Only 17% of India Inc. Board Directors Actively Shape Strategy, states ISB’s Corporate Governance Report 2025

India, January 05, 2026: The Indian School of Business (ISB) has called for Indian corporate boards to move beyond compliance and play a more strategic role in shaping the country’s corporate future. The findings of ISB’s Corporate Governance Report 2025 – The Board’s Looking Glass, reveal that while Indian boards demonstrate structural soundness and compliance maturity, many lack the strategic foresight and behavioural readiness needed for future leadership.

The report, authored by Sanjay Kallapur, Professor, ISB, Nirmalya Kumar, Visiting Professor, ISB, and Harish Raichandani, adjunct faculty, ISB, is based on a comprehensive survey of over 200 directors from BSE 500 companies. The report assesses governance maturity across three dimensions — guidance and oversight, board functioning, and leadership — and examines the effectiveness of key committees including audit, risk management, and nomination and remuneration. Professor Madan Pillutla, Dean, ISB, in his foreword, says the survey “shines a light on patterns of behaviour, decision-making, and leadership that determine whether boards merely comply or truly govern.”

The findings show that only 17% of boards play an active role in shaping company strategy, while the others 83% play a more passive role. More than one in three (36%) admit their boards provide limited or no input beyond reviewing management’s plans. 

Sanjay Kallapur, Professor of Accounting at ISB, said, “Although 98% of directors see the Boards as being compliant, which is commendable progress compared to yesteryears, there is a widening gap between guidance and oversight on the one hand, and strategic influence on the other. Effective oversight requires directors to go beyond compliance, anticipate risks, and guide management with foresight and conviction. As India’s corporate sector expands globally, boards must evolve from passive monitors to active stewards of long-term value creation.”

The study also highlights that only 27% of directors seek information from independent sources, creating an “echo chamber” that can stifle dissent and increase the risk of groupthink.

Nirmalya Kumar, Visiting Professor of Strategy at ISB, noted, “Indian boards are diligent in process and participation, but many fall short in translating these into meaningful strategic dialogue. Effective board functioning requires more than attendance and agenda compliance, it demands independent thinking, constructive challenge, and engagement beyond formal meetings. Strengthening these aspects is crucial if boards are to transition from reviewing management decisions to shaping them. True governance maturity lies in fostering boardrooms that value preparation, perspective, and the courage to ask difficult questions.”

The report also points to a crisis in candour within board-management relationships. Satisfaction with candour stands at only 38%, reflecting a reluctance to provide CEOs with unfavourable feedback. Over one in five (22%) boards remain disengaged from whistleblower and vigilance mechanisms, treating these as compliance exercises rather than tools of trust and transparency.

Leadership and committee effectiveness also emerge as critical gaps. While audit committees are strong on financial vigilance, their engagement on whistleblower and behavioural issues remains limited. Similarly, nomination and remuneration committees show weaknesses in CEO succession planning, with fewer than half of boards maintaining a clearly identified pool of successors.

Harish Raichandani, Adjunct Faculty and Researcher, ISB, said, “Independent Directors on the Indian corporate boards need to improve their ‘work ethic’, appetite to keep abreast, and find courage to speak up.”  He cited the study findings that at least one in three directors do not adequately prepare for their meetings, two in five directors’ alignment with the Company’s mission appears weak, and only one in six directors truly brings forth an independent external perspective to the deliberations taking place in the boardroom.”

The report concludes that while Indian corporate boards are structurally sound, inclusive, and committed to stewardship, they must address deeper behavioural and strategic gaps to become truly future-ready. ISB notes that governance maturity today must be measured not only by the strength of structure but by the depth of foresight, candour, and courage to challenge assumptions.