Bureaucrats being picked up for Boardrooms of India Inc
As the longest permissible term of Independent Directors under the Companies Act, 2013 is approaching to its end in 2024, former bureaucrats have become increasingly preferred candidates for Boardroom seats in Indian Companies. Recent appointment of Shri Tarun Bajaj, former revenue secretary as Independent Director in HUL is latest example in this trend. Nifty companies such L&T, Dabur, Colgate-Palmolive etc. are other examples. HUL already has former bureaucrat Sanjiv Misra and State Bank of India ex-chairman OP Bhatt as independent directors.
Among the Nifty 50, 26 have appointed retired bureaucrats as independent directors. ITC, Maruti Suzuki, Adani Enterprises, Adani Ports & SEZ, Bharti Airtel, Hindalco and HUL have a higher proportion of former bureaucrats among independent directors.
As per Former Sebi executive director JN Gupta, there are three main reasons of this trend i.e. First, companies appoint ex-bureaucrats because they can use their contacts for getting things done. Second, they bring prestige to the company. And finally, their varied experience across different administrative areas can be useful.
