India is emerging as a booming economy with regard to the entrepreneurial culture. With the Government of India focusing on the growth and promotion of startups, they are equally taking steps towards ensuring the benefits for MSMEs. Various ministries are also working inter-departmentally to promote the growth of cooperation in order to ultimately boost the Indian economy. Day by day, Indian businesses are becoming diverse in nature. To maintain a business successfully, one has to take into consideration several aspects. One of the crucial aspects of a smooth run of a business is regulatory compliance. Without adhering to regulatory compliance, no Indian business will stay on track.
With the passing of time, the impact and the requirement of regulatory compliance are only growing. As organisations are becoming more complex, structurally as well as operationally, to ensure proper and smooth functioning, the emphasis on Regulatory Compliance is ever-growing. Businesses now identify transparency as a major asset, and a structured manner for regulatory compliance ensures the achievement thereof. Stakeholders (which includes shareholders, customers, and the public in general) now appreciate and promote businesses that follow ethical practices. There is an increase in public and stakeholder participation in ensuring corporate compliance with internal policies and regulatory frameworks in accordance with the law. Regulatory Compliance ensures that the business abides by the financial terms, thereby eliminating or reducing the possibility of mismanagement. The importance of regulatory compliance has been widely accepted by the Indian Government, and they are now working in consort with the industry leaders as well as other stakeholders to formulate a more robust system for regulatory compliance to ensure smoother operations for Indian businesses.
Talking about compliance, let’s take a deeper look at how it is actually impacting Indian businesses. And to do that, we will have to understand regulatory compliance first. This article will then discuss about the primary benefits Indian businesses have received by committing to regulatory compliance.
What is Regulatory Compliance?
To put it in simple words, a regulatory framework is adopted/framed and implemented by the Indian legislation as well as concerned authorities, which are then required to be complied with by the corporations to whom it is applicable. Such regulatory frameworks are specific to the industry or fraternity in which an organisation is operating. When a business abides by these regulations, it tends to have transparency and operates ethically.
What is the Need for Regulatory Compliance in Indian Business?
India has seen tremendous growth in the number of startups that have been established. Almost every single day, an entrepreneur registers his / her startup, making India one of the fastest-growing economies. However, the rate at which these startups are also closing their operations is higher.
On a deeper analysis of the trajectory of these startups, it will not come as a surprise that due to a lack of awareness of the Regulatory framework and their compliance, the startups are facing difficulty in surviving. Be it in general life or the business world, compliance is one of the success-determining factors, as it ensures a disciplinary method of conducting internal operations. And a lack thereof will result in failure in the long run. An organisation’s long-term success would highly depend on its compliance practices.
Benefits: The Positive Impact of Regulatory Compliance in Indian Business
Regulatory Compliance Increases Credibility and Trust
Indian businesses that abide by regulatory compliance possess a clear advantage of credibility and trust. Not only does it foster trustworthy and reliable partners, but it also fosters a strong relationship with customers and investors. There is no doubt that such an increase in the trust factor can translate into a competitive advantage in the business market.
Regulatory Compliance Acts as a Catalyst for Internal Optimisation
When Indian businesses commit to regulatory compliance, they undergo thorough scrutiny, where the entire internal process is reviewed. This act leads to improved risk management and streamlined operations in the business. As a result, the efficiency of the organisation is boosted.
Regulatory Compliance Helps to Create a Sustainable Business Model
On the whole, businesses that prioritize corporate social responsibility (CPR) are more favoured in the global landscape. And the framework of regulatory compliance in India is aligning with such global trends. This offers an opportunity and an open gate for Indian organisations to partake globally in socially responsible practices. In this way, the Indian companies that take ESG – environmental, social, and governance considerations- become sustainable and build a solid business model.
Regulatory Compliance Pushes Towards Digitalisation
In this technology-driven world, it is wise to adapt to digitalization for innovation. Indian organisations can use digitalization to get the upper hand by implementing data security measures to stick to data protection compliance, advanced software for smooth GST compliance, and many more.
Government Initiative and Support
Needless to say, any initiative has its fair share of challenges. Although regulatory compliance is essential for the betterment of business, the road to it is not as easy as it may sound. There are challenges like the cost implication of compliance, changing the already established mechanism in company operations, and, majorly, lack of awareness of such benefits. However, the Government of India has introduced and is in the process of introducing multiple schemes and benefits that a company can take advantage of in the future. The Government has also taken measures to ease compliances, such as the introduction of online portals for various departments, which ensures that businesses now do not have to rely on any particular office and can find ready information through such online portals. Other initiatives and measures taken by the Government of India include but are not limited to the implementation of the Goods and Service Tax (GST) in 2017, which was aimed at simplifying the indirect taxation process. The Government of India, through the implementation of the Companies Act, 2013, also showcased and promoted responsible business practices to be incorporated in Indian companies to benefit the public as well as the economy.
Additionally, the Government of India has introduced multiple initiatives under the “Ease of Doing Business” model, which are aimed at creating a more business-friendly environment to ultimately add to the Indian Economy. It simplifies the regulatory process and reduces the bureaucratic hurdles Indian businesses face to follow compliance.
The Impact of Regulatory Compliance on Indian Business is Multifaceted.
In conclusion, regulatory compliance is profoundly impacting businesses, domestically as well as globally. From a clear, structured manner of operations to building trust with society as well as its customer base, the operations of a company can have a major impact (all positive) if they abide by regulatory compliance. Overall, Indian businesses are likely to benefit and derive a high rate of ROI if they decide to adhere to and amend their operations in order to comply with the regulations and legislations that might be applicable to them. It helps them to shine and prominently thrive in the world of business and ultimately offer more in terms of finances as well as corporate practices.
