Author : Avirup Bose (Professor of Competition Law and Policy, Jindal Global Law School)
Article Type - CRG Report
3.1 Introduction
Post the
adoption of liberalization reforms by India, almost 35 years ago, as
nationalized industries were privatized, much of the power of regulating the
various sectors of the Indian economy was transferred from the relevant
government ministry/department to independent sectoral regulators, with the
mandate to encourage competition and protect consumer interests (Singh, 2009).
India's liberalization reform process, which has provided the main impetus for
the country's substantial economic growth, although directed by the Government,
is largely managed by the country's economic regulators. Starting with the
securities market regulator β the Securities and Exchange Board of India (SEBI)
- in 1992, the Government has established several independent sectoral regulators
for various sectors of the economy, including electricity, natural gas,
petroleum, insurance, securities markets, real estate, and microfinance.
Besides sectoral regulators, the Government has established an economy-wide
regulator, the Competition Commission of India (CCI), under India's competition
law. Moreover, India's central bank - the Reserve Bank of India (RBI), which
serves as India's banking regulator and regulates the country's monetary
policy, has been in existence since 1934, and has entrenched its regulatory
clout over that of the Union Finance ministry.
The relevant
Acts of Parliament that established these sector-specific regulatory agencies
provided each agency with specific statutory duties and powers, while also
granting them freedom from the frequent direct political intervention that had
been common under the pre-liberalized era. These independent regulatory regimes
β created to be at an arms-length from the Government - have emerged as the new
nuclei of regulating the Indian economy. These independent agencies, with
considerable powers including the power to impose pecuniary fines and
behavioural remedies, to create secondary legislation, and even to modify
agreements, remain largely outside the traditional mechanisms of accountability.
While ministers responsible for the management of a ministry/department are
individually and collectively responsible to the Parliament, the independent
sectoral and economic regulators of India exist essentially as independent
agents.
In fact, their
independence itself is the source of their technical competence. As the
Organisation for Economic Co-operation and Development (OECD) summed it up -
"The key benefits sought from the independent regulatory model are to
shield market interventions from interference from 'captured' politicians and
bureaucrats." (OECD, 2002) However, independence is not set in stone, and
it is necessary to review whether the regulations enforced by India's
independent regulators are yielding the right outcomes for the Indian economy
and its people. Given the significant changes to the machinery of Government
and the institutional structures for regulatory decision-making over the last
three decades, questions arise about how regulators' performance is monitored
and assessed to ensure that the public interest is properly served.
3.2 Issues
To what extent
do India's economic regulators consider the public interest, consumer interests
and interests of the stakeholders they regulate? To what extent are such
regulators conducting themselves to achieve their statutory/policy objectives?
Further, the regulatory architecture of the Indian economy is a product of
ad-hoc evolution, without any deliberate design, developing over the years
through a sequence of piecemeal decisions, often in response to economic
pressures.
This has
resulted in a regulatory structure plagued by variations of phenomena like
regulatory absence, regulatory overreach, or regulatory conflicts, creating a
non-conducive business environment in India (Patnaik & Shah, 2014). Such
problems get further exasperated due to India's non-adoption of a 'regulatory
management system' which would require economic regulators to review the costs
imposed by proposed regulations and assess the impact of their regulatory
decisions, i.e., measuring the actual outcome of a regulatory action against
its intended outcome. An attempt to introduce such a mechanism was made by the
draft National Competition Policy (NCP) of 2012. The NCP attempted to establish
a set of principles for state and federal governments, which, when adopted,
will allow stakeholders to undertake a Competition Impact Assessment (COMPAS)
of existing and proposed government policies, statutes, and regulations, with a
view to removing or minimizing their competition-restricting effects. If
legislative or regulatory impediments to competition are proposed, such
laws/policies should be subject to review to ensure that the costs associated
with reduced compliance are exceeded by public benefits (Kumar & Bose,
2014). The Indian federal Government never adopted the NCP.
Further, the
regulatory functions of most economic regulators often involve an inappropriate
combination of legislative, judicial, and executive functions, resulting in
regulatory overreach or regulatory overlap, which remains largely uncorrected
due to their lack of accountability.
