3 weeks ago
India's Reform Test: Balancing Business Ease and Governance
India has grown a lot over the past ten years, becoming one of the biggest and fastest-growing economies in the world.
The government made rules simpler so businesses could start and operate more easily.
India's business-friendliness ranking improved, and more foreign money came into the country.
Now the government wants to update company laws with a new Bill in 2026.
The Bill would reduce harsh punishments for small paperwork mistakes and make companies share more information.
But it also suggests that experts, such as auditors, should wait three years before taking certain roles again.
Some people worry this would waste good expertise and make things more expensive.
They point out that other big countries, like the UK, the US and Singapore, do not do this.
Instead, those countries manage conflicts of interest carefully without banning experts for years.
The big question is how to make rules strong but not too strict.
India moved from the world's 11th-largest economy in 2014 to among the largest and fastest-growing major economies.
India's ease of doing business ranking improved from 142 in 2014 to 63 within five years.
Foreign direct investment rose from about $36 billion in 2013-14 to over $81 billion in 2024-25.
The Corporate Laws (Amendment) Bill, 2026 decriminalises procedural lapses while strengthening disclosure requirements and director accountability.
A proposed three-year cooling-off period and restrictions on non-audit services face criticism for limiting expertise, unlike practice in the UK, European Union, US, Australia and Singapore.
- Who
- India's policymakers, multinational firms, institutional investors and Indian companies affected by proposed corporate law changes.
- What
- India is debating the Corporate Laws (Amendment) Bill, 2026, which balances easier business rules with stronger corporate governance.
- Where
- India
- When
- Reforms have been underway since 2014; the latest amendments are proposed under the Corporate Laws (Amendment) Bill, 2026.
- Why
- To sustain investor confidence, retain growing FDI and support India's path to becoming one of the world's three largest economies.
Pro-Facilitation View
Pro-Governance View
Three-year cooling-off period
Pro-Facilitation View
Restricting professionals long after an audit relationship ends disrupts the flow of specialised expertise, raises costs and departs from international practice in the UK, European Union, US, Australia and Singapore.
Pro-Governance View
A cooling-off period after audits strengthens independence and accountability, ensuring governance is not compromised by long-standing professional relationships.
Restrictions on non-audit services
Pro-Facilitation View
Broad constraints across diverse advisory services fail to differentiate by risk, becoming a blunt instrument that limits access to expertise and fragments service delivery.
Pro-Governance View
Restricting the non-audit services auditors can offer prevents conflicts of interest and reinforces confidence in corporate governance.
Oversight of small companies
Pro-Facilitation View
Broader thresholds and eased compliance requirements reduce the burden on smaller firms, a necessary and welcome shift.
Pro-Governance View
As more companies fall under lighter regulation, flexibility must be revisited when firms grow and take on greater complexity.
Key facts
- Economy rank in 2014
- 11th-largest in the world
- Ease of doing business rank in 2014
- 142
- Ease of doing business rank within five years
- 63
- FDI in 2013-14
- About $36 billion
- FDI in 2024-25
- Over $81 billion
- Proposed legislation
- Corporate Laws (Amendment) Bill, 2026
- Proposed cooling-off period
- Three years
- International peers cited
- UK, European Union, US, Australia, Singapore










