Car companies find compliance burden difficult: survey

Nine out of 10 companies in the automotive industry have paid fines in the past 12 months for failing to comply with one of the more than 900 regulatory requirements listed for them, and most of those companies have been in favor of simplified compliance, the survey found.

Reasons for these violations include the lack of a comprehensive and up-to-date compliance list, missed deadlines and rapid changes in regulations, according to TeamLease Regtechcompliance outsourcing the firm that conducted the survey. A total of 34 companies participated in the survey.

However, the crux of the problem is the sheer amount of compliance that car companies and manufacturing companies in general have to deal with.

“The number of current acts and requirements is too great”, Rishi Agarwal, CEO of TeamLease Regtech, told ET. “Many of them, especially in relation to work, are overlapping and redundant.”

A manufacturing company in the automobile industry has to deal with 489 requirements at the central, state and local levels, the report said. They fall under employment law, EHS (environment, health and safety), corporate law, commercial law and finance and tax law categories. In addition to this, there are industry compliances for automakers.

Change of laws

All together, “a small auto company operating in one state India deals with at least 900 one-off and ongoing claims per year,” the report said.

Half of these requirements involve imprisonment.

To make matters worse, the laws are constantly being amended, adding even more confusion to companies. More than 3,500 regulatory changes are published each year on any of the 2,233 central, state, and local government websites through notices, newspapers, press releases, or other means.

A recent study by TeamLease Regtech found that there were more than 600 regulatory changes in the automotive industry that affected micro, small and medium-sized companies.

The report notes that most Indian organizations find it difficult to track compliance given the sheer number of them.

“The automotive sector creates a phenomenal number of jobs. Everything from setting up a new plant to managing it should become easier,” Agarwal opined.