Government policies play a crucial role in shaping the business landscape. While they often aim to improve regulation, consumer protection, or national security, some policy decisions have led to the downfall of major Indian companies. From regulatory crackdowns and environmental concerns to financial mismanagement and sudden economic reforms, businesses in various industries have suffered.
This list explores 15 Indian companies that collapsed or suffered severe setbacks due to government policies, analyzing their rise, policy-driven challenges, and eventual decline.
1. Biecco Lawrie – A Public Sector Undertaking Shut Down Due to Losses
Biecco Lawrie, originally established in 1919 as the British India Electric Construction Company, became a government-owned entity specializing in electrical equipment and lubricants.
Fall Due to Government Policies:
- Mounting financial losses led to its declining viability.
- In 2018, the Indian government decided to shut it down, citing continuous losses.
- Employees were offered Voluntary Retirement Schemes (VRS), and the company was dissolved.
2. NGEF (New Government Electrical Factory) – Impact of Economic Liberalization
NGEF, a government-backed electrical equipment manufacturer, was a leading producer of transformers, motors, and switchgears in India.
Fall Due to Government Policies:
- The 1991 economic liberalization exposed NGEF to competition from private and foreign companies.
- The company struggled to modernize and compete with new players.
- Operations ceased in 2002, and its assets were repurposed.
3. Saradha Group – A Ponzi Scheme Collapse Due to Regulatory Crackdown
Saradha Group operated across real estate, media, and chit fund investments, attracting millions of investors with promises of high returns.
Fall Due to Government Policies:
- In 2013, SEBI and the government cracked down on illegal investment schemes.
- The Ponzi scheme was exposed, and the company collapsed.
- The founder was arrested, and thousands of investors lost their money.
4. Sterlite Copper – Environmental Controversy Leading to Shutdown
Sterlite Copper, a subsidiary of Vedanta Limited, was one of India’s largest copper smelting plants, contributing significantly to national copper production.
Fall Due to Government Policies:
- Environmental protests erupted due to alleged pollution from the plant.
- In 2018, the Tamil Nadu government shut down the facility permanently.
- India, once a copper exporter, became an importer after Sterlite’s closure.
5. Dalmia Bharat Sugar – Export Ban Crippling the Sugar Industry
Dalmia Bharat Sugar was a leading sugar producer with interests in ethanol production and power generation.
Fall Due to Government Policies:
- In 2023, the Indian government imposed a ban on sugar exports to control domestic prices.
- This led to high inventory costs, reducing the company’s profitability.
- Net profit dropped by 48.8%, affecting the entire sugar industry.
6. Indian Apparel Manufacturers – Struggling Against Global Trade Policies
India’s textile and apparel industry has been a key export sector, providing millions of jobs.
Fall Due to Government Policies:
- Complex regulations and high labor costs increased production costs.
- Bangladesh and Vietnam benefited from better trade agreements, surpassing India in global apparel exports.
- Strict tax policies and regulatory hurdles discouraged new investment.
7. Infrastructure Leasing & Financial Services (IL&FS) – Financial Mismanagement and Policy Oversight
IL&FS was a major infrastructure finance company, handling large-scale public and private projects across India.
Fall Due to Government Policies:
- In 2018, IL&FS defaulted on loan repayments, triggering a financial crisis.
- The government took control of the company, dismissing its board.
- Investigations revealed financial mismanagement and governance failures.
8. Double Seven – The Government’s Failed Soft Drink Brand
After Coca-Cola exited India in 1977 due to foreign investment regulations, the government launched Double Seven as a domestic soft drink brand.
Fall Due to Government Policies:
- Change in political leadership in 1980 led to withdrawal of government support.
- Private competitors (Thums Up, Campa Cola) dominated the market.
- The brand was discontinued, failing to gain consumer traction.
9. ArcelorMittal Nippon Steel India – Impact of Import Restrictions
ArcelorMittal Nippon Steel India is a key steel producer, investing in expanding production capacity.
Fall Due to Government Policies:
- India imposed restrictions on importing metallurgical coke, a key raw material.
- This disrupted production and delayed expansion projects.
- The company faced operational inefficiencies due to supply chain disruptions.
11. Pernod Ricard India – Regulatory Hurdles in Liquor Licensing
Pernod Ricard, the French alcoholic beverage giant, operates extensively in India, selling premium liquor brands.
Fall Due to Government Policies:
- In 2025, the Delhi government rejected Pernod Ricard’s liquor license.
- Regulatory investigations into violations created legal challenges.
- The case went to appeals, further delaying business operations.
12. Renewable Energy Companies – Facing Weak Demand and Policy Delays
India’s solar and wind energy sector has seen rapid growth, with ambitious government targets.
Fall Due to Government Policies:
- Weak demand for renewable energy tenders affected investment.
- Delays in signing power agreements with distribution companies caused uncertainty.
- Many projects were canceled, threatening India’s clean energy goals.
13. Export-Oriented Industries – Hit by Global Trade Policies
India’s agriculture, auto, and industrial exports contribute significantly to GDP.
Fall Due to Government Policies:
- US and EU imposed stricter carbon taxes and trade tariffs on Indian goods.
- Exporters faced higher costs and reduced demand in global markets.
- Government policies failed to provide trade relief, impacting business growth.
14. Companies Affected by ‘Tax Terrorism’ – Bureaucratic and Tax Challenges
India has several multinational corporations investing in its economy.
Fall Due to Government Policies:
- Volkswagen, Cairn Energy, and Vodafone faced aggressive tax demands.
- Complex bureaucracy and retrospective taxation deterred foreign investment.
- Legal battles led to prolonged uncertainty and operational slowdowns.
15. Telecom Companies Affected by the 2G Spectrum Case
In 2008, the government allocated telecom spectrum to multiple companies, enabling new players in the industry.
Fall Due to Government Policies:
- In 2012, the Supreme Court canceled 122 telecom licenses, citing corruption.
- Companies like Uninor, Etisalat DB, and Videocon Telecom shut down operations.
- Thousands of jobs were lost, and investors faced heavy losses.
Final Thoughts
From once-thriving airlines and financial giants to manufacturing leaders and real estate firms, these 15 Indian companies collapsed due to sudden government policies. While some struggled with tax regulations, environmental laws, and financial mismanagement, others fell victim to policy shifts that reshaped entire industries overnight.
Understanding these business failures offers valuable lessons for entrepreneurs, investors, and policymakers. As India’s economy evolves, stability, regulatory clarity, and adaptability remain key to avoiding such collapses in the future.
