Law as a strategic imperative for business
Ignorance of law is no excuse, and not affordable either
- Jan 30, 2026,
- Updated Jan 30, 2026 2:57 PM IST
“Ignorance of the law is no excuse” is an adage taught to every law student. Yet, corporate India remains largely oblivious to this fundamental principle in its strategic planning and decision-making. Several recent events of corporate oversight, noncompliance, and wilful disregard of the law suggest an organisational culture marked by a casual, often reckless, approach to the regulatory environment. The legal consequences, once the regulators catch up, are swift and severe, causing enormous reputational and financial damage, eroding market confidence and value destruction for investors.
While the casual attitude towards regulatory obligations is no new phenomenon, what is more perplexing is that the lessons from repeated compliance failure continue to go unlearned by those in the boardrooms and C-suites. In an era characterised by heightened scrutiny, real-time enforcement, and personal liability for directors and key managerial personnel, including criminal liability, regulatory complacency has evolved from being merely a legal issue into a critical business risk.
More disappointing is the fact that many firms still view law as limiting. Regulations are often considered solely as a constraint to business or as cost centres. Very few companies recognise that the intrinsic value of legal and regulatory frameworks, when understood early and strategically integrated into decision-making, can serve as a powerful source of sustainable competitive advantage, shaping market structure and building long-term trust with investors, employees, customers, and regulators.
When oversights become existential threats
Instances of such a casual approach to the law and regulatory environment are rampant, posing an existential threat to corporate entities. The case of Bira 91’s (B9 Beverages Pvt Ltd) legal troubles is a classic illustration of the point. Bira 91’s regulatory problems were the result of an innocuous legal oversight over the parent company’s change of name from “Private Ltd” to “Ltd” when re-registering as a public company for its IPO. This minor tweak triggered a chain reaction - renewal of brand names, liquor licenses, and associated regulatory compliance across states. Due to this oversight, the company’s operations literally came to a standstill, resulting in stalled sales in key markets, lost years of market momentum, and shaken investor confidence. In the process, the company lost a significant portion of its market share, share value, investors and cast substantial doubt about the group’s ability to continue as a going concern.
Another recent compliance fiasco was the glaring oversight of regulatory compliance by IndiGo (InterGlobe Aviation Ltd) management regarding the new pilot rest norms (FDTL) rules issued by the DGCA to enhance aviation safety. Despite having almost two years to comply, IndiGo's casual attitude and attempt to circumvent the law led to massive flight disruptions. In addition to significant reputational damage and value loss for investors, IndiGo is facing multiple litigations for passenger compensation, a probe by the Competition Commission of India (CCI) into alleged abuse of market dominance, and a DGCA investigation, which has also directed the airline to slash its permitted daily flights by 10 per cent in the interim and imposed 22 cr in fine.
Likewise, Byjus and Paytm, India’s two successful ed-tech and fin-tech startups, exemplify how legal and governance shortcomings can abruptly come to disrupt even market-leading platforms, threatening their very survival. Both startups were subject to severe restrictions due to regulatory concerns about governance oversight and compliance issues. The impact was enormous on their core business operations, their goodwill and customer confidence suffered, and they faced increased scrutiny from regulatory bodies. Notably, the trigger was not a business-related issue; rather, but the lack of preparedness in the regulatory space and internal controls, areas that are often underestimated and overlooked in rapid growth of digital businesses.
There reason why these cases are particularly telling is that the warning signs were all there, but ignored. The aggressive growth targets, rapid scale up model and global acquisitions blinded the need for commensurate investment in strengthening of legal oversight, compliance systems, and board governance. The law was treated as an expensive back-office operation or outsourced, as opposite to being viewed as a strategic component of business decision-making. Compliance has been relegated as a post-growth problem, as opposed to a prerequisite for sustainable growth and a means to achieve a competitive advantage. Regulatory trust is not incremental, and once compromised, it is hard to restore, and its loss could be an existential threat.
In all these instances, the root cause was not the absence of a strong business model, innovation, or capital—but the failure to view the law as a strategic function and not an “afterthought”.
