Slow Dispute Resolution System Costs India Up To 2% Of GDP, Say Industry Experts

(MENAFN- KNN India) New Delhi, Apr 1 (KNN) India's slow and inefficient dispute resolution system is estimated to be costing the economy 1.5–2 percent of GDP annually, significantly impacting business confidence and investment flows, experts said.

Speaking at the Mint India Investment Summit 2026, legal and industry experts highlighted that weak contract enforcement and prolonged litigation are major structural bottlenecks for India's growth.

Delays Raising Cost of Doing Business

Experts noted that delays in resolving disputes, caused by frequent adjournments, procedural complexities, and lack of specialised expertise, are increasing the cost of doing business.

They pointed out that when disputes drag on, capital remains locked up and asset value erodes, creating inefficiencies across the economy.

From an investor's perspective, the unpredictability and time taken for dispute resolution reduce the attractiveness of India as an investment destination.

Investor Frustration and Capital Lock-in

Amit Bhasin, Chief Legal Officer, Marico said investors typically expect quick, cost-effective, and predictable dispute resolution mechanisms. However, prolonged litigation and rising legal costs in India often undermine these expectations.

The time value of money is also significantly affected, as capital tied up in disputes cannot be productively deployed.

ADR Framework Offers Partial Relief

Alternative dispute resolution (ADR) mechanisms such as arbitration, mediation, and conciliation have been promoted as faster alternatives to traditional court processes.

India has strengthened its legal framework through laws like the Arbitration and Conciliation Act and the Mediation Act, 2023. However, Wockhardt Senior Vice President (legal), Debolina Pratap noted that ADR mechanisms face their own challenges, including delays, court intervention, and limited institutional capacity.

She also pointed out that institutional arbitration in India has not scaled to the levels seen in global hubs like Singapore or London.

Need for Technology and Institutional Reforms

Experts emphasised that technology could play a key role in improving efficiency, particularly in procedural stages such as filings and registry operations, potentially reducing timelines significantly.

Pratap also highlighted the need for better-designed contracts and stronger domain expertise in dispute resolution forums to handle complex commercial cases more effectively.

Broader Economic Implications

The findings underscore the critical link between legal infrastructure and economic growth. Weak dispute resolution systems not only increase transaction costs but also deter both domestic and foreign investment.

Experts stressed that improving contract enforcement and reducing litigation timelines will be essential for enhancing ease of doing business and sustaining long-term economic growth.

(KNN Bureau)

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