Through the Looking Glass, How Indian Boards Are Evolving—and Where They Still Fall Short
Boards sit at the heart of corporate governance, entrusted with guiding strategy, ensuring leadership continuity, and exercising vigilant oversight while balancing the interests of diverse stakeholders. Over the past decade, India’s regulatory framework has made a sustained push to strengthen board effectiveness. Yet as two landmark reports—separated by a decade—reveal, the journey from compliance to genuine governance is far from complete.
In December 2015, Institutional Investor Advisory Services (IIAS), in collaboration with Vahura, a legal search and consulting firm, published “Board Effectiveness: Through the Looking Glass.” It was a deep dive into the state of corporate governance in India, examining how boards functioned beyond the formal compliance structures.
A decade later, the Indian School of Business (ISB) returned to the same theme with its “Corporate Governance Report 2025: Boards Through the Looking Glass.” The similarity of titles was not coincidental. It was an invitation to reflect on how far Indian boards have progressed—and where persistent gaps remain.
As governance expert Amit Tandon observes, both reports point to a clear shift in the role and expectations of corporate boards in India. They have moved from a largely compliance-driven function to one that is increasingly strategic, accountable, and performance-oriented. But while progress is evident, significant gaps remain between regulatory intent and boardroom reality.
The 2015 Picture: Form Over Substance
The IIAS-Vahura report focused on board effectiveness beyond formal structures. It found that while most listed companies complied with regulatory requirements on board composition, independence, and committees, effectiveness hinged on board processes, culture, and the capability of individual directors.
Several patterns emerged. Boards often struggled to move beyond passive oversight to actively challenging management. Chairpersons played a pivotal role, yet many boards lacked a clear separation between governance and management—particularly in promoter-led companies, an infirmity that persists to this day.
Director selection was frequently driven by familiarity and trust rather than skill diversity, leading to gaps in critical areas such as technology, risk management, and understanding of industry disruption. Board evaluations, increasingly conducted, were often perfunctory, inward-looking, and insufficiently linked to board renewal or director exits.
These findings date back to the period immediately following the rollout of the Companies Act, 2013. The SEBI Listing Obligations and Disclosure Requirements had not yet come into effect, and the recommendations of the Kotak Committee on Corporate Governance, which positioned boards as critical instruments for driving governance, had not yet been formulated. In that context, the report was a wake-up call.
The 2025 Picture: Progress and Persistence
The ISB report, published in January 2026, offers a decade-later snapshot. It notes improvement in gender diversity, attendance, and committee structures—driven largely by regulation and investor scrutiny. These are not trivial achievements. Gender diversity on boards has increased significantly. Directors are more attentive to their responsibilities. Committees are better structured and more active.
But beneath these formal improvements, deeper issues persist. The report underscores that “diversity of thought and experience still lags.” Boards remain dominated by former executives, bureaucrats, and promoter nominees. Independent directors face structural constraints, including information asymmetry, time limits, and reliance on management for setting the agenda. These constraints weaken their ability to exercise objective judgment.
The report also flags the growing complexity of board responsibilities. Environmental, social, and governance (ESG) issues, cyber risk, capital allocation, and succession planning now demand attention. Yet there has not been a commensurate upgrade in board capability or training. Directors are expected to oversee domains in which they may have little expertise, with limited support.
The Behaviour Gap
A key common insight across both studies is that board effectiveness is shaped more by behaviour than by form. Information quality, agenda design, depth of discussion, and psychological safety determine whether boards act as robust stewards or rubber stamps.
Both reports observe that dissent in Indian boardrooms remains rare. Consensus is often achieved through deference rather than rigorous debate. This is particularly pronounced in family-controlled and founder-led firms, where informal influence can override formal governance mechanisms. A director who owes their position to the promoter’s goodwill may think twice before asking a tough question.
Psychological safety—the sense that one can speak up without fear of retaliation—is essential for effective board functioning. In too many Indian boardrooms, it is absent.
The Evaluation Paradox
Another shared finding is the underutilisation or improper use of board evaluation. While evaluation is widely mandated, disclosure is patchy, and it rarely results in tangible outcomes such as director rotation, skill refresh, or leadership transition.
Evaluation becomes a box-ticking exercise rather than a tool for improvement. Directors are rated, but the ratings have no consequences. Poor performers remain. Skill gaps persist. The board continues as before.
Succession planning for CEOs and key executives is often reactive rather than institutionalised, posing long-term risks. In family-owned businesses, boards tend to view the next generation as natural successors, prioritising family continuity over experience or skill. The board becomes a training ground for family members rather than a forum for rigorous oversight.
