India's transition from a controlled economy to market economy has produced a comprehensive regulatory framework that evolved over 35 years of liberalisation. According to Business Standard, the transformation produced two major institutional changes: regulations became the bulk of laws governing markets as technology and business models changed rapidly, while regulators emerged to govern markets through regulations with the separation of player from referee roles. The government historically served as both player and referee - the Department of Telecommunications and Mahanagar Telephone Nigam in telecommunications, Life Insurance Corporation and GIC in insurance, and Unit Trust of India in fund management. This separation led to the creation of dedicated regulators including Telecom Regulatory Authority of India (Trai), Insurance Regulatory and Development Authority of India (Irdai), Securities and Exchange Board of India (Sebi) and Competition Commission of India. As CB Bhave famously noted, when problems develop at 30,000 feet, regulators must respond within existing statutory frameworks without waiting for legislative repair.
NITI Aayog Member Rajiv Gauba emphasized that deregulation should be the defining feature of India's next-generation reform architecture, speaking at the Global Fintech Fest 2026. According to Gauba, the next phase of reforms should focus on the 'nuts-and-bolts' of governance by systematically reviewing existing laws, regulations and administrative processes. He noted that a High-Level Committee is working on this exercise, guided by the principle of trust-based governance advocated by Prime Minister Narendra Modi. Gauba highlighted that reforms at the state and municipal levels are equally important, with several areas requiring reform falling within the jurisdiction of state and local governments. The latest regulatory developments, including the Securities Markets Code Bill, 2025 (SMC), represent what experts call Regulatory Architecture 2.0, addressing concerns about democratic legitimacy, proportionality, transparency, conflicts of interest and institutional accountability.
NITI Aayog Member Rajiv Gauba called for a fundamental shift towards light-touch and risk-proportionate regulation during the fifth Kautilya Economic Conclave in New Delhi. According to reports from Business Standard, Gauba emphasized that regulatory frameworks must keep pace with changes in technology, business models and the global economic environment. The challenge for policymakers is not to choose between regulation and growth, but to develop regulations that manage risks while supporting innovation, competition and investment. Gauba stressed that regulatory requirements should be calibrated to the nature and consequences of the risks involved, with regulators carefully assessing whether new rules are warranted before intervening in new and rapidly evolving sectors. This approach aligns with the evolution of India's regulatory state, which moved from the 'circular raj' to a transparent hierarchy of regulatory law where regulations must be made by governing boards following public consultation with disclosed comments and responses.
On India's fintech sector, Gauba highlighted its rapid growth and contribution to financial inclusion and wider access to financial services. He cited India's digital public infrastructure, including Aadhaar, UPI, DigiLocker and the account aggregator framework, as an example of how governments can provide secure and interoperable digital infrastructure on which private enterprises can build and innovate. Gauba called for regulatory frameworks to be principles-based, technology-neutral and proportionate to risk, while promoting competition, ensuring non-discriminatory access to underlying infrastructure and improving information symmetry. The Securities Markets Code Bill, 2025 (SMC) reinforces this approach by mandating that regulations must be made by the governing board following public consultation, with comments and the regulator's response disclosed. Both regulations and subsidiary instructions are subject to parliamentary scrutiny, with periodic review and regulatory-impact assessment adding evidence-based discipline to rule-making.
The NITI Aayog member emphasized the need for greater coordination among regulators to address overlapping mandates, avoid duplication and close regulatory gaps. According to Business Standard, Gauba stressed the importance of regulatory independence being accompanied by accountability. While regulators need autonomy to take difficult decisions free from undue influence, public confidence requires transparent decision-making, clear procedures, effective review mechanisms and accountability for regulatory performance. The Securities Markets Code Bill, 2025 (SMC) strengthens this architecture by consolidating enforcement into a single adjudicatory process, enabling proportionate responses from suspension and cease-and-desist orders to monetary penalties, disgorgement and remedial directions. The bill also consolidates appellate review, with the Securities Appellate Tribunal (SAT) now having jurisdiction over appeals against orders passed by Sebi itself, moving beyond the fragmented initial appellate architecture where Sebi's orders went to government-appointed Appellate Authority while monetary-penalty orders went to SAT.
Gauba called for stronger regulatory capacity as markets and technologies become more complex, requiring specialised expertise, stronger analytical capabilities and engagement with industry, academia and technology institutions. As reported by Business Standard, he linked this approach to sustaining the high growth required for Viksit Bharat by 2047 and referred to the government's Trust Based Governance or Jan Vishwas approach. The latest developments, including the Securities Markets Code Bill, 2025 (SMC), represent a move towards Regulatory Architecture 2.0 that governs Sebi and mandates the exercise of regulatory power with responsibility and accountability. The MER emphasizes that India must become 'more competition-friendly rather than business-friendly' to encourage investment and productivity growth, with IMF studies showing competition-enhancing reforms account for 12-15% of productivity growth across countries. Experts now advocate for a common institutional architecture for regulators similar to how the Companies Act provides a common framework for companies, with the Tribunals Reforms Act, 2026 having moved tribunals towards such a framework.
