Doing business in India and the repertoire of litigation assessment for business strategy
Over the past decade, the Indian government has emphasised a clear vision of “ease of doing business” as the primary driver for our nation’s goal to become a fully developed and self-reliant country by 2047. This vision extends beyond economic and social policy and translates into a comprehensive overhaul of the legal system. This involves definitive enactments and amendments to both substantive and procedural laws.
The objective is clear: leverage the vision of ease of doing business as a pillar of growth by prioritising digitisation, tax certainty, investor access, and a reduction in litigation. However, despite this resounding emphasis, foreign businesses still encounter significant hurdles, including complex regulatory compliance, slow contract enforcement, and delayed dispute resolution. Consequently, any foreign investor operating in India must conduct a thorough evaluation of the dispute resolution landscape to mitigate operational and financial risks.
This piece examines the current state of the Indian legal system, specifically from the perspective of commercial litigation and the obstacles foreign companies face. It provides a roadmap for success by highlighting two essential elements: the evolving legal landscape for making commerce and trade smoother and faster and strategic litigation assessment should the need arise.

Transitioning from a “clearance-intensive” model to a “trust-based compliance” model
The transition is built on four core strategies: decriminalisation, digitisation, simplification, and risk-based oversight.

Decriminalisation
By shifting from criminal to civil liability, the government is eliminating “jail time” for minor procedural errors. Following the decriminalisation of 183 provisions across 42 acts, a new wave of reforms targeting 288 provisions across 16 laws is underway. The goal is simple: first-time lapses like late filings now earn a warning or a fine, not a court date.

Taxation: predictability over litigation
The cornerstone of this reform is the Income Tax Act, 2025, which fully supersedes the legacy 1961 Act this April (2026). By institutionalising Faceless Assessments, the government has removed the friction of physical audits. Key to this “trust” model is tax certainty: the landmark tax holiday for data centres until 2047 and the reduction of minimum alternate tax (MAT) to 14% (as a final tax) ensure that global investors can commit capital without fearing retrospective shifts.

Customs and trade: “factory-to-ship” clearance
Customs has transitioned from the physical inspection of every container to a sophisticated risk management system (RMS). Under this regime, authorised economic operators (AEOs) now benefit from a 30-day duty deferral (doubled from the previous 15 days) allowing them to clear cargo immediately and settle duties later. This “Paper-Free Customs 2028” roadmap is underway, aiming to migrate all post-clearance activities, such as refunds and amendments, to an automated, application programming interface (API)-based digital module.

Environmental and digital clearances
India is digitising trust through platforms like PARIVESH 3.0 (which uses geographic information systems (GIS)-based decision support systems (DSS) to auto-check if a project sits on a forest land bank or sensitive zone), where artificial intelligence (AI)-driven data layers enable faster “in-principle” environmental approvals via self-certification. Similarly, the DPDP Rules, 2025 (issued under the Digital Personal Data Protection Act, 2023) shift data governance to a “trust-but-verify” model. While it empowers companies with a privacy-by-design mandate, it enforces accountability through heavy civil penalties, reaching INR 250 crore for critical data breaches.
India’s trust-based model can turn a “regulatory maze” into a streamlined “regulatory platform” where compliance is seamless. The foundation is set and the laws are well aligned to modern business and international trade. However, the real impact will come from consistent implementation. It is vital that these changes are embraced in both letter and spirit to justly de-risk the business environment.

Strategic readiness: anchoring the two pillars of pre-conflict preparation
A well-drafted contract is a shield, but it isn’t a foolproof guarantee. In the context of India’s complex legal ecosystem, corporations must prioritise early-stage dispute mitigation. Drafting is only the beginning. In practice, success depends on the continuous “living” management of the contract. The quality of on-ground documentation and performance monitoring often carries more weight in a courtroom than the initial legal prose.

From paper to practice: securing outcomes through contract governance
A simpler legal environment doesn’t lower the bar for evidence. If anything, it raises the importance of internal discipline. Contract governance is the ultimate insurance policy for long-term projects where informal changes often creep in. If you accept a late delivery without a formal protest, Indian law may deem you to have waived that right forever. By institutionalising “reservation of rights” letters for every deviation, a strict governance protocol preserves your standing and prevents your actions from being used against you in court.
In India, cases find success on the strength of real-time records. Shifting from manual memory to digital communication trails ensures that your evidence is created in the “ordinary course of business”, making it far more admissible in court. Maintaining automated logs and site diaries creates a transparent “paper trail of truth”, effectively neutralising an opponent’s ability to fabricate a different version of events.
Most disputes in India stem from minor lapses that were allowed to escalate. Implementing a system providing “early warning signals” allows for intervention through alternative dispute resolution (ADR) long before a conflict becomes terminal. A critical part of this is addressing the “verbal order” trap. By requiring a formal change order for any deviation in scope, a company ensures that extra work is always documented. This turns complex courtroom battles over oral promises into simple, data-driven billing discussions.
With India’s focus on trust-based compliance, your internal governance is your “shield”. If you can show a regulator or a judge that your company never moves without a change order, your credibility is immediately established. It proves that your company operates on systems, not on whims.

