Don’t Be Ruled By Rules

If GOI’s deregulation push leads to genuine lightening of compliance load, economy will get a huge boost 

A whisker separates India from Japan, and the 4th largest economy rank, as we head into 2026. But it’s fair to say India got here despite, not because of, its policies. Recall how, in 2004, enforcing a contract took 425 days on average, with 40 procedures. Insolvency resolution easily stretched to 10 years. Even in 2017, a Niti Aayog report said setting up shop in India required 118 days on average, with the wait stretching to 248 days in Assam. Things are better now, but only relatively. An abundance of regulations continues to be the proverbial spanner in business’s wheels. So, the PM’s advice to top bureaucrats, to set up “deregulation cells” for speeding up reforms, and improving ease of living and doing business, demands undivided attention.

There’s no denying that regulation has its place in a modern society. We wouldn’t have had seat belts in cars without it, nor the Aravalis. But the problem is too much regulation, or as the Economic Survey said in Jan – when “layers of operational conditions” are piled, policies become complicated and incomprehensible. The reams of quality control orders (QCOs) India published after 2017 are just one example of this problem. Excellent in theory – they were intended to keep out substandard and hazardous imports – the orders became a hurdle for business. The steel ministry alone had over 150 of them. Importing raw materials at the right price became difficult, hurting domestic manufacturing’s competitiveness.

That’s why regulations should be imposed sparingly, only if they pass the test of necessity. And those that make no sense, or have crossed their best-by date, like most QCOs, should be scrapped. Govt has pressed this point through the year, with the FM announcing a regulatory reform panel to promote ease of doing business in the Budget. The CEA has also said deregulation is the next focus area for India. Some moves, like the Jan Vishwas initiative to decriminalise minor offences, are already afoot, but getting every ministry and department to reduce procedures and paperwork – as PM has urged – is the need of the hour.

Tamil Nadu proves the worth of light-touch regulation. The way it handled Ford’s exit, and the Samsung strike last year, boosts investor confidence. More than big industry, the sector that needs deregulation most is SMEs – the biggest job creator – that’s hamstrung by costly compliances. If govt lifts its foot off the regulatory brake, India will get to the next trillion dollars faster.

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