Need for speed in our capital markets

For India to remain attractive, its legal and regulatory framework must evolve to reflects realities of modern capital flows and business environment

- SHRIRAM SUBRAMANIAN

INDIA'S EMERGENCE AS a globally competitive capital market depends on the speed and efficiency with which corporate transactions are completed. While the country continues to see complex transactions and significant capital inflows from first-time investors—both strategic and financial—the pace at which our legal and regulatory system operates needs to be hastened. The slow completion of transactions is becoming the single biggest obstacle preventing India’s capital markets from realising their true potential.

Significant delays in approvals from the Securities and Exchange Board of India (Sebi), National Company Law Tribunal (NCLT), Reserve Bank of India (RBI), and the courts for mergers, demergers, acquisitions, or restructurings erode the financial logic behind transactions and undermine investortrustin market institutions. While investors can assess the overall riskand price itin the transactions, they cannot wait indefinitely for resolutions.Inan era when capital moves across borders at a click of a button, prolonged legal orregulatory processesactasa costly drag on ambition and growth.

Delays and their overall impact

India’s corporate law and regulatory system paint a mixed picture where the approval process has changed over the decade but the speed ofapprovals remains slow. The case backlog is increasing and the ecosystem has many examples of transactions that have stretched far beyond reasonable timelines.