Corporate governance in India has evolved significantly over the past decade, with independent
directors (IDs) and non-executive directors (NEDs) playing pivotal roles in steering companies
toward transparency, accountability, and sustainable growth. As India aims to become a $5
trillion economy, the spotlight on these boardroom figures has intensified. But who are they, what
do they do, and why are they so critical in today’s corporate landscape? Let’s dive in.

Who Is a Non-Executive Director?
A non-executive director is a board member who doesn’t handle the company’s daily operations.
Unlike executive directors—such as the CEO or Managing Director, who are immersed in
running the business—NEDs focus on oversight, strategy, and guidance. They’re the external
voices in the room, often bringing industry expertise, strategic insight, or a broad network to the
table.

In India, NEDs are a diverse bunch. They might include seasoned professionals, former
executives, or even promoter representatives who aren’t involved in day-to-day management.
Their role is to challenge assumptions, provide perspective, and ensure the company’s long-term
health. For instance, the Companies Act, 2013, doesn’t distinguish between the fiduciary duties
of executive and non-executive directors under Section 166, meaning NEDs carry the same legal
weight of responsibility—albeit with a different focus.

The Independent Director: A Step Beyond
An independent director is a subset of NEDs, defined by their impartiality. Under Section 149(6)
of the Companies Act, 2013, an ID must have no material relationship with the company—be it
financial, familial, or professional—that could compromise their judgment. They’re not
promoters, not employees, and not linked to the company’s auditors or consultants in the past
three years. This independence is their superpower, enabling them to act as watchdogs for
shareholders, especially minorities.

In India, the push for IDs gained momentum after high-profile corporate scandals like Satyam
(2009), which exposed governance gaps. Today, every listed public company must have at least
one-third of its board as IDs, while certain unlisted public companies (e.g., those with a paid-up
capital of Rs. 10 crore or more) need at least two, per Rule 4 of the Companies (Appointment and
Qualification of Directors) Rules, 2014.

Current Data and Trends in India (2025)
As of March 2025, India’s corporate governance framework continues to evolve. The Ministry of
Corporate Affairs (MCA) and the Securities and Exchange Board of India (SEBI) have tightened
regulations to ensure IDs and NEDs deliver on their promises. Here’s a snapshot of the current
landscape:

Independent Director Databank: Launched by the MCA in 2019 and managed by the Indian
Institute of Corporate Affairs (IICA), the Independent Directors’ Databank has grown into a
robust platform. As of early 2025, it hosts over 22,000 registered directors, including more than
6,000 women directors, reflecting a push for gender diversity. Aspiring IDs must pass an Online
Proficiency Self-Assessment Test within a year of registration, ensuring a baseline of governance
knowledge.

Appointments in 2025: Recent announcements highlight the churn in boardrooms. For example,
Oil India Ltd. appointed Balram Nandwani, Raju Revanakar, and Pooja Suri as Non-Official
(Independent) Directors in March 2025, approved by the Ministry of Petroleum & Natural Gas.
Similarly, Cochin Malabar Estates and Industries Ltd. replaced Tara Purohit with Komal Bhotika
as an Additional Non-Executive Independent Director, effective March 28, 2025, signaling a
focus on fresh perspectives.

Resignation Trends: Data from 2024-2025 shows a rise in ID resignations, often linked to
liability concerns. A Vidhi Centre for Legal Policy report noted that post-corporate scams,
enforcement against directors has intensified, prompting some IDs to step down rather than face
legal risks. This trend underscores the need for clearer safe harbors under the law.

Women on Boards: SEBI’s mandate for at least one woman director on listed company boards
(Regulation 17 of LODR Regulations) has driven progress. By 2025, women IDs make up a
significant chunk of the databank, with companies like Engineers India Ltd. re-appointing
Karuna Gopal in March 2025 as a non-official ID.

