India Inc. to Rethink Business Strategy Amidst Regulatory Shifts

Critical Legal and Regulatory Changes Expected to Impact Business Strategy

Critical legal and regulatory shifts, from AI-driven workforce transformation to evolving insolvency frameworks, are expected to redefine India Inc.’s business strategy. A recent report by Khaitan & Co., ‘Foresight 2025,’ states that legal agility will be key for businesses navigating India’s evolving corporate terrain as regulatory complexities deepen across sectors.

Evolving Role of the Board

As the regulatory landscape tightens, the role of the board is evolving from a shareholder-centric approach to one that embraces stakeholderism, which factors in employees, customers, communities, and society at large. According to Rabindra Jhunjhunwala, Partner at Khaitan & Co., “While buzzwords like DEI, ESG, and AI continue to be tested, the true challenge lies in how boards adapt and execute these principles in a manner that suits their unique business needs.”

Focus on Privacy, Cybersecurity, and AI Regulations

The report, ‘Foresight 2025’ predicts that With the Digital Personal Data Protection Act, 2023 (DPDP Act) set to be fully operational, 2025 will witness a heightened focus on privacy, cybersecurity, and AI regulations. From the companies’ point of view, internal investigations are becoming a cornerstone of corporate governance, moving beyond compliance checkboxes to strategic risk management.

Deal-Making Landscape in 2025

Looking at 2025 from a deal-making perspective, the landscape promises excitement but also a fair share of challenges. Geopolitical shifts and evolving regulations will undoubtedly keep us on our toes, but India’s growth story remains resilient. According to Jhunjhunwala, “As we pursue the ambitious $ 30 trillion target, we can expect more cross-border deals, strategic partnerships, and innovative moves.”

Evolution of Transaction Liability Insurance

The report also indicates the evolution of the increased use of Transaction Liability Insurance (TLI) in the M&A landscape. With growing competition among insurers, premiums have dropped, and coverage has expanded, making TLI an attractive tool for dealmakers. Additionally, regulatory changes in Public M&A transactions, including a fixed price mechanism for take-private deals, are expected to drive deal certainty and investor confidence.

Specialised, Sector-Driven Legal Solutions

“From AI-led workforce transformations to the rise of transaction liability insurance, 2025 will be defined by specialised, sector-driven legal solutions,” said Jhunjhunwala. “Family businesses, the backbone of India’s economy, are undergoing a seismic shift, balancing legacy with the demands of a fast-changing corporate world,” he adds.

SARFAESI Act Emerges as Preferred Route for Distressed Asset Acquisitions

The report also states that delays in Insolvency and Bankruptcy Code (IBC) resolutions—averaging 582 days—have diminished investor interest. As a result, the SARFAESI (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest) Act is emerging as a preferred route for distressed asset acquisitions due to its faster turnaround time and lower costs. “The trend is particularly evident in the real estate sector, where SARFAESI auctions are gaining popularity,” says the report.

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Published On Feb 6, 2025 at 09:50 AM IST

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