Law as a Strategic Imperative for Corporate Board and Leaders
The select illustrations above are only symptomatic of the larger and deeper problem with how companies deal with the law. A lot of business perceive legal rules as nothing but a roadblock for doing business, and tend to actively bypass regulations, hoping weak enforcement or regulatory loopholes or grey areas could be taken advantage of. Some of these attempt at circumventing the law may yield short-term gains. But sooner or later, this could backfire leading to fines, sanctions, leadership exits, and sometimes even government takeover or liquidation. Then there are firms who comply with the law, but only as a checklist exercise, waiting till the last moment to just do enough and meet the minimum legal requirements to stay out of trouble. While this approach prevents immediate harm, the minimalist approach to law does not necessarily protect them bigger risks or immunity from corporate liability. In addition, regulations are viewed purely as a drain of resources, offering no perceived strategic edge.
Select firms, however, do not wait for the problems, they build a proactive preventive strategy for risk avoidance by embedding compliance into their organisational processes. They invest in legal expertise and train their managers to spot regulatory risks early. For these companies, law is seen as a protective shield—important, but still primarily defensive. A few, however, go beyond this preventive mindset and see their regulatory environment as something they can use to their advantage. They closely observe policies, anticipate regulatory changes, domestic and international, and design products, tweak their business models and strategies to align with those legal frameworks. For them, regulations shape the market, and law is not just about avoiding penalties or risk mitigation, but a strategic tool for competitive advantage and value creation.
Regulations keep getting more complex and with data and AI-driven, enforcement is not just stricter, but also will become more effective and stringent. Thus, the cost of ignorance of law will get expensive and fast. Companies cannot treat their legal issues as not some peripheral considerations, but vital to their business risks and daily decisions. The persistent tendency to view law as a nuisance to be dealt with, a burden to be managed, circumvented or delegated, must be overcome. It is essential to move beyond this mindset and acknowledge its potential in strategic planning and ongoing corporate success. Board of Directors, key managerial personnel and investors cannot afford to contract out their legal and regulatory thinking and responsibilities to compliance teams and forget it. Strategic blindness towards legal landscape inevitably translates into operational setbacks, damage to reputation and even put the whole company at risk.
If there is a lesson from the recent corporate setbacks, it's clear: ignorance of the law is not merely inexcusable but also commercially reckless. Firms that fail to integrate legal and policy considerations into their core business strategy and business decision making, do so at their own peril. Compliance is no longer risk avoidance or prevention, but competitive survival. Conversely, firms that successfully integrate legal astuteness into business decisions convert regulatory complexity into strategic advantage, create value and will shape the future of their industries.
Views are personal. The author is a Professor of Law and Public Policy at IIM Calcutta.
“Ignorance of the law is no excuse” is an adage taught to every law student. Yet, corporate India remains largely oblivious to this fundamental principle in its strategic planning and decision-making. Several recent events of corporate oversight, noncompliance, and wilful disregard of the law suggest an organisational culture marked by a casual, often reckless, approach to the regulatory environment. The legal consequences, once the regulators catch up, are swift and severe, causing enormous reputational and financial damage, eroding market confidence and value destruction for investors.
While the casual attitude towards regulatory obligations is no new phenomenon, what is more perplexing is that the lessons from repeated compliance failure continue to go unlearned by those in the boardrooms and C-suites. In an era characterised by heightened scrutiny, real-time enforcement, and personal liability for directors and key managerial personnel, including criminal liability, regulatory complacency has evolved from being merely a legal issue into a critical business risk.
More disappointing is the fact that many firms still view law as limiting. Regulations are often considered solely as a constraint to business or as cost centres. Very few companies recognise that the intrinsic value of legal and regulatory frameworks, when understood early and strategically integrated into decision-making, can serve as a powerful source of sustainable competitive advantage, shaping market structure and building long-term trust with investors, employees, customers, and regulators.
When oversights become existential threats
Instances of such a casual approach to the law and regulatory environment are rampant, posing an existential threat to corporate entities. The case of Bira 91’s (B9 Beverages Pvt Ltd) legal troubles is a classic illustration of the point. Bira 91’s regulatory problems were the result of an innocuous legal oversight over the parent company’s change of name from “Private Ltd” to “Ltd” when re-registering as a public company for its IPO. This minor tweak triggered a chain reaction - renewal of brand names, liquor licenses, and associated regulatory compliance across states. Due to this oversight, the company’s operations literally came to a standstill, resulting in stalled sales in key markets, lost years of market momentum, and shaken investor confidence. In the process, the company lost a significant portion of its market share, share value, investors and cast substantial doubt about the group’s ability to continue as a going concern.
