Regulation refers to “controlling human or societal behavior by rules or regulations or a rule or order issued by an executive authority or regulatory agency of a government and having the force of law”. India’s regulatory environment is complex and has been a challenge for businesses operating in the country. Businesses operating within the nation must contend with a challenging maze of 1,536 laws and 69,233 compliances, alongside numerous permissions, licenses, and registrations. As many as 26,134 of these compliances prescribe criminal penalties for violations.
India’s position in the World Bank’s Ease of Doing Business Index has been improving over the past few years. Sustained business reforms over the past several years have helped India jump 14 places to move to 63rd position in the global Ease of Doing Business rankings. This progress, however, brings to light an imperative need to harness technology for effective compliance management, sustain growth, maximize efficiency, and mitigate risks associated with potential violations, including stringent criminal penalties.
This article, “Leveraging Technology for Compliance Management in India: Overcoming Challenges and Maximizing Efficiency,” aims to dissect the intricacies of the Indian regulatory ecosystem and shed light on the transformative power of digital solutions like Compliance Cart in maneuvering through its complexities
The Top 5 Challenges in Compliance Management in India
Siloed Functions: A study showed that approximately 60% of Indian companies have multiple departments dealing with different aspects of compliance independently. This disintegrated approach often leads to a lack of communication and coordination between these departments, and information gaps, resulting in duplication of efforts and inconsistencies in compliance reporting.
Lack of Resources: A significant hurdle in effective compliance management is the lack of necessary resources, both in terms of personnel and technology. Approximately 70% of Indian small and medium enterprises are facing resource constraints when managing compliance. This involves not having enough skilled professionals to handle the complex and ever-changing regulatory environment and not having sufficient budget to invest in technology solutions that could automate and streamline compliance processes. This resource crunch can significantly hamper a business’s ability to ensure comprehensive and consistent compliance, potentially exposing them to legal and reputational risks.
Limited Visibility into Compliance Activities: Indian companies face challenges gaining visibility into their compliance management activities. This lack of transparency makes it difficult to identify and mitigate potential issues before they escalate into serious problems.
Inadequate Compliance Awareness at Operational and Management Level: A significant challenge impacting compliance management is the insufficient awareness and understanding among Key Managerial Personnel. With over 80% of directors, board members, and CXOs demonstrating limited comprehension of their organizational compliance obligations, it is difficult to cultivate a proactive compliance culture within these businesses. This lack of knowledge at the top levels hampers the effective dissemination of compliance-related directives and supervision at ground levels.
Manual and Ineffective Compliance Tracking and Management Processes: Despite the global trend of digitization, a surprising 95% of Indian organizations continue to rely on traditional and outdated, paper-based, and people-dependent methods for compliance tracking. Hard copies, spreadsheets, and emails are still the primary tools used for managing and following up on compliance tasks. This approach results in a lack of transparency, accountability, and timeliness, and blurs the lines of ownership in compliance management. Missed compliance deadlines are a frequent consequence, leading to statutory notices, penalties, and a constant state of crisis management among Key Managerial Personnel.
Compliance Cart is a digital platform designed to simplify compliance management for businesses in India. Its robust set of features includes real-time dashboards for immediate visibility into compliance status, automation of repetitive tasks and reminders for pending activities, a centralized and secure document management system, and timely regulatory updates. The benefits of employing a Compliance Cart are multifold: it promotes increased accountability within the organization through clear task visibility, enhances efficiency through automation, mitigates risks of non-compliance to up to 70% through timely alerts, and optimizes resource usage with streamlined operations, thereby reducing direct resource costs from 50%-60%, and improves efficiency by up to 80%. In essence, the Compliance Cart acts as a guiding ally, simplifying compliance management amidst the complexities of India’s regulatory environment, and aiding businesses to operate more effectively and efficiently.