Roles and Responsibilities: Where They Converge and Diverge
Both NEDs and IDs share core duties: overseeing management, shaping strategy, and managing
risks. However, their approaches differ:

Non-Executive Directors: NEDs offer strategic input and monitor performance. They might
represent promoters or bring specialized knowledge. For instance, a non-independent NED in a
family-run business like Reliance Industries could align board decisions with promoter vision
while ensuring operational checks.

Independent Directors: IDs go further, anchoring governance committees like audit,
nomination, and remuneration. They’re tasked with countering owner dominance, resolving
conflicts of interest, and ensuring fair executive pay. Schedule IV of the Companies Act, 2013,
lays out a code of conduct for IDs, emphasizing ethical standards, objectivity, and minority
shareholder protection.
In practice, IDs in India often lead audit committees—over 90% of listed companies had IDs
chairing these in 2024, per NSE data—ensuring financial transparency amid rising scrutiny from
regulators like SEBI.

Why India Needs Both in 2025
India’s corporate sector is at a crossroads. With economic growth accelerating and global
investors watching closely, robust governance is non-negotiable. NEDs bring expertise and
continuity, while IDs ensure independence and trust. Together, they’re critical for:

Preventing Fraud: The IL&FS collapse (2018) and subsequent defaults highlighted the cost of
weak oversight. IDs, with their outsider lens, are key to spotting red flags early.
Global Competitiveness: As Indian firms like Tata and Infosys expand globally, international
stakeholders demand governance aligned with best practices—something IDs and NEDs deliver.
Regulatory Compliance: SEBI’s 2024 Master Circular and MCA’s ongoing updates mean
boards must stay agile, with IDs and NEDs bridging compliance and strategy.

Challenges in the Indian Context
Despite their importance, challenges persist:

Liability Risks: Section 149(12) offers IDs some protection, limiting liability to acts they knew
about or consented to. Yet, other laws—like the Prevention of Money Laundering Act—don’t
distinguish between executive and non-executive directors, leaving IDs vulnerable. The 2021
parliamentary panel on data protection even suggested holding IDs liable for willful negligence,
sparking debate.
Tokenism: Some companies appoint IDs to meet quotas rather than leverage their skills. A 2023
IICA survey found 15% of IDs felt underutilized, pointing to a gap between intent and impact.
Industry Networks: In India’s interconnected business ecosystem, true independence can be
elusive. IDs often come from the same circles as promoters, raising questions about impartiality.

Real-World Impact: A Case Study

Consider the 2024 SEBI fine on independent directors of a major Indian tech firm for financial
misconduct. 

The regulator held them accountable for neglecting oversight duties, reinforcing that
independence doesn’t mean detachment. Contrast this with Infosys, where IDs like Kiran
Mazumdar-Shaw have been praised for strengthening governance post-2017 whistleblower
controversies, proving the value of engaged, proactive IDs.

The Road Ahead
As India marches toward 2030, the roles of IDs and NEDs will only grow. The MCA’s push for
digital tools—like the ID Databank—and SEBI’s focus on accountability signal a future where
these directors are more empowered yet more scrutinized. Companies must invest in training
(e.g., IICA’s 42-module courses) and shield IDs from undue liability to attract top talent.

In the end, NEDs and IDs are the yin and yang of Indian boards—balancing expertise with
independence, strategy with ethics. Their effectiveness will determine whether India’s corporate
story is one of triumph or cautionary tale. So, next time you scan a company’s annual report,
check the board composition—it’s a window into its soul

About the Author

Abhishek Adv. is a seasoned professional with over 18 years of experience in the hospitality and
service industry. Holding a Bachelor's degree in Hotel Management, an MBA in Operations
Management and Cyber Marketing, and an LL.B., Abhishek is currently pursuing an LLM with a
specialization in Corporate Law. Actively seeking experience in ADR & ODR, he is also
certified in POSH and accredited as a Mediator by the International Mediation Institute (IMI).
You can reach Abhishek via email at Counsel@AbhishekAdv.in or connect with him on
LinkedIn.( https://www.linkedin.com/in/abhishek-esq/)