Independent, or just in name?

From a modest 3.1 per cent share of global income in 1947 to a projected 11.6 per cent by 2030, India’s economic trajectory tells a story of resilience, ambition, and enterprise. In 2021–2022 alone, India contributed 7.2 per cent to the world’s gross domestic product—a figure that has since climbed to 9.7 per cent. By 2026, India is set to become the world’s fourth-largest economy, with a projected GDP of $4.7 trillion, behind only the United States, China, and Germany.

What powers this exponential growth?  Beyond infrastructure and innovation, it is the contribution of India’s vibrant private sector—industrial and service giants like Maruti Suzuki, Air Deccan, Bajaj, Bharti Airtel, Dabur, ITC, Reliance, and Wipro. These companies have shaped the nation’s economic landscape, either through sustained growth or by influencing market dynamics before merging or fading away. The entrepreneurial spirit, combined with policy reforms and improved ease of doing business, has enabled India to transform from a largely agrarian economy to a global services and manufacturing powerhouse.

While strategy and innovation are crucial, strong corporate governance often makes the difference between longevity and collapse. Companies that uphold transparent leadership and accountable structures tend to weather market storms better. Corporate governance, in essence, is the backbone of sustainable business growth, instilling confidence among investors, customers, and regulators alike.

The role of an independent director is rooted in the need for checks and balances. Their presence ensures that management is held accountable, the interests of minority shareholders are protected, and business decisions reflect ethical and responsible practices. Independent Directors act as watchdogs—not to interfere, but to uphold integrity.

In India, the concept of independent directors gained prominence following a series of corporate scandals that exposed gaps in oversight. In response, the Companies Act, 2013, mandated the inclusion of independent directors in listed and certain other classes of companies to strengthen corporate governance standards. This was a significant step toward aligning Indian corporate governance with global best practices. Far from being “rubber stamps”, these directors are expected to actively challenge decisions and promote better governance. By fostering trust among stakeholders, they play a critical role in enhancing a company’s long-term success and reputation.

To be effective, an independent director must have no financial, familial, or professional ties that could impair their objectivity. Their independence—both in form and spirit—is essential to maintaining a healthy balance of power on the board.

Their primary function is to promote transparency, support stakeholder rights, and ensure that management decisions serve the broader interests of the company. An independent director is not employed by the company and has no financial stakes in it. Shareholders appoint them to be on the board based on their expertise and experience in fields such as finance, management, human resources, or marketing.

To elevate the professionalism of independent directors, several institutions in India offer ‘Masterclass for Directors’ programmes. Graduates of these programmes are recognised as Certified Corporate Directors, often certified by bodies accredited by the Indian Institute of Corporate Affairs (IICA) under the Ministry of Corporate Affairs. IICA even operates a dedicated portal where qualified independent directors can register to be considered for board positions.

Each year, between 15,000 and 19,000 professionals qualify as independent directors through these programmes. Yet, the real challenge begins after certification. Despite the formal structures, many aspiring independent directors struggle to secure board roles. In India, where family-owned businesses dominate, there is often a preference for trusted insiders over truly independent professionals. High-performing companies frequently turn to familiar names — former board members, ex-chairpersons, or senior executives —further limiting space for fresh, independent voices.

For many new independent directors, especially those without a high-profile background or strong personal networks, opportunities often come from startups. While rewarding, these roles can blur the lines between mentorship and formal governance, limiting their true function.

While India has made progress in strengthening governance frameworks, the appointment processes and actual independence of directors still need refinement. The system must move beyond lip service to the genuine implementation of laws and deeper recognition of the value that independent oversight brings to corporate performance and integrity.

(The author is an entrepreneur, qualified corporate director and freelance writer)