The greatest challenge faced by India is to maintain a high economic growth and at the same time ensure environmental sustainability and social justice. The high growth rate during the last decade has not gone hand in hand with the mandate of environmental sustainability. The air of cities is dirty, rivers are polluted, and hazardous wastes are ill-managed. This could be attributed to some extent, due to the increasing gap that has been created over the years, in the over all capacity of environmental regulations, its institutions and the regulatory mechanism in addressing negative environmental impact of rapid industrialisation. Environmental regulations are intended to ensure sustainable resource use and facilitate in an effective natural resource management. The regulatory institutions are entrusted to protect the natural environment from degradation by means of a well developed mechanism of monitoring, compliance and enforcement. However, there are certain inherent capacity constrains with the regulatory institutions that come in the way of effective compliances and enforcement of regulation. The capacity constraints of regulatory institutions namely, The Ministry of Environment and Forest (MOEF), Central Pollution Control Boards(CPCB) and State Pollution Control Boards (SPCBs) including its regional offices, needs to be identified and strengthened so that an effective implementation of environmental regulation is ensure in this country.