Will scrapped diversity policies in the US have ripple effects in India?

What has followed is a trend of corporate rollbacks of DEI policies, with major tech giants such as Meta, Amazon and Google either quashing or restructuring them to better suit the political climate. 

One of the notable consequences of the Trump administration’s diversity probe has been the Equal Employment Opportunity Commission’s (EEOC) increasing scrutiny of major US law firms, pressuring them to disclose details about their clients’ diversity initiatives.

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This includes information on law firms’ staffing based on the DEI agendas of their clients and any incentives received for meeting such goals. The move has invited strong resistance amid concerns over client confidentiality, executive overreach and its chilling effect on diversity efforts.

Given the influence of American multinational corporations and legal practices, this trend may extend beyond the US, potentially impacting corporate policies in India too. 

India and DEI laws: DEI in the corporate sphere has been recognized as a framework designed to foster a workplace that reflects the diverse social fabric of society—one that is inclusive, equitable and supportive of an individual’s social identities, including race, age, caste, ethnicity, gender, religion, sexual orientation and physical ability. 

In India, the very text of our Constitution includes DEI principles by way of fundamental rights, with Article 15 prohibiting discrimination based on religion, caste, gender or ethnicity and Article 16 guaranteeing the right to equality of opportunity in matters of public employment.

Further, Article 14 provides for equality before law, allowing the state to reasonably classify and grant protection to a specific group of individuals. 

While the power granted to the government under the Constitution to create job opportunities and implement reservations is limited to public employment, various statutes have extended their applicability to private employers, pushing them to incorporate DEI practices.

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Statutes such as the Maternity Benefit Act of 1961, Equal Remuneration Act of 1976, Rights of Persons with Disabilities Act of 2016, Transgender Persons (Protection of Rights) Act of 2019 and the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act of 2013 mandatorily apply to private employers, requiring them to implement certain policies and make their corporate practices equitable.

Further, the Business Responsibility and Sustainability Reporting framework implemented by the Securities and Exchange Board of India (Sebi) requires a band of listed entities—by market capitalization—to make disclosures regarding their environmental, social and governance performance. 

An important point to note in the Indian context is that the fundamental rights under the Constitution are not enforceable against private employers. Also, there is no specific legislation that provides anti-discrimination protections to employees in the private sector.

Consequently, legal claims related to discriminatory hiring practices are relatively rare in India, and the associated legal risk is comparatively low when measured against jurisdictions such as the US.  

Impact of the US rollback: The rollback of DEI policies by American multi-nationals could be followed by their Indian affiliates. If a shift has already been made in their home country, it is unlikely that the American parent entities would expend resources beyond what would be statutorily prescribed on their Indian affiliates to further DEI initiatives.

Given that the trend of introducing DEI policies in the workplace stemmed from American companies to begin with, it is likely that Indian companies that have not yet implemented such policies may put them on the backburner. 

However, homegrown conglomerates such as LemonTree, Godrej and the Tata Group, which have had long-standing DEI practices, appear not to be wavered by this global shift. A rollback of DEI initiatives at this time may portray them as being weak in their resolve, particularly when they are not being subject to the same scrutiny in India.

Given the strong feelings associated with their rollback at American multinationals, it is possible that Indian entities may stand to gain by attracting affected members of the workforce by virtue of being workplaces where DEI practices are still recognized. 

Also Read: India Inc must stand by DEI: It’s both a social and business imperative

The road ahead: While the Indian DEI landscape seems to be growing, there are certain factors that companies need to consider while formulating their policies. The Indian corporate landscape differs significantly from that in America owing to different socioeconomic, ethnic and geopolitical factors.

Therefore, Indian companies cannot operate on a ‘cut-copy-paste’ basis by simply borrowing from the American DEI movement. Further, DEI initiatives cannot operate in isolation and must be holistically linked to a company’s growth strategy as well as the landscape in which it operates. 

Specifically, Indian companies need to focus on formulating diverse hiring practices, minimizing biases and creating job descriptions that are limited to the skill-set required to perform the job.

Several Indian companies have set clear diversity hiring targets and track their progress. Such practices become crucial in ensuring a company’s DEI policies benefit a diverse workforce and are not restricted to hegemonic sections of the society. 

Given that DEI initiatives are largely driven by proactive corporate actions, it is likely that the winds of the West may bring with them a change in the approach of the Indian companies. However, it remains to be seen if DEI will be reduced to a token gesture or it sprouts into a meaningful change.

These are the authors’ personal views.

The authors are, respectively, partner, counsel and associate, Khaitan & Co.