Archive · 12 Aug 2025
India Needs Urgent Reforms for Contract Enforcement
India's economic growth is slowed down by the legal system's slow pace of enforcing contracts.
This costs the country a lot of money each year.
To fix this, India needs to improve how it handles disagreements about contracts, like using quicker methods for solving problems.
It also needs to make courts better at handling complex cases and have specialized courts that work on these cases.
The country should also review how it handles international business disagreements to help foreign investors.
Inefficient contract enforcement costs India an estimated 1.5-2% of GDP annually.
Legal uncertainty and delays also lead to significant deferred investments.
India needs to strengthen domestic arbitration institutions and narrow grounds for appeal.
Commercial courts should become centers of excellence, focusing on complex, high-value cases.
India should rethink cross-border dispute resolution, including BITs and fast-track benches.
- Who
- The Indian judiciary, executive, and legislature.
- What
- Efforts to improve India's contract enforcement mechanisms and speed up dispute resolution.
- When
- Ongoing; requires a second generation of reforms.
- Where
- India
- Why
- To improve economic competitiveness and attract investment.
Challenges
Solutions
Domestic Arbitration
Challenges
Over-reliance on ad-hoc arbitration.
Solutions
Need for strong domestic arbitration.
Commercial Courts
Challenges
Inconsistent implementation of Commercial Courts Act.
Solutions
Commercial courts should focus on complex high-value cases.
Cross-Border Disputes
Challenges
Restrictive regime for cross-border dispute resolution.
Solutions
Need to correct course and consider BITs.
- Estimated Cost of Legal Uncertainty
- 1.5-2% of GDP annually
- Average Time for Contract Enforcement (2014-2018)
- Dropped from 1,445 days to 626 days in Delhi and Mumbai
- Commercial Courts Act
- Passed in 2015
- Bilateral Investment Treaties (BITs) Terminated/Not Renewed
- 68