Compliance Becomes a Key Focus in Corporate Boardrooms
For Indian companies operating on a global scale, the challenge of navigating complex regulatory environments has shifted from a secondary concern to a central element of corporate strategy. Rapid changes in trade rules, tariffs, environmental regulations, labor laws, data management, and taxation are increasingly influencing business outcomes. As these regulations evolve, they directly impact cost structures, market access, and overall competitiveness, compelling companies to integrate compliance into their core business planning rather than treating it merely as a compliance obligation.
Regulatory Challenges Impacting Business Operations
The landscape of regulatory compliance is becoming more intricate for Indian firms, particularly those with international operations. Tata Steel, which has a presence in India, the UK, the EU, and Canada, exemplifies this shift. During a recent earnings call, CFO Koushik Chatterjee emphasized that managing regulatory complexity has become a strategic necessity. He cited the company’s operations in the Netherlands, where the unit reported an operating profit of 210 million euros for the first nine months of FY26. This figure was significantly affected by carbon emission-related costs of 150 million euros and an additional 50 million euros due to US tariffs. Without these regulatory burdens, the operating profit could have exceeded 400 million euros, highlighting the substantial impact of policy on financial performance.
Smaller companies are also feeling the strain of evolving regulations. Pankaj Chadha, a partner at Jyoti Steel Industries, noted that rapidly changing rules often leave little flexibility for businesses. Companies are increasingly reliant on customer insights to navigate these complexities. For instance, a Mexican customer informed Chadha that Japanese steel was more competitively priced than Indian steel due to a zero-duty trade agreement, contrasting sharply with the 35% import duty on Indian products. This revelation underscores the necessity for businesses to understand and adapt to regulatory changes as a fundamental aspect of their operations.
The Emergence of ‘Regulated Strategy’
Legal experts are observing a significant shift in how companies approach regulatory compliance. Ankita Singh, founder of Sarvaank Associates, describes this trend as the dawn of a “regulated strategy,” where adept navigation of global regulations becomes a competitive advantage. She argues that regulatory risk is no longer merely a cost but a critical survival metric. This shift is prompting corporate boards to transition from a passive “wait and see” mindset to a proactive “preventive vigilance” approach, embedding compliance into the very fabric of product development and supply chains.
Madhavan Srivatsan, a senior partner at Emerald Law, agrees with this assessment. He notes that Indian companies can no longer afford to treat regulatory issues lightly. With heightened scrutiny, mandatory self-reporting requirements, and the potential for severe penalties, compliance has emerged as one of the most vital functions within organizations. The responsibility for ensuring compliance is increasingly being elevated within management structures, as any failure to adhere to regulations can expose directors to civil and even criminal liabilities.
Impact of EU Regulations on Indian Exports
While Tata Steel’s operations in the Netherlands have seen some improvement following the EU’s imposition of carbon costs on emission-intensive imports, these same regulations have adversely affected India’s exports of steel, cement, aluminum, and fertilizers to the European market. Starting in June, the EU plans to reduce import quotas and increase duties on volumes exceeding these limits from 25% to 50%, which will further disadvantage Indian producers in favor of domestic manufacturers.
Chadha expressed hope that India could negotiate a trade agreement with Mexico to alleviate some of these pressures. As the regulatory landscape continues to evolve, Indian companies must remain agile and informed to navigate the complexities of international trade effectively. The ability to adapt to these changes will be crucial for maintaining competitiveness in an increasingly regulated global market.
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