3.3 Initiatives Taken
Some
regulators, like the SEBI, have initiated efforts to reduce regulatory costs
and simplify compliance. In February 2026, SEBI announced that its National Institute
of Securities Markets (NISM) Centre for Regulatory Studies will study
regulatory impact and design a framework to assess how SEBI's regulations will
affect market participants, with a view to making Indian capital markets more
competitive. Earlier in 2025, the RBI announced a framework of broad principles
for the formulation of new regulations, requiring the regulator to conduct an
impact analysis of proposed regulations, conduct periodic reviews of
significant regulations, and promote transparency in its rulemaking. RBI
consolidated over 9,000 circulars and guidelines into 238 function-specific
Master Directions for different categories of regulated entities. As part of
this initiative, 9,446 circulars are being repealed, with relevant 3,809 circulars
subsumed into Master Circulars, and 5,673 have been deemed obsolete.
The Insurance
Regulatory and Development Authority of India ("IRDAI") constituted a
Regulation Review Committee ("RRC") in 2023 to review the entire
insurance regulatory framework and recommend a principle-based regulations
framework for registration and regulation of Indian insurance companies. The
RRC worked with several stakeholders and submitted its report to the IRDAI,
inter alia, recommending that the IRDAI consolidate its erstwhile 72
regulations into just nine.
3.4 Economic Survey and its Findings
Despite these
developments, the Economic Survey, 2025-26 recommended that India's financial
regulators adopt a formal regulatory framework to assess the impact of their
regulations. The Survey recommended that the quality of regulations be assessed
against five criteriaκ democratic
legitimacy, accountability of the regulator, fair, accessible, and open
procedures, expertise, and efficiency.
This suggests
that, despite incremental steps to improve rulemaking by India's financial
regulators, there is a lack of accountability that also allows independent
regulatory agencies to pursue enforcement agendas that often diverge from the
incumbent government's economic agenda. Further, there is a complete absence of
crossfertilization of ideas across regulators, which prevents the development
of a common regulatory philosophy. There are several sectors where, despite
Government initiatives, a slowdown has been compounded by regulatory overreach
or turf wars. In such situations, neither the Government nor the regulators
accepts the responsibility for critical aspects of regulatory decisions.
Although a right of appeal from the regulatory decisions of most Indian
economic regulators exists, it is very limited to judicial review. Such review
processes are often time-consuming and costly and may not be sufficient to
correct regulatory policy errors.
3.5 Disputesκ The Telecom Sector
Let us
illustrate this conflict with one example from India's telecom sector β one
which contributes 6.5% to the country's GDP and is the third-largest industry
in India. On the one hand, the Government wants to incentivize global telecom
companies to manufacture in India. On the other hand, under its
"Atmanirbhar Bharat" scheme, it also aims to develop a homegrown
manufacturing industry. This balancing act becomes even more complicated, given
that access to standard essential patents (SEPs) is crucial to manufacturing in
the telecom sector.
Striking the
right balance on how SEPs are licensed in India is crucial. On the one hand, if
India wants to attract global semiconductor companies like Ericsson and
Qualcomm, or global telecom companies like Apple and Samsung, to manufacture in
India, it must provide a proper legal framework to protect SEPs owned or used
by them in India. On the other hand, if the Government wants to promote the
domestic production of mobile handsets, Indian telecom companies β none of whom
own any major SEPs β must be able to access such SEPs on equitable terms and at
a reasonable cost.
Over the last
12 years, the CCI and the Delhi High Court have tussled over defining the
jurisprudence governing SEPs in India. Both bodies have passed several
decisions (all against the same SEP holder, Ericsson) β adopting opposing views
on the balance of interests between SEP holders and technology users in India.
The
contentious issue is the methodology to calculate the SEP royalty rate. Users
of Ericsson's SEPs (Micromax, Intex and iBall) argued that the royalty should
be based on the phone's chipset technology, rather than a percentage of the
price of the final downstream mobile phone handset. CCI, without any trial,
passed interim orders showing sympathy with the arguments of the Indian mobile
phone manufacturers. CCI, while ordering further investigation, made conclusory
remarks that charging a different license fee per unit of a mobile phone for
the use of the same technology is prima facie discriminatory and contrary to
FRAND terms. Beyond violating its FRAND commitments, CCI hinted that Ericsson could
even be violating India's antitrust statute's "unfair pricing"
provisions.
