India, today, presents a troubling contradiction. We speak endlessly of becoming a global manufacturing hub, a developed economy within two decades, and a major technology power. Yet, beneath the slogans and speeches, lies growing unease across markets, businesses, and investors.
Markets have been under pressure for almost two years. The rupee continues to weaken. FIIs are pulling money out at worrying speed. Corporate earnings have disappointed across several sectors. Amid global uncertainty and geopolitical tensions, citizens are being advised to exercise austerity.
But at perhaps the most critical economic moment in recent years, one constituency remains curiously muted: the industry associations.
These bodies were created to represent industry interests and act as institutional bridges between policymakers and the productive economy. They were not created merely to host conferences, networking events, and award ceremonies. Their real mandate is far more serious: to improve India’s business environment, strengthen competitiveness, and ensure that investment and enterprise can flourish.
That responsibility today demands honesty. And honesty requires acknowledging that the Indian business environment is becoming steadily more difficult.
Businesses today face a maze of approvals, registrations, filings, audits, inspections, and reporting obligations across taxation, labour laws, environmental rules, land approvals, customs, corporate compliance, financial regulation, data rules, and sector-specific regulations. Even large companies with sophisticated legal teams struggle to navigate the system efficiently. For startups, exporters, and MSMEs, the burden is often debilitating. Every year brings new reporting requirements, new procedural expectations, new portals, and new interpretations. Businesses spend extraordinary amounts of management bandwidth dealing with compliance instead of innovation, expansion, exports, or productivity.
A more serious problem is the culture surrounding enforcement. Despite clear positive intent at the apex level in the government and constant push from the top for ease of doing business, decriminalisation, and simplification, the lived experience of many businesses remains one of growing anxiety and unpredictability, thanks to the bureaucracy and the regulators. Rules are often interpreted differently across departments and jurisdictions. Regulatory overlap remains significant. Approvals remain slow. Dispute resolution remains painfully delayed. Businesses frequently operate in fear of retrospective scrutiny or arbitrary interpretation.
The atmosphere increasingly appears rooted in suspicion rather than trust. The burden often shifts onto businesses to constantly demonstrate innocence, intent, and procedural perfection. Routine commercial or administrative matters can quickly acquire criminal overtones. A country cannot become globally competitive by exhausting its productive sector through permanent compliance anxiety.
Ease of doing business is not about digitising forms while retaining the same underlying complexity. Real ease of doing business means fewer approvals, stable rules, limited discretion, predictable taxation, time-bound clearances, and a regulatory culture that views enterprise as a crucial and the most important partner in growth rather than a perpetual suspect.
Capital gains tax changes, shifting interpretations, and aggressive enforcement have cumulatively created uncertainty. What investors struggle with is unpredictability. Global capital always has alternatives. Long-term investment flows only where rules appear stable and credible. The continuing outflow of foreign institutional investment cannot simply be dismissed as a temporary market movement. Global liquidity conditions matter, but persistent investor discomfort reflects deeper concerns about legal certainty and ease of operating in India.
The weakening rupee is another warning sign. Currency pressure is not merely a forex issue; it reflects concerns about competitiveness, investment inflows, and confidence in long-term growth momentum.
The tragedy is that India possesses extraordinary natural advantages: a large domestic market, entrepreneurial energy, strong digital public infrastructure created in the last one decade, geopolitical acceptability acquired in the past 15-odd years in an increasingly fragmented world, and a historic opportunity arising from global supply chain diversification away from China.
Yet, many of these advantages are being undermined by institutional complacency and policy inconsistency. The hesitation of several major global manufacturers (for example, Tesla) in making large India commitments reflects this larger reality. India continues to be viewed as a difficult operating environment.
Instead of introspection, public discourse often becomes defensive and nationalistic. But slogans will not attract investment.
Equally worrying is India’s inadequate urgency in preparing for the next technological era. Artificial intelligence, robotics, semiconductors, and automation are transforming global production systems. The very IT services model that powered India’s rise has already been disrupted from AI-driven productivity.
Industry associations should be leading serious national conversations on AI infrastructure, semiconductor ecosystems, research investment, university-industry collaboration, advanced manufacturing capabilities, and workforce transition. Instead, much of the engagement remains ceremonial.
China is investing aggressively in advanced manufacturing and AI. The United States is subsidising strategic industries and reshoring supply chains. Southeast Asia is integrating rapidly into global manufacturing networks. India cannot assume a demographic advantage alone guarantees economic success.
This is precisely why pressure groups like industry associations matter. Their purpose is not proximity to power; their purpose is stewardship of India’s economic future.
But that requires institutional courage. Constructive criticism is not anti-national. Suppressing criticism in economic policymaking is deeply dangerous because it creates blind spots at the highest levels.
Industry associations should collectively ensure rationalisation of compliances, reduction in regulatory overlap, faster dispute resolution, greater tax certainty, decriminalisation of minor violations, and credible long-term strategies for manufacturing and technological competitiveness. Most importantly, they should be fighting to restore business confidence.
Confidence cannot be manufactured through speeches or branding campaigns; it emerges when entrepreneurs believe the system genuinely wants them to succeed rather than constantly defend themselves. India still has immense potential. But potential alone does not sustain currencies, attract capital, create jobs, or build global competitiveness. Nations rise when institutions are willing to confront uncomfortable realities before they become crises. Right now, the silence of industry associations is becoming a part of the problem.
The writer is a retired IRS officer and Ex-Chief of Surveillance at SEBI. Advisor to corporates, market participants and tech entrepreneurs.
