Recently, during a conversation with an industry representative, I was told how easy it is to set up a startup in Singapore compared to India. This gentleman, who had recently visited Singapore, explained that one of the key reasons Indians living in the Southeast Asian nation prefer establishing startups there is because the government is “extremely supportive” when it comes to obtaining clearances. “They don’t want to shift operations to India due to the large number of bureaucratic hurdles,” he remarked.
He cited the example of an artificial intelligence-based startup that remotely controls major medical procedures in countries facing a shortage of doctors. “I was shown a video of a robot performing surgery in an African country with minimal human involvement. The robot’s activities were being controlled from a computer based in Singapore,” he said. When I asked if such a startup could be set up in India, he replied, “It’s possible, but the process is extremely cumbersome. We talk about single-window clearance, but in practice, it’s still elusive.”
As he said this, I was reminded of an email alert I received from a Pune-based firm offering what it calls a SaaS (Software as a Service) solution to help Indian firms meet regulatory compliance requirements for setting up and operating industrial units. The email was accompanied by a 61-page report, which noted that India’s installed solar power capacity has reached 107.94 GW, making it the world’s third-largest solar energy generator, behind China and the US. Yet, the report lamented, renewable energy companies in India must navigate a staggering 2,735 compliance requirements—an overwhelming burden by any measure.
Based on a case study of a standalone solar power plant in Maharashtra, where electricity is generated and transmitted through the grid, the consulting firm TeamLease RegTech, in its report “Decoding Compliance Management for the Renewable Energy Sector,” detailed the vast compliance landscape. The report identified obligations spanning seven categories of law, across three levels of legislation, and involving multiple types of requirements—licenses, registrations, permissions, approvals, and NOCs. Failure to meet these requirements exposes companies to the risk of criminal charges, including imprisonment.
According to the report, the corporate office of the Maharashtra-based solar plant had to fulfill 799 unique obligations, 51 approvals, permissions, and registrations, and 285 legal mandates. These span the central, state, and local levels and involve regulatory bodies such as the Central Electricity Regulatory Commission (CERC), State Electricity Regulatory Commissions (SERCs), and the Bureau of Energy Efficiency (BEE). When including periodic approvals, the total compliance count comes to 2,735.
The report specifies that compliance requirements include adherence to Renewable Purchase Obligations (RPOs), the Energy Conservation Act, 2001, tariff policies, environmental clearances, and grid integration standards as per Central Pollution Control Board (CPCB) norms. Key challenges include “regulatory fragmentation across jurisdictions, overlapping mandates from different authorities, and inconsistent policy implementation,” as well as slow processes for land acquisition and environmental clearance.
Highlighting that states like Rajasthan, Gujarat, and Karnataka lead the sector due to high solar insolation and more supportive policies, the report underscores that this is not the case across India. “The dynamic regulatory environment, marked by frequent legal updates and continued reliance on manual, paper-based compliance systems, increases the risk of non-compliance,” it notes.
The report classifies regulatory requirements for the renewable energy sector into seven broad categories: labour, finance and taxation, environment-related, secretarial, commercial, industry-specific, and general. It emphasizes that overlapping legislative powers between the Union and state governments add further complexity to the regulatory framework.
“For instance,” it notes, “‘labour’ and ‘electricity’ fall under the Concurrent List of the Seventh Schedule of the Indian Constitution, empowering both the Union and state governments to legislate. As a result, a company must comply not only with Union laws but also with the laws of the state in which it operates. Land poses a particularly tricky situation—it is a state subject, but ‘transfer of property excluding agricultural land’ falls under the Concurrent List.”
Taxation is another area of complexity. “The power to impose and collect taxes is divided among Union, state, and concurrent jurisdictions. Some taxes (such as corporate tax) are paid to the Union government, while others (such as stamp duty) go to the state. Certain taxes (like property tax) are even collected by municipal bodies,” the report states.
The report includes timelines for obtaining approvals, registrations, and permissions—ranging from under a week in six cases, to over 91 days in four, and no timeline at all in thirteen cases. It also lists more than a dozen Central and state departments from which clearances must be obtained—covering electricity and power, pollution control, roads and highways, skill development, health, labour, social justice, and even airport management.
Labour-related clearances are singled out as particularly burdensome. “This category includes 29 Union laws, which have now been consolidated into four labour codes. Since labour is in the Concurrent List, every Union law has corresponding state-level legislation. Companies must compile a list of applicable Acts, rules, and regulations to fully understand their compliance obligations.”
The Maharashtra solar plant mentioned earlier must adhere to 244 labour compliance requirements, which grow to 1,071 when accounting for frequency. It must comply with a range of labour and social welfare laws to ensure a safe, inclusive, and non-discriminatory work environment.
- The Child and Adolescent Labour (Prohibition and Regulation) Act, 1986
- The Payment of Gratuity Act, 1972
- The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
- The Rights of Persons with Disabilities Act, 2016
- The Payment of Wages Act, 1936
- The Employees' Provident Fund and Miscellaneous Provisions Act, 1952
- The Maternity Benefit Act, 1961
Under the secretarial category, compliance includes regulations from the Ministry of Corporate Affairs under the Companies Act, 2013, SEBI Act, 1992, and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Finance and taxation laws include direct taxes (income tax, corporate tax, property tax) and indirect taxes (GST, excise duty, customs duty).
In the Environment, Health, and Safety (EHS) domain, compliance includes rules on fire extinguisher maintenance, biomedical and hazardous waste management, noise pollution, groundwater extraction, and the transboundary movement of waste. There are also rules under the Electricity Act, 2003, the Motor Vehicles Act, 1988 (especially relevant for electric vehicle infrastructure), and energy conservation mandates under BEE regulations.
The report highlights Rule 8(1)(b) of the Environment (Protection) Act, 1986 and the Plastic Waste Management Rules, 2016, which require all plastic waste to be segregated at the source and handed over to authorized agencies, ensuring proper environmental management.
Further, under the Sexual Harassment of Women at Workplace Act, 2013, companies are required to publicly display penalties for misconduct, conduct regular awareness programs, and reconstitute Internal Committees every three years.
The Industrial Disputes Act, 1947 (Bombay Rules, 1957) mandates annual elections for worker representatives on various committees, while other labour laws—such as the Equal Remuneration Act, the Payment of Bonus Act, the Employees State Insurance Act, and the Minimum Wages Act—require detailed registers to be maintained in prescribed formats.
The report concludes with a striking observation: “A detailed examination of India’s business laws reveals that imprisonment has long been used as a mechanism to regulate entrepreneurs.” Citing the report “Jailed for Doing Business” by Gautam Chikermane and Rishi Agrawal, it states that of the 1,536 laws governing businesses in India, over half (54.9%) contain provisions for imprisonment. Of the 69,233 compliance requirements within these laws, nearly 38% carry the risk of jail time for non-compliance.
Comments