Ericsson
challenged CCI's jurisdiction to resolve disputes arising from patent abuse
before the Delhi High Court. The Court took three years to resolve the dispute
in favour of CCI, allowing it to continue antitrust proceedings against
Ericsson. Ericsson appealed this order before a division bench of the Court,
which took an astonishing seven years to conclude in July 2023 that CCI had no
jurisdiction to resolve such SEPs disputes. Thus, India is perhaps the only
major economy where its antitrust regulator has been ousted from inquiring into
SEP owners' potentially abusive licensing practices from a competition law
perspective.
In April 2024,
the Delhi High Court issued its first SEP decision in favour of Ericsson and
ordered Lava, an Indian smartphone company, to pay Rs. 2,440 million in
damages, one of the highest awards for patent infringement in Indian history.
The Court disagreed with CCI and found that Ericsson's practice of using the
net sales price of the downstream mobile handset as the appropriate royalty
base was appropriate. The Court's reasoning could be seen as accepting that the
retail value of a multi-component product, like a mobile phone, is derived from
the combinatorial interaction of its multiple parts β each generating
complementarity effects.
Lava has
appealed against this decision of the Delhi High Court, and CCI has also
appealed before the Indian Supreme Court to reopen cases against Ericsson.
However, the Supreme Court dismissed the case in September 2025, as the
original parties had settled it. Therefore, even after 11 years of judicial and
regulatory manoeuvring, there is no legal certainty about the core licensing
practices of SEPs in India. On the other hand, the Union Government's budget
for fiscal 2026 not only introduces the India Semiconductor Mission 2.0, with a
budgetary allocation of Rs. 1,000 crore to focus on producing semiconductor
equipment and materials in India, designing full-stack Indian semiconductor
intellectual property, and developing domestic and global supply chains but
also significantly boosts India's electronics manufacturing capabilities by
increasing the outlay for the Electronics Components Manufacturing Scheme
(ECMS) from Rs. 22,919 crores to Rs. 40,000 crores. Much of this fiscal and
manufacturing ambition for India would be unrealized without first fixing the
SEP policy quagmire.
The SEP
turf-war is not an isolated incident. As of writing this article, the Supreme
Court of India is hearing an appeal by both CCI and Meta's WhatsApp against an
order of the National Company Appellant Tribunal (NCLAT) which upheld a Rs
213.14 crore penalty imposed by CCI over Meta for abusing the privacy of its
users under its 2021 privacy policy update. CCI had held earlier held that
WhatsApp's take-it-or-leave-it privacy policy is an abuse of its dominant
position and imposed behavioural restrictions for a period of five years on the
ability of WhatsApp to share user data across other Meta-owned applications.
NCLAT had decided to set such restrictions aside reasoning that this would lead
to a collapse of Meta's business model. One of the arguments raised by Meta,
which was recognized by NCLAT was the question of CCI's jurisdiction to deal
with data markets, arguing that the newly notified Digital Personal Data
Protection (DPDP) Act, 2023, addressed all concerns regarding privacy issues
and the appropriate jurisdiction would be that of the Data Protection Board
under the DPDP and not of the CCI.
3.6 Importance of Regulatory Impact Assessment (RIA)
Further, most
primary or secondary regulatory policy decisions of the Government β either at
the parliamentary stage or at the level of the regulators themselves - are made
without any regulatory impact assessment (RIA) or public consultations with
stakeholders or domain experts. The regulatory policymaking process itself is
largely bureaucratic, often controlled by parliamentary committees. Such
regulatory policies may inadvertently add costs to doing business or restrict
firms' ability to compete effectively in the market.
Currently,
India lacks a mechanism to assess regulatory costs and other trade-offs in the
design of its regulatory policy. Currently, Indian regulators perceive their
role as law enforcement agencies, charged with either ex ante standardizing
sectoral rules of conduct or ex post determining legal liability issues for
sectoral/industry actors.