Another recent compliance fiasco was the glaring oversight of regulatory compliance by IndiGo (InterGlobe Aviation Ltd) management regarding the new pilot rest norms (FDTL) rules issued by the DGCA to enhance aviation safety. Despite having almost two years to comply, IndiGo's casual attitude and attempt to circumvent the law led to massive flight disruptions. In addition to significant reputational damage and value loss for investors, IndiGo is facing multiple litigations for passenger compensation, a probe by the Competition Commission of India (CCI) into alleged abuse of market dominance, and a DGCA investigation, which has also directed the airline to slash its permitted daily flights by 10 per cent in the interim and imposed 22 cr in fine.
Likewise, Byjus and Paytm, India’s two successful ed-tech and fin-tech startups, exemplify how legal and governance shortcomings can abruptly come to disrupt even market-leading platforms, threatening their very survival. Both startups were subject to severe restrictions due to regulatory concerns about governance oversight and compliance issues. The impact was enormous on their core business operations, their goodwill and customer confidence suffered, and they faced increased scrutiny from regulatory bodies. Notably, the trigger was not a business-related issue; rather, but the lack of preparedness in the regulatory space and internal controls, areas that are often underestimated and overlooked in rapid growth of digital businesses.
There reason why these cases are particularly telling is that the warning signs were all there, but ignored. The aggressive growth targets, rapid scale up model and global acquisitions blinded the need for commensurate investment in strengthening of legal oversight, compliance systems, and board governance. The law was treated as an expensive back-office operation or outsourced, as opposite to being viewed as a strategic component of business decision-making. Compliance has been relegated as a post-growth problem, as opposed to a prerequisite for sustainable growth and a means to achieve a competitive advantage. Regulatory trust is not incremental, and once compromised, it is hard to restore, and its loss could be an existential threat.
In all these instances, the root cause was not the absence of a strong business model, innovation, or capital—but the failure to view the law as a strategic function and not an “afterthought”.
Law as a Strategic Imperative for Corporate Board and Leaders
The select illustrations above are only symptomatic of the larger and deeper problem with how companies deal with the law. A lot of business perceive legal rules as nothing but a roadblock for doing business, and tend to actively bypass regulations, hoping weak enforcement or regulatory loopholes or grey areas could be taken advantage of. Some of these attempt at circumventing the law may yield short-term gains. But sooner or later, this could backfire leading to fines, sanctions, leadership exits, and sometimes even government takeover or liquidation. Then there are firms who comply with the law, but only as a checklist exercise, waiting till the last moment to just do enough and meet the minimum legal requirements to stay out of trouble. While this approach prevents immediate harm, the minimalist approach to law does not necessarily protect them bigger risks or immunity from corporate liability. In addition, regulations are viewed purely as a drain of resources, offering no perceived strategic edge.
Select firms, however, do not wait for the problems, they build a proactive preventive strategy for risk avoidance by embedding compliance into their organisational processes. They invest in legal expertise and train their managers to spot regulatory risks early. For these companies, law is seen as a protective shield—important, but still primarily defensive. A few, however, go beyond this preventive mindset and see their regulatory environment as something they can use to their advantage. They closely observe policies, anticipate regulatory changes, domestic and international, and design products, tweak their business models and strategies to align with those legal frameworks. For them, regulations shape the market, and law is not just about avoiding penalties or risk mitigation, but a strategic tool for competitive advantage and value creation.
Regulations keep getting more complex and with data and AI-driven, enforcement is not just stricter, but also will become more effective and stringent. Thus, the cost of ignorance of law will get expensive and fast. Companies cannot treat their legal issues as not some peripheral considerations, but vital to their business risks and daily decisions. The persistent tendency to view law as a nuisance to be dealt with, a burden to be managed, circumvented or delegated, must be overcome. It is essential to move beyond this mindset and acknowledge its potential in strategic planning and ongoing corporate success. Board of Directors, key managerial personnel and investors cannot afford to contract out their legal and regulatory thinking and responsibilities to compliance teams and forget it. Strategic blindness towards legal landscape inevitably translates into operational setbacks, damage to reputation and even put the whole company at risk.
If there is a lesson from the recent corporate setbacks, it's clear: ignorance of the law is not merely inexcusable but also commercially reckless. Firms that fail to integrate legal and policy considerations into their core business strategy and business decision making, do so at their own peril. Compliance is no longer risk avoidance or prevention, but competitive survival. Conversely, firms that successfully integrate legal astuteness into business decisions convert regulatory complexity into strategic advantage, create value and will shape the future of their industries.
Views are personal. The author is a Professor of Law and Public Policy at IIM Calcutta.