Newsletter April 2026

Dear Friends,

Greetings from the Centre for Regulatory Governance

Outside GIFT city, few noticed an order issued by IFSCA in March this year. The regulator for India’s sole international financial centre has identified close to a thousand companies registered in the domain, but with no actual business operation. The implication from the order is significant. These are shell companies out there to ostensibly secure tax benefits. 

Their presence immediately reminds one of the relentless drive the direct tax department has waged to cut into the numbers of these shell companies. There is no definition of a shell company in the Companies Act, but it is understood these normally refer to a company without active business operation or significant assets, “which in some cases are used for illegal purposes such as tax evasion, money laundering, obscuring ownership, benami properties and others,” as a Parliament reply by the Union Finance Ministry noted. By 2023, nearly four hundred thousand such companies were wiped from the Registrar of Companies. In its investigations, the Securities and Exchange Board of India has also often found that such companies are used to support the movement of scrips in the market. That the IFSCA has noted these coming up in its territory shows that the attraction of this territory as a financial centre has unquestionably risen for these old tricks to make a comeback. The operation also stamps IFSCA's alignment with the global best practices. 

A clean environment is particularly significant for fair business to reap the benefits of lower compliance. The Corporate Laws (Amendment) Bill 2026 cleared by Parliament, is one of those making the business environment easier. It has decriminalised minor offences by shifting penalties to fines from jail terms and raised the profit threshold for Corporate Social Responsibility norms to start applying from the present Rs 5 Crore to Rs 10 Crore. Also, it has increased the time limit to transfer such unspent funds to bank accounts from the present 30 days to 90 days. Businesses, especially new ones, should find the legal environment conducive rather than intimidating if we aim to encourage new companies to roll out rapidly with clear plans instead of shell companies.  

These sorts of procedural changes have pleasantly become the norm, especially since early 2025 when the Trump tariffs hit the Indian economy. The government has rightly recognised that the only way for the economy to defend itself against such global disturbances is for the domestic rules to be made easier and more certain in each sector. 

In this context, it will be our endeavour at CRG to discover how many of the regulators have realised the seriousness of the challenge and pushed to make the compliance environment easier. 

As we have communicated to our friends, CRG aims to strengthen the effectiveness, accountability, and transparency of regulatory institutions in India. We work to develop data-driven insights into India's regulatory environment while fostering collaboration between regulatory bodies, academics, and civil society organisations. We have been supported by a growing ring of policy experts and academic experts from across India and abroad. It is such a pleasure that several of the regulators have been happy to develop projects with us already, on this score. Some of these details are highlighted with details on our website: https://crg.jgu.edu.in/ and through our monthly newsletters like this one.  

We are proud to announce the launch of our First Scoping Report, focused on Regulatory Governance issues in India, on 24th April in Mumbai. The Report will be launched by Ms Arundhati Bhattacharya, President and CEO, Salesforce, South Asia. The volume brings together the first set of peer-reviewed essays by some of India's top experts, our faculty and our student associates.

We hope to see you there and hold a rousing conversation on these themes.

Till then, please find below the list of key regulatory developments we have noticed for the month of March. Do let us know frankly if we have omitted any key developments, which we shall be most happy to correct. 

The Regulatory space for the month of March 2026 was marked by a wave of reforms:

● CCI: It has stressed upon the rising need for using AI, to improve effectiveness of their work, but with transparency in that process. CCI has harped on its misuse also and warned Companies to ensure that the AI tool they use, are not manipulated and advised them to do a self-audit on those tools before facing formal regulatory scrutiny.

● SEBI: SEBI kept up its efforts to check insider trading as it brings into its ambit, regulators and consultants who handle price-sensitive information, as it uses an AI tool called "Sudarshan" to fight financial fraud and misleading advice.

● IFSCA: IFSCA - the sole regulator for GIFT City, has targeted dormant Companies to surrender their licences. This will ensure transparency in operations, lending further credibility to the Institution, as India gears up for rising investments in the wake of trade deals with the EU and the US. 

● IRDAI: IRDAI, too, announced more reforms after the 100% FDI announcements. Main focus was on improving the Accounting and Financial standards and help generate higher transparency for the Insurance sector, as India gears up for Foreign investments in the coming months. 

● FSSAI: As FSSAI continues its actions to improve the food standards in India, it initiated some reforms aimed at "Ease of Doing Business", with a view to make processes simple for the small and medium businesses, while promoting a transparent, efficient and business-friendly regulatory environment for the food industry.

● NFRA: NFRA, which had been in the news for all the right reasons like exploring AI, or proposals for getting more Financial and Functional autonomy, is now exploring ways to improve coordination with the ICAI for improved efficiency in auditing.

Meanwhile as use of AI gained importance in the Regulatory sector, there were interesting and thought-provoking columns written by eminent personalities - focussing on 2 aspects:

●  Need for India's Tech space to grow beyond Tier-1 cities.

● India must shift from being a consumer to being a creator in the sector, to be a formidable global player.

Finally, 2 very important Bills were presented in Lok Sabha.

● The Corporate Laws Amendment Bill is a very important bill to make India more business-friendly, by reducing the compliance burden. It has been referred to a 31-member joint committee for further deliberations.

● The 2025 IBC Amendment Bill introduces a new form of Creditors' Initiated Insolvency Resolution Process (CIIRP), offering lenders more say in how to liquidate a business on the insolvency platform.