This Article is From Jun 18, 2014

How India Inc is Reacting to Board-Room Quotas for Women

How India Inc is Reacting to Board-Room Quotas for Women

Reliance Industries chairman Mukesh Ambani and his wife Nita Ambani arrive for the company's annual general meeting in Mumbai

As companies work to comply with new law aimed at addressing the widespread absence of women from India's boardrooms, Nita Ambani today joined the board of Reliance Industries Limited, owned by her husband and the country's richest businessman, Mukesh Ambani.

The new law, passed last year and with varying deadlines for firms depending on turnover, aims to boost gender diversity at the top by insisting on at least one woman in the boardroom of listed companies.

"My firm has been head-hunting for over a decade and I have not had businesses actually looking to hire women from outside the ranks for board positions," said Mahalakshmi, the head of the Mumbai-based Professionele Consulting, who uses only one name.

"Businesses would want someone whom they can influence and ensure conformity in the board," she added.

Women make up roughly 50 per cent of India's population of 1.2 billion, but in terms of female labour participation it ranks a dismal 120th among the 131 nations surveyed by International Labour Organisation last year.

Credit Suisse's Global Gender Gap 2013 ranked India at 101 out of 136 countries and found that only nine percent of the firms surveyed had women as part-owners.

"There is an ecosystem geared towards negative selection that excludes women. The job criteria are fashioned out in such a way that only men will make it to the short list," said Kiran Mazumdar Shaw, the founder and head of Biocon, a leading name in India's biotech sector.

"So while a company advertises for talented risk-takers on one hand, the board is actually risk-averse and steeped in convention when it comes to allowing women to join their ranks."

Shaw, 61, said she too struggled against the same "credibility issues" when she started Biocon 36 years ago but she kept pushing on until better days came.

In some cases women themselves are hesitant to step forward, say analysts, for fear of being a token female face in the boardroom -- expected to rubber stamp decisions rather than bring any fresh perspective.

As a result, it has been easier for companies to select "known faces" from a small group of women who have already made it in the business world -- or, as recent moves have shown, family members.

Since the new law was passed, other well-known companies turning to female relatives for their boardroom positions include the fabric and fashion retailer Raymond Group, cigarettes-to-soap conglomerate Modi Group and Century Textiles and Industries.

Ms Shaw feels a possible solution to the complex issue lies in making suitable amendments to the new regulations.

"The law should mandate the appointment of independent women directors. Female family members being appointed on boards to be compliant is not in keeping with the spirit of the intent," she said.