For Indian companies looking overseas, global expansion is no longer just about market opportunity — it is increasingly about regulatory endurance. A new report by Avalara Inc. reveals that 70% of Indian firms believe cross-border trade has become more complex than it was three years ago, highlighting a decisive shift in how businesses approach international growth.
The 2026 Cross-Border Complexity Report, based on responses from senior decision-makers, captures mounting frustration with shifting regulations, tariff volatility and uneven enforcement standards across markets. An even larger 86% of respondents said cross-border operations have become more complicated in just the past year, signalling that the compliance burden is accelerating rather than stabilising.
The impact is tangible. Nearly 78% of Indian businesses surveyed said they have delayed, scaled back or reconsidered entry into new international markets due to regulatory uncertainty. Yet expansion ambitions remain alive: more than half still plan to enter additional markets, albeit with more rigorous compliance groundwork.
The findings suggest a recalibration rather than a retreat. Companies are increasingly building compliance assessments into early-stage planning, well before contracts are signed or offices established abroad. Tariffs, customs documentation requirements and the interpretation of local tax rules are now influencing strategic decisions at the boardroom level.
“Indian companies remain committed to global expansion, but the pace of regulatory change means planning must be both grounded and forward-looking,” said Dulles Krishnan, General Manager, India Operations at Avalara. He pointed to rising tariff volatility, stricter documentation requirements and the global shift toward real-time tax reporting as key pressure points. “Companies need stronger systems, reliable data flows and purpose-built technology to stay compliant and operate without disruption,” he added.
The report identifies tariffs and duties as the most significant operational hurdle, cited by 47.2% of respondents. Customs and border processes follow at 40.8%, while 37.6% flagged challenges linked to interpreting local regulations. These friction points occur at critical stages of cross-border movement, where even minor compliance lapses can result in shipment delays, penalties or higher landed costs.
The financial implications are notable. On average, Indian firms are spending 11.4% of their cross-border revenue on customs, taxes and regulatory management. This underscores a structural shift: compliance is no longer treated as an administrative function but as a strategic cost centre requiring coordinated oversight across finance, logistics and legal teams.
Technology is playing a growing role in managing this complexity. About 89% of surveyed firms said they are using digital systems to reduce manual processes and improve visibility across multiple jurisdictions. Businesses report that automation is essential in keeping pace with frequent regulatory updates, particularly in regions such as South Asia, Europe and North America, where compliance standards have tightened.
However, complexity does not ease after market entry. More than half of respondents cited ongoing regulatory changes as a key operational challenge, while 46.4% pointed to border disruptions and 40% to unexpected fines or audits. These persistent uncertainties are prompting firms to invest in more resilient compliance frameworks.
The report concludes that Indian companies are not stepping back from globalisation — they are professionalising it. Expansion continues, but with stronger regulatory intelligence, structured processes and compliance-led decision-making at its core.
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