How is India modernising its regulatory framework and business climate?

India is currently undergoing a "Great Unshackling" of its economy by transitioning from a regulatory framework based on state control and suspicion to one rooted in trust and ease of doing business. This modernisation is being driven through aggressive deregulation, decriminalisation of minor offences, and targeted fiscal incentives for emerging sectors.

Institutional Framework for Reform

The government has established high-level bodies to ensure these reforms are granular and time-bound:

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High-Level Committee on Non-Financial Regulatory Reforms (HLC-NFRR): Set up in August 2025 and headed by former cabinet secretary Rajiv Gauba, this committee uses a "whole-of-government" logic to "deep clean" regulatory norms. As of June 2026, approximately 20–30% of this work is complete, with another 30% in progress.

State-Level Implementation: A task force led by cabinet secretary T.V. Somanathan ensures these reforms are not restricted to New Delhi but reach the state level, where businesses often face the most significant compliance hurdles.

Decriminalisation: An expanded Jan Vishwas Bill, passed in April 2026, amended 79 central acts across 23 ministries. It removed 717 provisions that previously invited prison terms for minor infractions, such as missed filings or incorrect signage displays.

Easing the Compliance Burden

A major focus of the modernisation effort is reducing the harassment faced by India's 74.7 million Micro, Small and Medium Enterprises (MSMEs), which can face over 1,400 annual compliances.

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Review of Quality Control Orders (QCOs): Originally intended to prevent the dumping of low-quality goods, QCOs had expanded to nearly 790 products by 2025, often creating cost disadvantages for small exporters. To fix this "autoimmune disorder" in the economy, 116 QCOs have been rescinded, deferred, or suspended.

Streamlining Approvals: The Union Budget 2026–27 introduced automated approval systems to further enhance the ease of doing business.

Fiscal and Technological Incentives

To position itself as a global technology power, India is using its regulatory framework to attract investment in strategic sectors:

Tax Incentives: The 2026–27 Budget announced tax holidays until 2047 for certain technology sectors and increased the eligibility threshold for Safe Harbour provisions from ₹300 crore to ₹2,000 crore to provide greater tax certainty.

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Digital Public Infrastructure (DPI): India is leveraging its "India Stack" (Aadhaar, UPI, DigiLocker) to provide inclusive, secure, and affordable digital governance at a population scale.

Mission-Mode Programs: Dedicated missions in AI (IndiaAI Mission), semiconductors (ISM 2.0), and quantum technologies are strengthening the indigenous innovation ecosystem.

Global Trade and Competitiveness

India is also modernising its business climate by seeking bilateral trade agreements (BTAs). Ministerial-level talks are currently underway with the United States to finalise a framework that secures a competitive advantage for Indian goods by resolving outstanding tariff concerns.

While these reforms are described as "surgery" rather than "homeopathy," international observers like the World Bank note that continued efforts are necessary to bolster growth and job creation for India's rising working-age population.