· 4 min read · Updated 31 Aug 2026
By Correct Editorial — Compliance Research Desk
Break the Compliance Burden
Published on: April 30, 2025
3 Compliance Challenges, 2 Sins and 1 Point Agenda towards Ease of Doing Business
We all want India to be a USD 5 trillion economy. The current slowdown in the economy needs some strong reform measures. Understanding the challenges is the first step before identifying the solutions.
India is not an easy place to do business. The Make-in-India initiative is a strong component of raising growth and is focused on making India a global manufacturing hub. However, setting up a manufacturing facility in India is heavily front-loaded with getting permissions, licenses, registrations, and consent orders. The gestation period stretches to many months, creating uncertain go-live dates, serious cost overruns, and unpredictable outcomes.
Clearances are required at every stage such as:
- Purchase of land
- Registration of property
- Connection of electricity and water
- Environmental clearance
- Permissions from the factory inspector and pollution control boards
Once successfully established, scores of acts, thousands of compliances, and hundreds of annual filings become applicable. For the Make-in-India initiative to be successful, establishing and running a manufacturing company in India needs to be re-imagined.
India’s regulatory landscape leaves companies grappling with 69,233 compliances and 6,618 filings. To top that, there are more than 2,500 regulatory updates in a year. Handling this regulatory complexity coming from the Centre, State, and local governments is a challenge for every company. The multiplicity makes compliance, deterrence, and enforcement almost impossible. Administrative overhead increases due to duplicate filings, register maintenance, and conflicting requirements.
Needless to say, small companies with limited resources find that this regulatory cholesterol acts as an effective barrier to growth and scale.
3 Fundamental Challenges
-
Manual Tracking:
Most companies manage compliances manually through spreadsheets and emails. -
Lack of Legal Update Access:
Many companies don’t even have a complete list of applicable compliances, making it extremely hard to track changes. -
Insufficient In-House Expertise:
A lack of training and knowledge leads to poor understanding and execution of compliance requirements.
The 2 Sins of Compliance
-
Sins of Omission
- Missed filings
- Incomplete documentation
- Outdated licenses and registrations
-
Sins of Commission
- Incorrect calculations
- Wrong forms
- Delays in submission
As government scrutiny increases, these errors are becoming more costly than ever. Daily headlines show the consequences of non-compliance—penalties, closures, and legal action.
1 Point Policy Agenda: Ease of Doing Business
If we want to achieve the $5 trillion economy goal, India must stop burdening businesses with paperwork.
While the Finance Minister rightly pointed out the need to improve tax revenues, the one-point policy agenda should be:
Implement the National Ease of Doing Business Policy
(Ref: TeamLease RegTech in Financial Express, 16th July 2019: "It’s time to change the way India does business")
The Key:
Simplification, Rationalization, and Digitisation of compliances to reduce the burden and unlock India's growth potential.
What a Company Can Do Before the Policy Changes
Policy reform operates on a longer timeline than any single business can wait for. The three challenges named above are, individually, addressable inside a company.
Against manual tracking
The problem with spreadsheets is not the spreadsheet. It is that a spreadsheet records only what someone remembered to enter, carries no notion of what is missing, and cannot tell you that a form changed. The first move is not buying software — it is establishing a single authoritative list of obligations with an owner against each. Whatever holds that list matters less than the list existing at all.
Against the legal-update gap
Very few companies can monitor a couple of thousand regulatory sources. What they can do is narrow the surface: identify which regulators actually govern their entities and locations, and monitor those specifically. A manufacturing company in two states does not need to track everything — it needs to track a defined and knowable subset, reliably.
Against the expertise gap
The realistic answer for most companies is not hiring depth in-house. It is combining external professional judgement with an internal system of record, so that the advice a Chartered Accountant or Company Secretary gives is captured somewhere durable rather than living in an email thread. Running compliance for one company or across a practice looks at how that division of labour tends to work.
Why the Sins Compound
Sins of omission and commission behave differently over time, and the difference matters for where to spend effort.
An omission is usually discovered by a regulator, which means it is discovered late and priced at its maximum. Per-day additional fees mean the cost of a missed filing is a function of how long it stays missed, not of how serious it was.
An error of commission — a wrong figure, the wrong form — is more often discoverable internally, provided something is reconciling the submission against the underlying records. That is why reconciliation is worth more than it looks: it is the only control that catches the second category before someone else does.
The practical implication is that a company with limited resources should first ensure nothing is missed, and only then work on accuracy. Completeness is cheaper to fix and more expensive to neglect. The monthly financial checklist is a reasonable place to start on the second.
Frequently asked questions
- Why is setting up a manufacturing facility in India front-loaded?
- The permissions arrive before the output does. Purchase of land, registration of property, electricity and water connections, environmental clearance, and permissions from the factory inspector and pollution control boards all precede go-live. The gestation period stretches to many months, which produces uncertain launch dates, cost overruns and unpredictable outcomes before the facility has produced anything.
- What are the three fundamental compliance challenges?
- Manual tracking, where most companies still run compliance through spreadsheets and email. Lack of access to legal updates, where many companies do not hold a complete list of what applies to them and therefore cannot track what changed. And insufficient in-house expertise, where limited training produces poor understanding and inconsistent execution.
- What are the two sins of compliance?
- Sins of omission and sins of commission. Omission covers missed filings, incomplete documentation, and licences or registrations allowed to lapse. Both categories tend to be discovered by a regulator rather than by the company, which is what makes them expensive.
- Why does regulatory multiplicity hit small companies hardest?
- Obligations arrive simultaneously from central, state and local governments, producing duplicate filings, separate register maintenance and occasionally conflicting requirements. Against 69,233 compliances, 6,618 filings and more than 2,500 regulatory updates a year, the administrative overhead is close to fixed regardless of company size, so it consumes a far larger share of a small company's resources and acts as a barrier to growth and scale.