Sudden regulatory changes in India and their impact on your business 

India is known for its dynamic economic environment, which offers both opportunities and challenges for companies and foreign investors. One of the biggest challenges is unexpected legal changes and new regulations, which are often introduced without warning and can have a significant impact on affected companies. These abrupt regulatory changes, which we refer to as "Disruptive compliances“ often require extensive documentation and tie up considerable time and financial resources. 

Current examples of disruptive compliances:

1. BIS Scheme X certification

In March 2024, the Indian Ministry of Heavy Industries announced the introduction of BIS Scheme X certification, which will become mandatory for certain machinery and electrical equipment starting August 28, 2025. This scheme requires manufacturers to ensure their products comply with Indian standards and obtain appropriate certification from the Bureau of Indian Standards (BIS). For foreign companies, this means they must subject their products to extensive testing and submit detailed technical documentation. The entire process can take up to 12 months or more, requiring early planning and significant resources.  

 2. Mandatory dematerialization of shares

Another example is the dematerialization of shares mandate introduced by the Indian government. Starting September 30, 2024, all private companies will be required to convert their physical share certificates into electronic form. For foreign investors, this means opening a demat account with Indian custodian banks, which involves applying for a Permanent Account Number (PAN), complying with Know Your Customer (KYC) requirements, and notarizing various documents. This process can be time-consuming and requires careful planning.  

 3. Sudden import restrictions

In August 2024, India, without prior notice, introduced a licensing requirement for the import of laptops and other electronic devices. Companies such as Apple, Dell, and HP suddenly faced new trade barriers that disrupted their supply chains and business operations. However, after significant pressure from international trading partners, particularly the United States, this regulation was lifted within weeks.  

Causes of sudden regulatory changes 

Several factors contribute to these abrupt regulatory changes in India: 

  • Protection of domestic industry: The Indian government usually intends to promote local manufacturers and curb foreign competition in order to strengthen the domestic economy by enacting such regulations.
  • Adaptation to international standards: India is increasing its efforts to align its regulations with global standards, which may result in sudden changes to comply with international trade agreements or meet market demands.
  • Safety and quality concerns: To protect consumers, new standards are sometimes introduced at short notice to ensure that imported products meet certain safety and quality requirements. 

Challenges for companies 

These unexpected changes pose significant challenges for you as a company: 

  • Short-term adjustments: Companies often have to make significant changes in a short period of time to comply with new regulations, which can disrupt operations.
  • Additional costs: Compliance with new regulations often requires additional investments in compliance, training and infrastructure.
  • Reputational risks: Non-compliance can lead to legal consequences and a loss of trust among customers and partners. 

Strategies for dealing with disruptive compliances 

To address these challenges, your company should take proactive measures: 

  • Early information gathering: Continuous monitoring of the regulatory landscape helps to learn about upcoming changes at an early stage.
  • Flexibility in business processes: Companies should design their processes so that they can respond quickly to regulatory changes.
  • Close dialogue with authorities: An open exchange with regulators can help to gain clarity about new regulations and facilitate compliance processes.
  • Investing in compliance management: Establishing a robust compliance management system can help minimize risks and respond efficiently to changes. 

Conclusion: Seize opportunities, manage risks – with the right partner at your side 

The multitude of sudden, sometimes far-reaching regulatory changes – which we refer to as disruptive compliances – is a reality that all companies doing business in India must address. While many of these measures make sense in the long term and stabilize the system, their implementation means: 

  • high administrative effort, 
  • Uncertainty in internal processes, 
  • significant requirements for documentation, deadlines and processes, 
  • and commitment of financial and human resources. 

 

Especially for foreign companies without their own local presence in India, these requirements are often difficult to manage efficiently – especially when they arise suddenly and at the same time clash with strategic or operational projects. 

How we can support you: 

As an established India service provider with dedicated departments and German-Indian expert teams in India and Europe, we support companies in the planning, implementation, and ongoing fulfillment of all regulatory requirements – quickly, reliably, and proactively. Our support includes: 

  • ✅ Monitoring and early warning in the event of regulatory changes (Compliance Radar) 
  • ✅ Translate and apply legal and administrative regulations – practical, in German 
  • ✅ Establish efficient compliance processes, especially for medium-sized companies and international corporations 
  • ✅ Operational implementation on site in India, including communication with authorities and service providers 
  • ✅ Document management and deadline monitoring 
  • ✅ Taking on temporary functions (Z. E.g. Resident Director, Company Secretary Services etc.) 

 

Our more than 20 years of experience show that companies that rely on continuous local expertise operate more safely and efficiently – and can concentrate on their core business instead of constantly putting out fires. 

 

Do you need support with regulatory issues in India? Do you have questions about the Indian market? Please feel free to contact us. We are your reliable partner for dynamic India.