Legal regulatory environment of business is determined by constitutional provisions, economic lows, commercial laws, industrial and labour laws, government regulations under various laws and court decisions. These help the government in the regulation of economic activities of the business enterprises. Since Indian economy is centrally planned and controlled, the business enterprises are required to operate within the framework of legal-regulatory environment.

The important components to the legal-regulatory environment include the following :

(a)    The constitutional framework – directive principles, fundamental rights and division of legislative powers between central and state governments.

(b)    Commercial and economic laws and government policies under the laws relating to licensing, monopolies, foreign investment, etc.

(c)    Government policies related to imports and exports.

(d)    Government policies related to small scale industries, sick industries, consumer protection, control of environmental pollution, etc.

(e)    Government policies related to pricing and distribution of essential commodities.

(f)    Court decisions for the protection of consumers, environment and ecological balance.

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