Sitharaman says regulatory delays, lengthy litigation can hamper trade talks

Making a strong case for avoiding excessive regulation, Sitharaman, who is also the corporate affairs minister, said that regulators must be guided by the principle of ‘minimum necessary, maximum feasible’ to balance regulatory vigilance with a pro-growth mindset. 

In a world facing challenges on multiple fronts, including exports, environment, energy and emissions, increased reliance on domestic growth levers requires ensuring the right balance of regulation and freedom, she said, speaking at the 16th annual day of the Competition Commission of India (CCI) on Tuesday. 

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The finance minister’s message reflects concerns as global trade uncertainty persists even after US President Donald Trump paused his reciprocal tariffs for 90 days, giving trade partners an opportunity to strike deals. Regulatory uncertainty could add to the risks that global investors may face, especially in capital-intensive sectors.  
 

'Vigilance-growth balance'

Delays in regulatory clearance can lead to uncertainty, disrupt commercial timelines and potentially erode the intended value of transactions, said Sitharaman. 

“And globally, it has an impact even as we negotiate free-trade agreements with different countries because the ability, the nimbleness and the readiness of regulators is very keenly watched by investors," the minister said, adding that the country is looking at agreeing on some free-trade agreements within a reasonable time.

“Whether it is litigation, the time consumed in litigation, or a case of regulators being less transparent, negotiations can get complicated," she said.

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Regulatory vigilance has to be balanced with a pro-growth mindset, she said, referring to the emphasis on regulatory reforms in her FY26 Union budget presented on 1 February. She reiterated the budget’s message of ‘light touch regulatory framework’ based on principles and trust to unleash productivity and employment.

Ensuring regulatory efficiency and nimbleness is central to the government’s economic growth strategy as the ease of doing business can unlock the Indian economy's unrealized potential, the minister said. 

According to Sitharaman, “responsive and forward-thinking institutions have never been more critical", given the challenges that gripped the world in recent years—from the pandemic and geopolitical tensions to supply-chain disruptions.

Referring to the CCI, the minister said it is imperative that regulatory frameworks, while maintaining rigorous oversight, also facilitate swift and seamless approvals for transactions that pose no harm to competition.

Speaking at the event, CCI Chairperson Ravneet Kaur said fair competition is not just a legal obligation, it is a strategic imperative for growth and innovation.

The regulations framed based on the 2023 amendment to the competition law aim to make the anti-trust framework more agile, transparent and aligned with the realities of the market, she said.

Last year, the CCI introduced multiple schemes to improve the ease of doing business and to make its oversight more efficient. These include a settlement scheme allowing closure of a case by paying an amount ordered by the CCI and provision to drop investigations when the erring company makes commitments to change its market conduct. Also, the competition watchdog expanded the scope of its leniency regime to encourage more cartels to come clean. 

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The latest regulation on the cost of production enables a consistent approach in determining costs in cases of predatory pricing and deep discounting, Kaur said.

The amendments to the Competition Act have transformed the way competition law will now be working in the country, she said.
 

Industry concerns

Tight rules regarding availability of input tax credit under the Goods and Services Tax, a wide coverage of taxes deducted or collected at source (TDS or TCS) under the income tax regime, long-pending tax disputes, difficulties in the enforcement of contracts, multiple central, state and local compliance requirements for businesses and difficulties in land acquisition are often flagged by industry bodies as areas requiring relaxation. 

The government, on its part, has undertaken multiple rounds of decriminalization of laws and has put in place a system of coordination with all agencies to speed up the execution of infrastructure projects. The government has also replaced several approval requirements under the Companies Act with just filing requirements.