Cost of Compliance in Manufacturing

Despite the current reformatory moves by the government, policies related to the legal and regulatory compliances have not kept pace with the change and are seen to be cumbersome and business unfriendly. Deloitte Touche Tohmatsu India Pvt Ltd (Deloitte) along with the Confederation of Indian Industry (CII) conducted a survey focusing on the “Cost of Compliance” for companies from the manufacturing industry doing business in India to identify key issues faced by companies relating to legal/statutory requirements.

Key recommendations

Outdated requirements, unfriendly procedures and lack of clarity in rules / legislations have been identified by the respondents as the key issues faced across company structure, employee, environmental, and factory related compliances.

Simplification of laws/procedures, increasing self-certification/ self-regulation, increased automation of processes, and managing the discretionary powers of government officials in a more effective way are the key recommendations by the respondents to reduce compliance related load.

Simplification of laws/procedures: Lack of clarity in interpretation leads to litigations, and considerable time / energy of senior management being spent.

In addition, bringing in certainty in laws would help companies in reducing compliance challenges.

Increasing self-certification/ self-regulation: The Indian compliance regime lays increased importance to inspection and monitoring, however, some of the government departments are not adequately staffed to handle this. The respondents opined self-certification may be introduced in a phased manner in greater number of areas of compliance.

Automation of processes: Automation of processes has resulted in reducing the time and cost involved in the compliance process. Initiatives such as e-filing at the MCA (Ministry of Corporate Affairs) are often cited by the respondents as the way forward to reduce compliance burden.

The time taken for the legal processes is another area where the respondents believe that the businesses are significantly impacted.


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