India’s slow dispute resolution is costing up to 2% of GDP, deterring investors

9th Mint India Investment Summit in Mumbai last week. Panellists, including senior in-house legal counsels and law firm partners, said weak enforcement sits at the heart of the problem, raising the cost of doing business and deterring investment.The inability to enforce contracts swiftly and predictably, along with delays, frequent adjournments, procedural hurdles and lack of subject-matter expertise, creates friction for companies and investors.

As disputes drag on, capital remains locked up, value erodes, and the broader economy takes a hit.“There is a study that it has cost us 1.5 to 2% of GDP. That's how significant the failure… the failure to be able to enforce contract swiftly, efficiently, and in a predictable manner,” said Amar Gupta, joint managing partner at JSA.From an investor’s perspective, the consequences are immediate.

“Because we have a complex judiciary system where cases may take a lot of time… the timeliness of dispute resolution goes completely for a toss. From an investor point of view, it becomes more frustrating,” said Amit Bhasin, chief legal officer at Marico.Investors typically expect disputes to be resolved quickly, at low cost and with predictable outcomes, Bhasin said, adding that in India, prolonged litigation, rising legal costs and uncertainty in judgments often undermine those expectations, while the time value of money continues to erode.Alternative dispute resolution (ADR), including arbitration, mediation and conciliation, has been positioned as a workaround, offering faster and less formal resolution outside traditional courts.