Innovation or
entrepreneurship is not an input factor in their regulatory decision-making
process. Neither regulators, voluntarily, nor by law, are required to assess
the impact of their decisions/policies on an industry's capacity to innovate or
grow. To create a robust innovation ecosystem, India needs to ensure that
innovation remains central to both the Government's economic policymaking and
the judicial processes of its regulators and courts. To develop a national
vision of innovation, the regulatory agendas of regulators/courts should be in
coherence with the innovation agenda of the federal or state governments.
The Union
Budgets for fiscal years 2025 and 2026, although falling short of introducing a
structured approach to regulatory impact assessments in India, did recognize
their underlying principles. The budget focuses on the need for regulatory effectiveness
to boost ease of doing business in India and on developing regulations to that
effect. For example, the Jan Vishwas (Amendment to Provisions) Bill 2025
proposed amendments to 288 provisions to decriminalize and promote ease of
doing business, highlighting the Government's commitment to improving
regulatory efficiency. Besides these decriminalization reforms, the Government
has also undertaken efforts to rationalize regulatory frameworks under the
Environment (Protection) Act, 1986, the Air (Prevention and Control of
Pollution) Act, 1981, and the Indian Forest Act, 1927. Furthermore, the
criminal provisions of the Water (Prevention and Control of Pollution) Act,
1974, have been decriminalized to reduce the regulatory burden on compliance
further. The federal Government also created the "Task Force on Compliance
Reduction and Deregulation, which was constituted in January 2025 to simplify
regulations and streamline procedures across Indian States and Union
Territories in priority sectors such as labour, land use, and building and
construction. The focus of the Indian Government on reducing the burden of
regulatory compliance and promoting trust-based governance continues in the
union budget for fiscal year 2026. For example, the budget announced a comprehensive
review of the Foreign Exchange Management Act to update and rationalize India's
foreign investment frameworks. Another budgetary measure was to establish a
"High Level Committee on Banking for Viksit Bharat" to review banking
regulations and align them to the future economic growth ambitions of India.
In his 1991 budget speech introducing India's historic Liberalisation, Privatisation and Globalisation reforms, India's former Prime Minister borrowed the immortal words of Victor Hugo β "No power on earth can stop an idea whose time has come". Perhaps, in a similar vein, it is time for India to adopt a structured approach to regulatory decision-making.
Regulatory Agencies in India
RBI β Reserve Bank of India
SEBI β Securities and Exchange Board of India
IRDAI β Insurance Regulatory and Development Authority of
India
PFRDA β Pension Fund Regulatory & Development
Authority
ROC - Registrars of Companies
NHAI - National Highways Authority of India
OGAI - Online Gaming Authority of India
TRAI β Telecom Regulatory Authority of India
BBMB - Bhakra Beas Management Board
PNGRB - Petroleum and Natural Gas Regulatory Board
FSSAI β Food Safety and Standards Authority of India
BIS β Bureau of Indian Standards
CCI - Competition Commission of India
CERC - Central Electricity Regulatory Commission
CEA - Central Electricity Authority of India
DIC - Digital India Corporation
DGCA - The Directorate General of Civil Aviation
DBPI - Data Protection Board of India
NFRA β National Financial Reporting Authority
NBA - National Biodiversity Authority
NTCA - National Tiger Conservation Authority
RERA - Real Estate Regulatory Authority Coal controller
Organization
NGT - National Green Tribunal
CZA - Central Zoo Authority
AERA - Airports Economic Regulatory Authority of India
CDSCO β Central Drugs Standard Control Organisation
IBBI - Insolvency and Bankruptcy Board of India
AERB - Atomic Energy Regulatory Board
EPFO - Employees ' Provident Fund Organisation
FSDC β Financial Stability and Development Council
NHA - National Health Authority
NMC - National Medical Commission
NPPA - National Pharmaceutical Pricing Authority
INβSPACe - Indian National Space Promotion and Authorisation
Centre
Viksit Bharat Shiksha Adhishthan (Pending)
WDRA - The Warehousing Development and Regulatory Authority
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