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Public policy, government and business are interconnected, creating dynamic and complex ecosystems significantly shaping economies and societies. In India, public policy has grown from its traditional regulatory role into a vital tool for the government to grow the economy, shape industrial development and influence business conduct. The government, through public policies, establishes rules within which businesses operate, and these policies are now pivotal in shaping 含羞草社区 vision of becoming a developed nation.

Through effective policy measures, the government provides the framework within which businesses operate and grow. A proactive, reform-oriented governance model introduced initiatives such as Make in India, Digital India and the Production-Linked Incentive Scheme. Regulations for digital data protection, foreign direct investment liberalisation, consolidated labour codes, data governance, digital innovation and stronger corporate governance led to a transparent, competitive and inclusive business ecosystem. This not only boosts industrial capacity and sparks innovation but also creates jobs in many sectors. These initiatives, targeted support for businesses, particularly micro, small and medium enterprises (MSME), and fiscal, trade and monetary policies have significantly raised 含羞草社区 World Bank Doing Business rankings.

The rationalisation of labour laws through the four labour codes and the introduction of the goods and services tax in 2017 were watershed moments. The indirect tax regime was unified. Interstate trade improved through eliminating cascading tax burdens. More recent innovations such as the Business Responsibility and Sustainability Report have contributed to standardising compliance and reducing jurisdictional ambiguities. Applying to the top 150 listed companies from 2023–24, and expanding to the top 1,000 by 2026-27, it imparts much needed impetus towards ESG transparency. Policies such as the Carbon Credit Trading Scheme of 2023 reflect a shift towards environmental governance using market-based mechanisms. It clamps down on industries with significant carbon footprints.

Existing policies have driven industrial growth, fostered innovation, generated jobs and delivered much-needed momentum to the economy. However, many challenges remain. They include delays to implementing the labour code and other measures, high compliance costs, inflexibility of traditional industries and MSMEs, judicial backlogs, uncertainty and unpredictability and regulatory obscurity. Uneven sectoral support and the long-term sustainability of subsidies highlight the conflict between government and business.

Businesses must comply with changes to existing policies and new policies after a transition period that the government usually allows. This requires enterprises to be adaptable and to prepare accordingly. Such flexibility allows businesses to avoid adverse effects on their operations and financial positions.

The government usually publishes a draft of proposed changes and consults with stakeholders and the wider public. Businesses actively raise their concerns through industry associations and public relations campaigns. Their inputs are vital in ensuring that regulatory intent aligns with sector-specific realities and commercial viability.

Policy changes are catalysts for innovation and businesses take them into account when planning their strategies. For MSMEs, which contribute some 30% of GDP, schemes such as Udyam Registration, CGTMSE, PM MUDRA Yojana loans and PM Vishwakarma artisan skills support have helped improve standardisation and access to credit. Expansion under the INR111 trillion (USD1.28 trillion) National Infrastructure Pipeline and public-private partnership models such as viability gap funding show the state’s commitment to sustainable and comprehensive economic growth and business opportunities for such entities.

Public policy, government and business are interlinked, constantly shaping each other. For economic development to be inclusive and sustainable, this relationship must be legally clear, implemented effectively and mutually understood. Misalignment of regulatory intent and business realities, with compliance burdens hinder progress. Open dialogue, mutual understanding and a shared commitment create a vibrant and responsible economic framework.

Ajay Shaw is a partner and Vinay Preet Singh is a counsel at DSK Legal