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Sep 02, 2021
4 min read

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“Ignorance of the law is not an excuse for non-compliance”

Compliance Management in India is complex and needs expertise. India has a universe of over 1,536 Acts, 69,233 compliances and 6,618 filings. The regulatory ecosystem is also extremely fluid and changes at least 15 times a day. It is not uncommon to see compliance officers operate in ad-hoc, people dependent and paper-based environment. While the Companies Act, 2013 makes board and management liable for non-compliance, most organizations do not have the right tools, processes and human capital to stay on top of their compliance program. Digitizing compliance tracking is the first important step in this journey.

The key question is when to consider joining the digital bandwagon. Here are five symptoms to look out for to know that it is time to consider digitizing your compliance program.

1) You are consistently missing critical Compliances

A typical manufacturing set up in India with footprint in multiple states deals with several hundred registrations, licenses, permissions, consent orders, maintenance of registers, returns, challans, renewals among others. At least 30% of these compliances are high risk and need to be done accurately and timely, failing which an organization runs operational, financial and reputational risks.

2) You are receiving several notices

Government departments in India are going digital as a part of “Digital India” campaign. As a result, they have greater capability to identify sins of omission (missed compliances) and sins of commission (incomplete / inaccurate) leading to notices. Managing litigation takes management time and bandwidth away from core business.

3) You are missing critical Compliance/Legal Updates

Regulatory and Compliance eco-system in India is highly dynamic. Laws change approximately 15 times day leading to over 2,500 changes a year. These updates can lead to changes to forms, penalties, dates, duty structures, interest computation among others which need appropriate changes to filings, returns and registers. If you are missing updates, chances are you are inadvertently committing sins of commission.

4) You operate in multiple geographies (States / UTs / Cities)

In India there are multiple bodies which govern the compliance obligations of an enterprise. Central Government, State Governments, Union Territories, Local Governments. As the number of locations increase, the complexity increases exponentially. As a result, the expertise requirements also sharply increase. In most cases, organizations do not have the required in-house expertise to manage all the compliances.

5) You are doing business with International Customers

In the past few years, there is an enhanced focus on vendor compliance internationally. Buyers demand certain minimum standards on corporate compliances, risk management and sustainability standards of vendors. They seek periodic evidence and hold periodic audits failing which vendors are replaced.

The world around us has changed quite dramatically in the past few years. The power of technology is pervasive and influences the quality of our life every waking moment of the day. Digitization holds the key to transparent, accountable and timely compliance program. The power of Cloud, Mobile, Analytics, AI & ML are transforming business processes. There are digital platforms available today for less than the salary of a junior compliance officer. A typical organization can come on-board such a platform in 3-4 weeks. They help reduce human errors and bring greater control in day to day operations and supervision. The cost of poor compliance has escalated sharply. Enforcement agencies are raising their game and expect Corporates to comply. It is time to review your Compliance program and go-digital.

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