The Inflection Point
Both reports, despite the time gap between them, converge on the view that India’s corporate boards are at an inflection point. Regulatory compliance can push only so far. The next phase of governance reform must focus on board capability, independence of mind, leadership quality, and performance accountability.
Governance requires a degree of discomfort. It needs to be a space of constructive tension. Value-adding boards will require intentional changes in how directors are selected, how boards function, and how effectiveness is measured and acted upon.
This is not about adding more rules. India already has a robust regulatory framework for corporate governance. The challenge is moving from structure to spirit—from compliance to culture.
The Way Forward
What would it take to close the gap? Several steps emerge from the analysis.
First, director selection must become more rigorous and skill-based. Nominating committees should look beyond the usual circles of familiarity and actively seek directors with diverse expertise—technology, risk, sustainability, global markets.
Second, board evaluation must be linked to consequences. Evaluations should be conducted by credible external agencies, with findings that inform decisions about director tenure and board composition. Directors who consistently underperform should not be renominated.
Third, boards need better information. Management should provide not just data but analysis, not just reports but context. Independent directors should have access to external advisors when needed, at company expense, to supplement management-provided information.
Fourth, psychological safety must be cultivated. Chairs should actively encourage dissent, invite contrary views, and protect directors who speak up. Dissent should be seen as a sign of engagement, not disloyalty.
Fifth, training and capability building should be ongoing. The complexity of board responsibilities is only increasing. Directors need access to education on emerging issues—cyber risk, AI governance, climate risk, and more.
Conclusion: Stewards, Not Rubber Stamps
The central challenge facing boards today is not a lack of rules but the gap between structure and spirit—between equating compliance with governance and achieving genuine stewardship.
India’s corporate boards have come a long way since 2015. They are more diverse, more attentive, and more accountable. But the journey is not complete. The next phase must move decisively beyond box-ticking and towards boards where assumptions are challenged, information is scrutinised, and dissent is an integral part of deliberations.
In short, towards boards that serve as genuine stewards.
Q&A: Unpacking the Evolution of Indian Boards
Q1: What were the key findings of the 2015 IIAS-Vahura report on board effectiveness?
The 2015 report found that while most listed companies complied with formal regulatory requirements on board composition and committees, effectiveness hinged on board processes, culture, and individual director capability. Key issues included: boards struggling to move beyond passive oversight; lack of clear separation between governance and management in promoter-led companies; director selection driven by familiarity rather than skill diversity; and board evaluations that were perfunctory and not linked to renewal or director exits.
Q2: How has the situation evolved according to the 2025 ISB report?
The 2025 report notes improvement in gender diversity, attendance, and committee structures, driven largely by regulation and investor scrutiny. However, it finds that “diversity of thought and experience still lags,” with boards dominated by former executives, bureaucrats, and promoter nominees. Independent directors face structural constraints like information asymmetry and time limits. The complexity of board responsibilities (ESG, cyber risk, capital allocation) has grown without commensurate upgrade in board capability or training.
Q3: What is the “behaviour gap” identified in both reports?
Both reports find that board effectiveness is shaped more by behaviour than by form. Information quality, agenda design, depth of discussion, and psychological safety determine whether boards act as robust stewards or rubber stamps. Dissent in Indian boardrooms remains rare, with consensus often achieved through deference rather than rigorous debate. This is particularly pronounced in family-controlled and founder-led firms, where informal influence can override formal governance mechanisms.
Q4: Why is board evaluation often ineffective in practice?
While board evaluation is widely mandated, it is often conducted perfunctorily, with little disclosure and few tangible outcomes. Evaluations are rarely linked to director rotation, skill refresh, or leadership transition. Poor performers remain, skill gaps persist, and the board continues as before. The evaluation becomes a box-ticking exercise rather than a tool for improvement, reflecting the broader gap between compliance and genuine governance.
Q5: What steps are needed to move from compliance to genuine board effectiveness?
Several steps are essential: (1) more rigorous, skill-based director selection beyond familiar circles; (2) board evaluation linked to consequences, with underperformers not renominated; (3) better information for directors, including access to external advisors; (4) cultivation of psychological safety where dissent is encouraged and protected; (5) ongoing training and capability building on emerging issues like cyber risk, AI governance, and climate risk. The goal is to create boards where assumptions are challenged, information is scrutinised, and dissent is integral to deliberations.
