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Legal frameworks comprise a multitude of laws, rules, regulations and delegated legislation enacted over time, and later modified in a piecemeal manner, resulting in inconsistencies, regulatory arbitrage and compliance confusion.

A fragmented regulatory architecture leads to uncertainty, hindering enterprises from thriving in a modern economy. They are denied the benefits of a streamlined marketplace, associated compliance, regulatory certainty and reduced intermediation costs. By blocking these advantages, regulatory fragmentation imposes hidden costs on businesses, undermining the wider ease-of-doing-business agenda. An example is the overlapping regulation of mobile phones by the Telecommunications Act, 2023 and the Requirement of Compulsory Registration Order, 2021, under the Bureau of Indian Standards Act, 2016.

Consolidation powering business-friendly regulatory reform

Consolidation is overdue and will deliver tangible benefits to industries and investors. A single, coherent framework replacing scattered and inconsistent rules removes duplication and overlap, strengthening accountability and transparency. By streamlining compliance, businesses save time and costs, freeing them to innovate and grow. A simplified and predictable regulatory environment enhances the ease of doing business, boosts investor confidence and makes the economy more competitive in global markets.

The government and sectoral regulators are steadily moving towards streamlining the regulatory landscape to reduce the compliance burden and further the ease of doing business, among others. Recently, the Reserve Bank of India merged more than 9,000 circulars and guidelines into 238 function-based Master Directions, specific to each category of regulated entity. This action will significantly improve accessibility to regulatory directives, reducing compliance costs. Consolidating separate regulatory instructions for each type of regulated entity makes clear how each instruction applies to a regulated entity. The egulated entities have endorsed the unified regulatory framework, which will reduce ambiguity, lower transaction costs and significantly improve the business environment.

A much-needed consolidation of legal architectures in areas such as labour has also been undertaken. The second National Commission on Labour pointed out that many government and state labour laws are a patchwork of amendments and additions, resulting in labour laws becoming complicated, mutually inconsistent and outdated. To modernise and simplify this outmoded regulatory framework, 29 archaic enactments were amalgamated into four labour codes. This was designed to promote industrial harmony and improve the ease of doing business. Employment, economic growth and investment will increase through such regulatory and legal certainty.

Unified laws boost business competitiveness

Internationally, regulatory and legal consolidation is increasingly recognised as a powerful tool for improving the ease of doing business. In 2024, Australia’s Law Reform Commission stated that unnecessary complexity in legislative frameworks generates unnecessary costs. This makes it harder for businesses, particularly smaller firms, to operate and innovate because they have to put limited resources towards costly compliance processes in order to navigate complex regulations.

In 2009, to eliminate compliance burdens and distorted competition, the EU introduced its Single Rulebook Model. This provided a single set of harmonised rules for the financial sector. According to the OECD, reforms worldwide aim to benefit enterprises. Fragmented and overlapping rules impose unnecessary costs, slow compliance and weaken competitiveness. By unifying laws, governments create regulatory environments that are easier to navigate, more predictable and more business-friendly.

Digital governance completes consolidation reforms

However, consolidation is only part of the solution to outmoded governance. Digital infrastructure, such as machine-readable laws, must also be developed. A repository of laws, rules, regulations and delegated legislation will result, enabling living rule books that evolve seamlessly with every regulatory change. Such technology-based libraries avoid duplication, ensure consistent interpretation and greatly reduce compliance burdens. Legal consolidation and digital governance together form an enhanced model that improves the ease of doing business.

Ameet Datta is managing counsel, Jasman Dhanoa is a senior associate and Yashaswini Chauhan is an associate at ADP Law Offices.