," Oh said in a recent interview with The Korea Herald, highlighting India's mixed approach to foreign investment.

As a result, foreign entities, including his Korean clients, have often faced frequent tax audits, with violations likely entailing hefty penalties. Last year, Chinese tech giant Xiaomi's Indian unit was fined 6.53 billion rupees ($781.24 million) for tax evasion, following an investigation revealing 55.5 billion rupees in money illegally transferred out of the country. Korean automakers Hyundai Motor and Kia were each fined around 370 million rupees last year for breaching emission regulations.

As more Korean companies consider opportunities in the fast-growing Indian economy, Oh emphasizes the importance of understanding the regulatory landscape and potential risks.

It's an "uneven playing field" for foreign firms, not only in India but all countries. "Most countries apply stiffer rules on foreigners," the veteran foreign lawyer of Jipyong noted, "So, to invest overseas, you have to delve a layer deeper into the regulations," he added.

As a prominent law firm specializing in business overseas, Jipyong has served as a partner for numerous local firms in their international endeavors. Since establishing its Shanghai office in China in 2002, the company has steadily expanded its overseas presence and currently operates eight units in seven countries out of Korea.

In December, Jipyong took its latest stride in the international stage by establishing a dedicated team for Indian affairs. Although without a physical office due to India's closed legal environment, Jipyong's India team is comprised of seven senior or executive-level officials, including Managing Partner Yang Young-tae and Partner Jeong Cheol.

Jipyong's official entry into India reflects the global trend of businesses capitalizing on opportunities offered by the world's fastest-growing economy. With an impressive growth rate of nearly 8 percent and a population of 1.4 billion, India is poised to sustain its robust growth trajectory this year.

India is also in the process of ascending to a new position within the global supply chain, aiming to become an alternative to China as a top manufacturer amidst the continued US-China rivalry and China's economic slowdown.

The government of Narendra Modi recently took a step in liberalizing its legal industry. In March 2023, the Bar Council of India unveiled plans to allow foreign lawyers to advise on matters of international and foreign laws, given their cooperation with the local legal firms and lawyers.

While many law firms in Korea lack familiarity with India's legal landscape, Oh asserted that Jipyong excels in this regard, owing to its extensive experience in Myanmar, a former province of British India that is also partially based in English common law.

"The legal framework in Myanmar closely resembles that of India, both rooted in the English common law system. Over the past decade of advising on Myanmar laws, I've also developed insights into Indian laws," explained Oh.

While Jipyong's India-focused team was only just inaugurated, the law firm has handled related cases since early 2010s. Until now, the firm has successfully facilitated around a dozen major deals for the local firms.

Due to the complexities of India's regulations, many Korean firms choose to invest through joint ventures.

"South Korean companies bring their advanced technology and capital, while local companies contribute intangible assets like land. This approach allows companies to navigate regulations and labor issues more smoothly, facilitating a softer landing," he noted.

Another significant investor group in India is private equity funds. One of Jipyong's clients, STIC Investment, exemplifies this trend. In 2020, STIC Investment invested approximately $10 million in India's Sahyadri Hospitals, and two years later, successfully exited the deal at $24 million. This stands as an exemplary case of private equity fund investment in Indian entities.

In the case of financial institutions, they often enter the Indian market through share subscription agreements, noted Oh. In 2020, Jipyong facilitated NH Capital, a subsidiary of NongHyup Financial, in acquiring new shares in Indian Farmers Fertilizer Cooperative's Kisan Finance. This deal represented the first case where a Korean financial institution acquired stakes in the Indian non-banking sector.

Oh highlighted the e-commerce sector as an attractive option for potential investors, emphasizing India's extensive smartphone usage and digital payment services.

"Similar to China and Southeast Asian nations, India swiftly transitioned to mobile technologies, leading to a notable smartphone penetration rate regardless of economic status. The e-commerce sector, which taps into the rising interest of Indians in beauty and fashion, appears to hold significant potential," he explained.

Despite the promising opportunities in India's growing economy, Lee advises companies to seek sufficient legal consultation before entering the Indian market.

"Due to India's vast size, regulations can vary based on industry and region. Rather than simply partnering with a large law firm, finding the right legal partner with expertise in the relevant field and a strong network within the region is crucial," he emphasized.

To meet this need, Jipyong's India team has established partnerships with several local law firms, fostering close collaboration.

"We are primarily dedicated to Korean companies, yet we also see the opportunity to offer legal counsel on Korean law to Indian companies navigating or exploring opportunities in Korea in the future."