Compliance Complexities in the Chemical Industry

The Indian chemical industry is a highly diversified space with over 80,000 products, accounting for around 11% of the total exports. This $220+ billion industry ranks 6th globally and 3rd in Asia in production and is projected to reach $1 trillion by 2040. However, there are complexities within the regulatory framework that hinder growth. A single-state chemical manufacturing company must complete over 60 one-time registrations and approvals. An average small chemical manufacturing company with one manufacturing unit in Maharashtra has 635 unique obligations. After accounting for 53 monthly, 93 quarterly, 48 half-yearly, and 61 annual compliances, this figure rises to 1,545.

Each company building a new chemical compound manufacturing facility must obtain nearly 72 licences and permissions under at least 52 acts from Central and State authorities at various stages. These include authorisation under the Biomedical Waste Management Rules, 2016, registration under the Environment (Protection) Act, 1986 & Ozone Depleting Substances (Regulation and Control) Rules, 2000, petroleum storage licence under the Petroleum Act, 1934, and public liability insurance under the Public Liability Insurance Act, 1991.

Before starting construction, the corporation must obtain 10 Maharashtra Regional and Town Planning Act, 1966 certificates/approvals. These include building layout and drainage plan approval, NOCs for stormwater drainage, tree felling and sewage water discharge, plinth and building completion certificates and others. They also need a 1948 Factories Act-approved factory layout plan. The company needs approval for non-agriculture land use if the land is not zoned for industrial use. Due to the nature of the industry, companies must comply with the Chemical Weapons Convention Act, 2000 and Chemical Weapons Convention Rules, 2016, Essential Commodities Act, 1955, and Insecticides Act, 1968 and Rules, 1971, among other acts.

Depending on the chemical the company makes, there is also pressure to follow the Ministry of Environment, Forest, and Climate Change (MoEF&CC) chemical committee and Basic Chemicals, Cosmetics, and Dyes Export Promotion Council export regulations. Compliance also depends on the location of manufacturing units (industrial areas, export-oriented units, gramme panchayats, special economic zones, etc.), quantity and severity of chemicals manufactured, and use of specific equipment. Notifying the relevant authority to change threshold quantities is also difficult. Most Indian chemical companies struggle to track compliance with so many regulations. Industries must follow regulatory bodies' directions, notifications, circulars, notices, etc. Large-scale environmental harm and strict liability often spark public outrage, putting pressure on compliance officers and key managers. These companies must also comply with Indian hazardous substance and pollutant regulations. The multiplicity of compliances increases the risk of lapses and high penalties, causing chemical industry bottlenecks.

No central repository of regulatory updates provides national, real-time, comprehensive, and personalised information on all compliance burden changes. Nearly 6,000 regulatory updates were published on 2,233 union, state, and local government websites in FY23. Compliance teams in many organisations still use ad hoc, paper-based, and people-dependent processes. Compliance officers manually track status with spreadsheets. Consequently, there may be accidental misses, delays, lapses, defaults, expired licences, and missed legal updates. They often firefight and are stressed during regulatory audits.

Chemical companies must digitise and improve compliance management immediately. Several RegTech players have invested heavily in technology to help organisations track and manage their compliance programmes. Some RegTech players have added automation layers to reduce manual intervention and compliance costs for organisations. Creating a ‘Culture of Compliance’ to accompany the digital transformation of the compliance management system is also crucial. Technology-based digital solutions can help businesses navigate regulatory complexity without breaking the law. A compliance management system can enable businesses to streamline their workflows and introduce accountability. It comes equipped with real-time tracking of regulatory updates, a notification engine, reminders, and a central repository for compliance documents. It allows users across the organisation hierarchy to access and monitor compliance status of the company. Such a compliance management system is the next step in DPI and the digital economy. Adopting and adapting these solutions can help companies improve compliance visibility and control.?

The compliance management system by TeamLease RegTech can revolutionize regulatory adherence, ensuring businesses navigate complexities seamlessly. Offering real-time tracking of regulatory updates, notifications, and reminders, this system centralizes compliance documents and streamlines workflows. Explore how TeamLease RegTech's compliance management system can enhance your regulatory compliance journey while ensuring operational efficiency and accountability by scheduling a demo today. Click Here.