India’s Union Budget 2025 signals openness of trade and investment as well as a paradigm shift in regulatory philosophy. India’s regulation has often been over-prescriptive and the 2025 Budget signals a clear departure from this, embracing a trust-based, principle-driven approach. The finance minister sets up a High Level Committee for regulatory reforms seeking to reform the regulations for the non financial sector.
“The Financial Stability and Development Council will review existing regulations to ensure they are responsive to current realities as well as future proof to develop the financial sector. Finally, decriminalisation will incentivise voluntary compliance rather than excessive enforcement,” said Richa Roy, Partner, Cyril Amarchand Mangaldas.
Possible legal provisions that could be decriminalized:
a) Provisions under the Companies Act, 2013, related to minor non-compliance issues, such as late filing of returns or procedural lapses, could be converted into civil penalties instead of criminal prosecution.
b) Certain tax violations, such as late GST filing or procedural errors, could be treated as administrative penalties rather than criminal offenses. Provisions under income tax, GST, and SEBI regulations may see further relaxation to support businesses.
c) Minor infractions under the Consumer Protection Act, 2019, especially those related to misleading advertisements or procedural non-compliance, could be relaxed to encourage better compliance without fear of imprisonment.
d) Some non-serious violations of environmental permits (such as delayed pollution control reporting) under the Environment Protection Act could shift from criminal liability to fines, reducing the compliance burden on businesses.
e) Decriminalization of minor violations in labor codes, such as late salary payments or administrative errors in employment records, can encourage ease of doing business while still ensuring employee welfare.
f) Regulatory provisions under the Factories Act, 1948, and Shops and Establishments Acts in various states could be relaxed to protect MSMEs from undue legal action over small administrative mistakes.
Effects of Jan Vishwas 2.0 on Businesses and Economy
The decriminalization of these provisions will have a transformative effect on India’s business climate. By shifting from criminal penalties to civil fines, businesses will experience reduced legal risks and greater operational flexibility. This will encourage entrepreneurship, as smaller firms and startups often struggle with stringent regulatory requirements.
“Foreign investment will increase as global investors prefer jurisdictions with lower compliance risks and predictable legal frameworks. By making India’s regulatory environment more business-friendly, Jan Vishwas 2.0 could boost investor confidence and strengthen India’s position in the Ease of Doing Business rankings. Additionally, the move will help reduce the burden on courts and law enforcement agencies, allowing them to focus on serious legal matters rather than minor regulatory infractions. This will improve judicial efficiency and reduce litigation backlogs, benefiting both businesses and individuals,” said Raheel Patel, Partner, Gandhi Law Associates.
Impact on People: Citizens and Small Businesses
For ordinary citizens, Jan Vishwas 2.0 will reduce legal intimidation and promote a trust-based governance system. Small businesses, freelancers, and self-employed individuals will benefit from lower legal risks and fewer unnecessary penalties for minor mistakes in tax filing, licensing, or employment documentation.
For salaried individuals, particularly those in regulated professions (law, finance, healthcare, etc.), fewer criminal liabilities for procedural lapses could reduce career-related legal risks and enhance professional confidence.
Moreover, by simplifying compliance procedures, Jan Vishwas 2.0 will create a more efficient and transparent regulatory environment where businesses and individuals can operate without constant fear of punitive legal action.
A step toward legal reform and ease of business
Jan Vishwas 2.0 is a progressive step toward decriminalizing minor infractions, supporting economic growth, and making legal compliance easier. While serious offenses should remain penalized, eliminating criminal liability for technical, administrative, or procedural errors will help businesses, professionals, and the common citizen thrive in a more trust-based system.
The real success of this reform will depend on implementation and clarity—ensuring that regulatory oversight remains balanced while reducing unnecessary legal threats. If executed well, India’s economy and business environment will become more competitive, inclusive, and legally efficient in the coming years.
