Home/ Companies / News/  India ahead of US in number of women directors, but the good news ends there

Bengaluru: At first glance, Indian companies are doing better than their US counterparts when it comes to women on company boards. Step back, and the picture is different.

A majority of the top 500 companies in India have at least one woman director, putting the country ahead of US, where only about a fourth of S&P 500 companies have one woman director. On the surface, this looks like the regulation in India to include at least one woman on the board has worked well.

Despite the regulation, 5% of companies still did not have a single woman director. Companies like Bharat Petroleum Corp. Ltd, GAIL Ltd, Oil and Natural Gas Corp. Ltd are some of those that even after two years after the regulation came into place, don’t have a single woman director. In comparison, only 2.8% of companies in the US did not have a woman director.

One might think that in India, there would have been a rush to comply among companies and among the new appointees we may notice a higher proportion of women, but here again, data disappoints. Of the new directors who were appointed in India in 2015, 20.85% were women. In the US, the share was 26.9%.

There is more bad news. And that is the problem of companies appointing family members on boards.

In 2015, 43% of the 588 women directorships were filled by family and were classified as non-independent, according to Prime Database. These include companies such as Reliance Industries Ltd and Godfrey Phillips India Ltd.

Very few companies in India have looked at women directors in the true spirit of diversity as only 1.6% of the companies had 30% or more women on boards, according to PRIME Database.

Pranav Haldea, managing director, PRIME Database said that ownership structure of companies in India and US is very different. While Indian companies are primarily promoter controlled and driven, companies in the US have a much wider, institutional ownership. As such, board appointments, including appointment of women, are primarily a function of the value an individual can bring to the table as also the diversity element, rather than just who the promoter knows.

“Indian companies have looked at this largely from a compliance perspective which is clear from the fact that more than half of the women board directors are family members or other non-independent. The real test to this mandate is if we see the proportion of women among new directorships rise in subsequent years and if we see more companies have more than just one woman on their boards," said Haldea.

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Updated: 04 Jul 2016, 07:35 PM IST
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