Regulations to Facilitate Freedom, Not Friction

INNOVATION IS THE FUNDAMENTAL driver for economic prosperity, and the work of this year’s Nobel Prize laureates, Joel Mokyr, Philippe Aghion and Peter Howitt, reaffirms this. Their work reminds us that progress does not happen by accident; it requires an ecosystem that fosters innovation and dismantles any barriers on the way.

- By Amit Kapoor & Amitabh Kant

In that spirit, as India advances toward its aspiration of becoming a global economic powerhouse, the role of regulation cannot simply be about enforcement. It must be reimagined as something far more strategic. Should regulation act solely as a shield protecting trust, transparency and fairness or as a sword that is arbitrary, punitive and stifles ambition?

Innovation Must Be the Engine

Every rising economy reaches a moment when old systems can no longer support new ambitions. India is at that moment now. For sustainable growth and inclusive prosperity to become a reality, innovation must be the engine, and for innovation to thrive, regulation must serve as an enabler instead of a barrier. It must open doors, encourage experimentation, foster competition, and enable opportunities.

This stance is reinforced by global evidence: countries with strong innovation ecosystems, such as Switzerland, the USA, Singapore and China, consistently outperform peers in productivity and competitiveness. For India, where the technology and innovation economy is projected to reach $1 trillion by 2030, fostering innovation is thus nonnegotiable.

Excessive Compliance Burden

While innovation flourishes only in a business environment marked by policy predictability, clarity, and transparency, Indian companies currently face 69,233 compliances across 1,536 laws. This results in an excessive compliance burden that represses entrepreneurial spirit. So, to unlock India’s potential, it must unshackle enterprises from regulatory overreach.

Historically, regulations in India have leaned toward control, epitomised by the Licence Raj, and sectorspecific restrictions such as industrial licensing and import controls. While the 1991 economic reforms dismantled most of this, remnants persist. This approach is not the most appropriate for a dynamic $4 trillion Indian economy, aiming to reach $10 trillion by 2035.