E-Paper
Professional challenges for independent directors in India
This article is authored by Abhay Gupte, retired senior financial partner, Deloitte India.
Independent directors occupy an essential yet increasingly complex role in the governance of listed companies in India. Their presence was conceived as a safeguard for transparency, accountability and the protection of minority shareholders. In principle, they stand as impartial custodians of fairness in boardrooms that might otherwise be dominated by the interests of controlling shareholders. In practice, however, their responsibilities are shaped—and often constrained—by concentrated ownership patterns, entrenched cultural hierarchies and persistent information asymmetry. These conditions mean that the very independence they are expected to embody is constantly being tested.
The rationale for having independent directors is both clear and compelling. In any board-led structure, the decision-making process naturally tends to favour those who hold the greatest power, influence or economic stake. This tilt may not always be deliberate, but it is inherent in systems where promoters or majority shareholders have significant control. Independent directors serve as a counterbalance to this structural advantage. Because they do not possess vested interests, they can examine proposals objectively, question assumptions and ensure that the broader interests of all shareholders are not overshadowed by those of a few. Their value lies not in passive compliance but in active participation, analytical clarity and a willingness to challenge when necessary.
Yet the statutory criteria for independence, although meticulously defined by the Companies Act, 2013 and SEBI’s LODR Regulations, offer only a partial foundation. True independence emerges not from the eligibility norms, but from the conditions under which directors operate. Promoter-driven nominations, even when compliant with the letter of the law, can create subtle pressures. These need not take the form of explicit directives; often, the culture of deference or the expectation of alignment exerts its own influence. This is why a more uniform, transparent and institutionally robust nomination and evaluation process—anchored firmly by a truly empowered NRC—is vital. Just as standardisation has strengthened financial transparency globally, a similar commitment in board nominations can reinforce genuine independence.
The challenges extend beyond appointments. Independent directors are expected to embody a regulatory paradox: they must act as rigorous watchdogs while simultaneously serving as strategic advisors. This duality is difficult to inhabit when the flow of information is incomplete, delayed or inconsistently curated. Board papers arriving just days before meetings, running into hundreds of pages, often leave directors scrambling for clarity. When information is selective or overly voluminous, oversight becomes reactive. Instead of anticipating risks, independent directors are forced into a mode where they respond to issues after they have escalated.
A meaningful solution lies in embracing technology as a governance ally. Digital platforms that enable real-time access to financial, compliance and operational data can transform how independent directors engage with their responsibilities. Globally, independent directors spend nearly twice as many hours annually on oversight compared to their Indian counterparts. With AI-enabled dashboards that present trends, deviations and red flags without requiring deep technical expertise, directors can focus on analysis rather than information gathering. Technology can democratise access and reduce the dependence on management for filtered insights.
Cultural dynamics, however, remain an under-recognised barrier. Boards in India seldom offer their independent directors the structured onboarding, dedicated support staff or external advisory access that western boards treat as standard. Without these enabling conditions, independent directors may find it challenging to contribute strategically or question established assumptions without appearing confrontational. The absence of consistent institutional support diminishes their ability to shape long-term direction, even when they have the expertise to do so.
The future, therefore, does not rest solely on tightening regulations. A transformation in boardroom practice is far more essential. Transparent nomination processes, substantive pre-board briefings, access to independent experts, digital governance systems and periodic peer evaluations should become the norm rather than the exception. These steps would not only strengthen oversight but also enhance trust in the system.
Embedding transparency, standardisation and technology into board functioning is crucial to ensuring that independent directors can fulfil their intended purpose. When empowered with information, supported by robust processes and insulated from undue influence, they can transcend tokenism and truly contribute to a more resilient and accountable governance landscape in India.
As Pratip Kar of SEBI often emphasised, “Good governance is not just about compliance—it is about systems- embedding greater transparency, standardisation and technology into board functioning is absolutely essential. Only then can independent directors move beyond symbolic roles and contribute meaningfully to building a more resilient governance framework."
This article is authored by Abhay Gupte, retired senior financial partner, Deloitte India.
