Auto companies find compliance burden heavy: survey

The reasons for these lapses include the lack of a comprehensive and current list of compliances, missing deadlines, and rapid regulatory changes, according to TeamLease Regtech, the compliance outsourcing firm that conducted the survey. In all 34 companies were part of the survey.

However, at the core of the issue is the high number of compliances that automotive companies and manufacturing companies in general must deal with.

“The sheer number of applicable acts and compliances is too high,” Rishi Agarwal, the chief executive of TeamLease Regtech, told ET. “Many of them, especially regarding labour, are overlapping and redundant.”

A manufacturing company in the automotive industry must deal with 489 central, state and local-level compliances, the report noted. These fall under the labour, EHS (environment, health & safety), corporate law, commercial law and finance and taxation law categories. In addition to this, there are industry-specific compliances for automakers.

Changing Laws

All put together, “a small automobile manufacturing company operating in a single state in India deals with at least 900 one-time and ongoing compliances in a year,” as per the report.

Half of these compliances carry a provision for a jail term.

To make things worse, the laws constantly undergo amendments leading to further confusion for companies. There are over 3,500 regulatory updates annually published on any of the 2,233 websites of central, state and local government websites through notifications, gazettes, press releases or other means.

A recent study by TeamLease Regtech found that there were over 600 regulatory updates that concerned micro, small and medium companies in the automobile industry.

Most Indian organisations find it challenging to keep a track of compliances given their sheer numbers, the report noted.

“The auto sector creates a phenomenal number of jobs. Everything from setting up a new factory to running it needs to become easier,” opined Agarwal.