Navigating disputes in a trust-based model: selective litigation and pre-emptive positioning
In the Indian legal landscape, selecting the right moment for conflict requires a fundamental shift from emotional reactions to econometric assessments. Since not every breach of contract warrants a decade of litigation, businesses must implement a rigorous strategic filter. By objectively evaluating each dispute, corporations can ensure more favourable outcomes, whether through formal court rulings or strategic out-of-court settlements. Businesses should evaluate potential disputes against the following critical benchmarks to determine their viability.
The evidence filter (the “contemporaneous” test). The primary question arising before every construction dispute is “do we have the ‘paper trail of truth’”? If your documentation (change orders, site diaries, reservation of rights) is gap-heavy, the battle is already lost. In 2026, Indian courts have little patience for “reconstructed” evidence. Only fight the battles where your digital trail is immutable.
The regulatory filter (the “precedent” test). Another perspective for choosing the litigation battle is to answer “does this affect our ‘core business’”? Beyond the immediate financial recovery, certain disputes warrant a firm stance, regardless of the amount, if they safeguard a foundational business principle or pre-empt a damaging regulatory precedent. Conversely, tactical restraint is advised in cases where litigation might cast a company as “obstructionist”, potentially eroding the institutional trust cultivated under the trust-based compliance model.

Recent jurisprudence — significant shift toward aligning with global trends
Indian courts have increasingly adopted a “global harmonisation” approach to arbitration, aiming to make India a global business hub. Some of the recent rulings focus on:

• Invalidating unilateral arbitrator appointment clauses to ensure party autonomy.
• Recognising the “group of companies” doctrine, allowing non-signatories to be bound by arbitration agreements in complex corporate structures, reflecting modern global commercial realities.
• Affirming that unstamped arbitration agreements are not inherently void, removing technical hurdles for foreign investors.
• Affirming that courts should exercise limited power to modify arbitral awards, reinforcing that courts cannot rewrite or re-evaluate the merits of an award.

Recent tax litigation trends in India also demonstrate a move towards procedural fairness and administrative pragmatism, balancing the need for rigorous tax collection with the “ease of doing business”. While high-profile rulings like Tiger Global– Flipkart have tightened anti-avoidance standards, several other recent judicial and legislative developments are distinctly pro-business. The judiciary has increasingly shielded businesses from being penalised for the defaults of their vendors, a major relief for large-scale procurement operations. (On January 15, 2026, the Supreme Court of India ruled that Tiger Global must pay taxes on its USD 1.6 billion stake sale in Flipkart to Walmart in 2018. The court denied Mauritius treaty benefits, finding the investment structure lacked commercial substance and was designed for tax avoidance. This landmark decision emphasises that tax residency certificates are not absolute, allowing tax authorities to look through conduit entities.)

Conclusion
Operating in India is greatly viable and often exceptionally profitable for companies that view legal dynamics as a strategic variable rather than a hurdle. In this high-growth environment, the “smart money” prioritises prevention over litigation. But where disputes arise, success depends on moving from a reactive stance to a pre-emptive, system-driven litigation strategy. With the judicial system undergoing a digital and procedural transformation, a structured approach ensures that legal outcomes reinforce, rather than disrupt, business goals.

AUTHOR BIOGRAPHIES

Gautam Bhatikar
Gautam is dual-qualified in India and England and is a veteran with over 25 years of wide-ranging and diverse experience in construction and EPC, offshore projects, maritime and shipping, insurance, environment, commodities, international trade, oil and gas, energy, commercial litigation, and Alternative Dispute Resolution (ADR). Gautam has acted for various EPC contractors, financial institutions, shipowners, PSUs, oil companies, traders and insurers in high-stakes domestic and cross-border litigation and arbitrations. Gautam has also advised several Indian and International construction and projects companies in India, the Middle East & Africa, He has been advising and representing domestic and international clients from a variety of jurisdictions including the UK, U.S., Europe, Middle East, and Southeast Asia. Over the years, Gautam has been regularly featured in the “Recommended Lawyers” list of leading publications such as Chambers & Partners and Legal 500, and ranked as a “Distinguished Practitioner” by Asialaw Profiles. Gautam has also featured in the list of “Super 50 Lawyer” by ALB.

Vikram Kamath
Vikram Kamath is a Principal Associate with Phoenix Legal at their Mumbai office. He is part of the Litigation and Dispute Resolution team predominantly handling matters related to Commercial and Corporate laws, Shipping and Maritime laws, Infrastructure, Projects and Construction, and White-collar Crimes. As a litigator and corporate/commercial legal advisor, Vikram has a rich experience spanning over a decade of industry experience in representing MNCs as well as individuals in various cross-border and domestic disputes, transactions, M&A and restructuring. Vikram regularly appears before the Supreme Court, various High Courts, District Courts, National Company Law Tribunals, while also representing clients in arbitration proceedings. Vikram specialises in providing cross-border advice on various Indian laws as well as representing Shipowners, Charterers and P&I clubs in admiralty suits before various High Courts. Separately, Vikram advises and represents foreign and domestic companies and their KMPs in proceedings related to money-laundering, economic fraud, data-breach, white-collar crimes and internal investigations.