OPINION | Trillions are stuck in disputes at commercial tribunals but reform agenda ignores it

Tribunals were designed to be faster, more expert, and more predictable than conventional courts.

India’s economic reform journey is a patchwork of contradictions. Highs such as GST 2.0, which promises to simplify compliance, widen the tax base, and smooth the arteries of commerce, are celebrated. Yet hidden lows continue to act as speedbreakers on India’s path to becoming a global ease-of-doing-business powerhouse.

One such speedbreaker is laid bare in stark numbers by DAKSH’s landmark report “State of Tribunals 2025”. This first-of-its-kind baseline report on India’s commercial tribunals reveals a silent blockage that no budget speech or reform slogan acknowledges.

For the first time, it quantifies the problem in absolute terms, showing that disputes worth ₹24.72 lakh crore, nearly 7.5% of GDP, are stuck in litigation at the tribunal level. This vast sum, spread across more than 3.56 lakh pending cases, which are handled by just 350 tribunal members, highlights a stark imbalance between mandate and capacity.

Frozen capital; economic obstacle

This staggering figure does not command headlines. It does not spark outrage in the way inflation or unemployment does. Yet it is the equivalent of a hidden tax: capital frozen in legal amber, paralysed when it should be circulating through the economy. If GST 2.0 is meant to clear the path for business, commercial tribunals risk becoming the dam that holds everything back.

From early promise to systemic delay

Tribunals were designed to be faster, more expert, and more predictable than conventional courts. That promise seemed credible in 2018 when Tata Steel acquired Bhushan Steel for over ₹35,000 crore. One of the “dirty dozen” defaulters referred by the RBI, Bhushan Steel, was resolved through the National Company Law Tribunal in what became the first marquee success of the Insolvency and Bankruptcy Code (IBC). The case reassured policymakers, creditors, and investors that India could tackle stressed assets decisively.

But even this celebrated resolution took longer than the law’s 330-day limit. At the time, delays were tolerated as teething troubles of a new regime. Today, they have become systemic. DAKSH’s report shows just how deep the crisis runs. The average resolution at the NCLT now takes 752 days. Debt Recovery Tribunals have more than 2.15 lakh pending cases, with no functional benches in 18 states, and over 85% of cases are already older than 180 days. The Income Tax Appellate Tribunal backlog, meanwhile, involves disputes equivalent to 2.11% of India’s GDP. At the Customs, Excise and Service Tax Appellate Tribunal, pendency has barely budged since 2019. Sectoral bodies such as TDSAT, SAT, and APTEL face growing caseloads in telecom, securities, energy, and even data protection without matching capacity.

Vacancies, fragmented governance, and an over-reliance on temporary staff all feed directly into these delays. The result is a system designed for speed that now delivers paralysis.

When delay becomes an economic drain

The consequences ripple across the economy. Every month of pendency means suppliers wait longer for payment, banks carry non-performing loans instead of extending new credit, and workers lose jobs when insolvent companies cannot restart. For foreign investors, it means factoring in years of uncertainty and moving capital to jurisdictions where disputes are resolved predictably. What should have been a relief valve for commerce has instead become a choke point.

The opacity of the system compounds the problem. Unlike fiscal deficits or inflation, tribunal performance is not measured or reported in ways the public can track. Pendency data is scattered across ministries, often outdated, and rarely published in real-time dashboards. Without systematic performance data, policymakers cannot know if reforms are working. Judicial independence has too often been interpreted as administrative obscurity. That is not how institutions designed to underpin economic governance should function.

Clearing the blockage

Other jurisdictions show a way forward. The United Kingdom faced similar problems and responded by creating a unified two-tier system, organised into subject-matter chambers but administered under one authority. This eliminated duplication, improved consistency, and concentrated expertise. A billion-pound investment in digital justice made video hearings routine, enabled litigants to track cases online, and ensured that granular statistics on backlogs and disposal rates were publicly available.

For India, three priorities stand out. First, a National Tribunals Commission must be established to oversee appointments, staffing, and budgets, freeing tribunals from dependence on executive ministries that often appear as litigants before them. Second, procedural consistency and digitisation are critical: a unified filing and case management platform with real-time dashboards would bring predictability and visibility. Third, capacity must be built, with vacancies filled on time, benches expanded where caseloads are heaviest, and domain specialists inducted in fields such as insolvency, taxation, and competition law.

Reform’s unfinished business

None of these measures is radical. But they are the difference between capital lying idle and capital fuelling growth. With nearly 7.5% of GDP frozen in disputes, unlocking even part of this sum would unleash credit, investment, and confidence on a scale few other reforms could match.

India has already shown it can deliver bold reforms when it chooses to. GST 2.0 promises a tax system fit for the twenty-first century. The next frontier is clear: to ensure that when disputes arise, they do not become black holes where capital disappears. Otherwise, India risks celebrating the high of GST 2.0 while ignoring the hidden tax of tribunal paralysis.

(Surya is a Programme Director and Ritima is a Senior Research Associate at DAKSH.)

Views are personal and do not represent the stand of this publication.