India Needs Smart Deregulation

Regulatory sandboxes, already successful in fintech, should expand across industries to enable innovation without exposing the economy to untested risks

- SRINATH SRIDHARAN

DEREGULATION, AT ITS core, is about reducing friction and streamlining governance, not removing safeguards. Yet in today's fast-changing world — where digital finance, geopolitical shifts, and disruptive technologies are reshaping industries — the real question is not whether India needs deregulation. It is how to strike the right balance before economic instability sets in.

The Union government is expected to announce a national deregulation commission soon. Its mandate will be to accelerate approvals and remove barriers, particularly for smaller businesses. But as the chief economic advisor recently noted, digitization alone does not equate to deregulation. Policy changes must extend beyond central directives and take root at the state and local levels. Businesses need real regulatory improvements, not just bureaucratic rebranding.

The ghost of the licence-permit raj still lingers in Indian business. It hides in endless approvals, in the fine print of archaic laws, and in the unchecked power of officials across all levels who see regulation as a means of control rather than economic enablement. Some call it state interference. Others call it institutional inertia. In many cases, it is just corruption by another name. Regardless of what it is called, the result remains the same. Businesses, especially smaller ones, find success not just through merit but by navigating a system where knowing the right people matters as much as operational excellence.

Over the years, careful deregulation has strengthened India's financial sector. Banking, capital markets, and fintech services have expanded, making India a global leader in financial innovation.