Women In India Inc. Boardrooms: Progress Versus Challenges, In Charts

India Inc.’s boardrooms are evolving, slowly, to accommodate women.

Women accounted for 17% of board directors in Nifty 500 companies as of March 2020, compared with 15% a year ago, according to a report by Institutional Investor Advisory Services and SBI Mutual Fund. That’s 777 of the total 4,657 directors appointed by these firms.

A majority of the women appointed in leadership roles have professional experience and expertise, it said. They now have more say on board composition and executive remuneration, with the highest proportion of women in the Nomination and Remuneration Committees at 18%.

This improvement was driven by regulatory efforts.

The Companies Act, 2013, made it mandatory for boards to have at least one woman director from April 1, 2014. SEBI then embedded this requirement in its Listing Obligations and Disclosure Requirements regulations. On May 9, 2018, following the recommendations by the Kotak Committee, the Securities and Exchange Board of India mandated that top 500 companies by market value were required to appoint at least one woman as an independent director by April 1, 2019. The deadline for the next 500 was April 1, 2020.

Gender equality, the fifth on the list of United Nations’ Sustainable Development Goals, is one of the most important issues for 87% of companies approached in India, according to a 2019 McKinsey study. At the same time, the subcontinent is ranked 112 among 153 nations on the World Economic Forum’s Global Gender Gap Index 2020. That’s four places lower than 2019. This index considers a combination of factors such as health, education, economy and politics to gauge gender equality in a country.

Another McKinsey study shows that companies in the top quartile for gender diversity on executive teams were 21% more likely to outperform on profitability and 27% more likely to have superior value creation.

This isn’t lost on India’s corporate leadership, the report said.

There were fears initially that a largely promoter-owned corporate India would appoint family members to meet the requirement of a woman director. Those were misplaced. The 2017 study showed that over 60% of the women on boards were independent directors. As of March 30, 2020, 71% of the directorships held by women were in the independent category, the report said.

Still, the share of both men and women on the board composition is equally critical. Over the past 36 months, women’s share has risen—28% of the Nifty 500 boards comprised more than 20% women as on March 30, 2020 against 11% three years ago.

Sectors with the highest inclusion rate include healthcare, real estate and consumer staples, the report said.

Much More Needed

While the share of women in directorial roles in India’s largest companies has improved, it still missed the 20% target for March 2020.

The inclusion rate further narrows in case of women in leadership roles. 491 of the Nifty 500 companies had chairpersons on March 30, 2020—of these, only 18, or 4%, were women.

State-run companies have the worst track record. Of the 13 companies that don’t have any women directors, 12 are public sector companies. Just eight of the 71 public sector undertakings in BSE 500 have boards with more than 20% women, the report said.

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“Despite improvements in the form of retention, maternity benefits, safety and security at the workplace for women in PSUs, there is lack of focus on developing a female talent pipeline, perhaps attributable to gender-based blind spots,” it said.