Cost Audit In India: Regulatory Effectiveness, Compliance Burden And Opportunities For Reform

Abstract

Statutory Cost Audit Represents One Of The Most Distinctive And Debated Dimensions Of Corporate Regulation In India. Originating As An Administrative Intervention To Curb Industrial Profiteering And Ensure Resource Conservation During The Planned Economy Era, The Discipline Has Evolved Into An Instrument Of Economic Governance Under Section 148 Of The Companies Act, 2013. However, The Regulatory Architecture Faces Growing Tensions Between The Corporate Mandate For Ease Of Doing Business And The Public Policy Requirement For Verifiable, Granular Microeconomic Data. Industry Associations Argue That Statutory Cost Record-keeping And Audit Impose Substantial Compliance Costs, Procedural Overlap With Financial Reporting, And Administrative Rigidities. Conversely, Regulatory And Administrative Bodies—including The National Pharmaceutical Pricing Authority, The Directorate General Of Trade Remedies, And Public Procurement Agencies—depend On Contemporaneous, Product-level Cost Records To Determine Fair Consumer Pricing, Calculate Injury Margins In Anti-dumping Investigations, And Monitor State Incentive Distributions. This Paper Evaluates The Statutory Architecture Of Cost Audit In India, Analyzes The Empirical And Institutional Dimensions Of Regulatory Effectiveness, Examines The Structural Causes Of Compliance Friction, And Appraises International Parallels In The United States, The United Kingdom, And Germany. Drawing Upon Recent Policy Evaluations, Particularly The 2024 Inter-Ministerial Committee Report Chaired By Ashu Mathur And Contemporary Scholarly Discourse, The Study Articulates A Comprehensive Blueprint For Structural Reform Centered On Digital Integration, Threshold Rationalization, Sector Harmonization, And Dynamic Risk-based Oversight.

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