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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