The phrase ‘regulation’ comes from the Latin ‘regula,’ that means ‘a straight stick’—however in India, laws resemble a pretzel, twisted past recognition.
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To untangle this mess, the panel ought to comply with these ideas: Minimize redundant guidelines as a substitute of layering new ones, bury outdated ‘zombie legal guidelines,’ make inspections predictable, go digital to finish the ‘stamp-and-sign’ tradition, belief companies with self-certification, and—most significantly—maintain regulators accountable for delays. There are six broad areas the place the HLC ought to intervene.
First, regulatory design is a vital but usually ignored side of financial governance. Whereas legal guidelines, guidelines and laws could also be well-drafted when it comes to language and intent, their structural coherence, consistency throughout statutes and sensible enforceability usually stay fragmented. Poorly designed laws create compliance uncertainties, enhance transaction prices and stifle enterprise effectivity by embedding redundancies and contradictions.
A complete overview of all Acts, subordinate guidelines and regulatory frameworks affecting companies is crucial for his or her simplification and guaranteeing logical, risk-proportionate and outcomes-focused regulation. The HLC should undertake a first-principles re-assessment, scrutinizing the foundational structure, quite than merely making incremental modifications.
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Second, the HLC ought to be sure that provisions that impede the Ease of Doing Enterprise (EoDB) agenda, together with penal provisions—akin to fines, imprisonment or different punitive measures—reside within the guidelines quite than the father or mother Act. Amending an Act takes parliamentary approval, a course of usually hindered by legislative inertia, even when minor modifications may make a big distinction. Guidelines, in distinction, will be revised by way of government motion, which may guarantee adaptability and responsiveness.
Third, the HLC ought to advocate sundown clauses for sure forms of laws. This method presents two key benefits. First, it ensures that ineffective or outdated legal guidelines routinely lapse after a predefined interval. Second, it institutionalizes periodic critiques, compelling policymakers to re-assess the need and impression of laws earlier than their renewal.
Fourth, the panel ought to consolidate legal guidelines. A single employment code could be useful. Whereas progress drives job creation, employment elasticity has declined. Labour reforms goal to boost flexibility, however India’s fragmented framework—with 4 codes—stays insufficient.
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Traditionally, complicated labour legal guidelines with 30,000-plus compliance necessities and three,000 filings (supply: TeamLease) have inflated non-wage prices, inspired capital-intensive manufacturing and slowed job creation. Regardless of codifying 29 statutes into 4 codes, implementation is inconsistent, with many states but to inform guidelines.
A unified employment code would streamline compliance, decrease prices and create a secure regulatory atmosphere to draw funding and increase employment. Although politically demanding, this is a crucial reform.
Fifth, the HLC ought to be sure that notifications underneath each Act are launched at mounted intervals—say, quarterly or biannually—quite than on arbitrary dates. The observe of issuing notifications anytime should finish. It forces companies to react at brief discover, disrupting manufacturing cycles, provide chains and compliance plans.
Pre-defined notification schedules permit regulators to evaluate the cumulative impression of adjustments earlier than implementation.
Sebi, India’s securities market regulator, issued 12 circulars in January 2025, 15 in December 2024, 12 in November and 17 in October. The shortage of a pre-set calendar burdens companies with continuous compliance responses. Whereas the HLC will deal with non-financial laws, such issuances are a pain-point throughout sectors.
Establishing a structured timeline would mitigate this. Furthermore, pre-defined notification schedules permit regulators to evaluate the cumulative impression of adjustments earlier than implementation.
Sixth, as regulatory inspections hinder EoDB, particularly for small enterprises dealing with frequent arbitrary checks, the HLC ought to undertake a risk-based framework, classifying enterprises into low, medium and high-risk tiers based mostly on compliance historical past, trade sort and previous violations. Excessive-risk companies would face stricter scrutiny, whereas low-risk ones with sturdy compliance data would see minimal intervention.
Past risk-based concentrating on, inspections have to be streamlined via time-bound assessments, besides in circumstances involving fraud or imminent security issues, thus decreasing the scope for rent-seeking by inspectors. Plus, self-certification and third-party verification mechanisms needs to be institutionalized to shift compliance monitoring from authorities companies to accredited exterior auditors, notably for routine issues.
Rules needs to be guard-rails, not booby traps. The HLC can repair this—if it avoids the lure of recommending one other panel. It should slash pink tape, simplify legal guidelines and inject a contemporary dose of logic into governance.
The writer is a public coverage skilled.
