India wants to make business easier—but is it making accountability weaker?
In a move to streamline India’s corporate regulatory framework, Finance Minister Nirmala Sitharaman on March 23, introduced the Corporate Laws (Amendment) Bill, 2026 in Parliament. The proposed reforms aim to decriminalise several corporate offences and reduce compliance burdens, but have also triggered a sharp political debate over their potential impact on corporate governance.
At the core of the bill is a shift in approach from criminal prosecution to civil penalties for a range of minor corporate violations. The government argues that this change will improve the ease of doing business, particularly for startups, small firms, and producer companies, while also reducing the fear of litigation that often discourages entrepreneurship.
The proposed amendments seek to modify provisions under the Limited Liability Partnership (LLP) Act, 2008 and the Companies Act, 2013. By replacing certain criminal liabilities with monetary penalties, the government hopes to create a more business-friendly regulatory environment without compromising essential oversight.
However, the move has not gone unchallenged. Opposition leaders have raised concerns that the bill, in its current form, could weaken accountability mechanisms and dilute the balance between regulatory enforcement and corporate freedom. Critics argue that reducing criminal provisions may send the wrong signal at a time when corporate transparency and governance are under increasing scrutiny globally.
The debate also extends to the role and powers of the National Financial Reporting Authority (NFRA). Some lawmakers have questioned the expansion of regulatory authority, warning that it could lead to excessive centralisation and reduced parliamentary oversight. In response, the government has maintained that the proposed powers are consistent with those granted to other major regulators such as the Securities and Exchange Board of India (SEBI) and the Competition Commission of India (CCI), and will remain subject to checks and consultation.
Another contentious issue is the revision of Corporate Social Responsibility (CSR) criteria. The bill proposes changes to the net profit threshold, increasing it from ₹5 crore to ₹10 crore, a move the government says reflects current economic realities and is intended to ease compliance for smaller businesses. While this may benefit emerging companies, critics fear it could reduce the overall pool of CSR contributions.
Industry experts appear cautiously optimistic. Many believe that decriminalising minor offences is a necessary step in modernising India’s corporate legal framework. “The reform reduces unnecessary legal pressure on businesses, but its success will depend on how effectively civil penalties are enforced,” said a corporate law expert based in Mumbai.
The introduction of the bill comes at a time when India is positioning itself as a global investment destination amid shifting supply chains and geopolitical realignments. Simplifying corporate laws is seen as a key lever in attracting foreign capital and boosting domestic entrepreneurship.
At the same time, the government has indicated openness to further scrutiny by proposing that the bill be examined by a Joint Parliamentary Committee. This suggests that the final version of the legislation may evolve through broader political and institutional consultation.
As the bill moves through the legislative process, the central question remains: can India strike the right balance between making business easier and maintaining strong corporate governance? The answer could shape not just investor confidence, but the future direction of India’s economic reforms.
