India is proposing a radical change in the legal framework on contracts to make them enforceable, thus creating a more stable and predictable business environment and boosting investment, especially in the country’s infrastructure sector.
A cabinet note will soon be moved by the ministry of law and justice to amend the Specific Relief Act toward this end. The move is expected to lift the country’s rating in the World Bank’s Doing Business index as it’s a measure on which India does poorly, having been ranked at 164 out of 190 on this score.
Prime Minister Narendra Modi wants the country to break into the top 50, boosting India’s attractiveness as an investment destination. “Details have been finalised… It will go to cabinet soon,” a top government official told ET.
The changes are aimed at widening the ambit of enforceability beyond just compensation. The law currently provides for damages as a general rule and awarding specific performance — forcing an entity to complete a task— as an exception.