Regulatory Frame Work
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The document discusses the regulatory framework for industry in India and the government's role in intervention and regulation. It outlines the various stages of industry formation and highlights the many laws and government agencies that businesses must interact with. While some level of government intervention is necessary, the document argues that a shift towards more quality-focused and catalytic intervention is needed to reduce red tape and promote entrepreneurship. Reforming government administration and mindsets is key to improving the business environment.
Regulatory Frame Work
- 1. REGULATORY FRAME WORK Suneel Gupta Associate Professor GHS-IMR Kanpur
- 2. Why Government should intervene: Economic historian noted that when country move towards economic development and government has greater role in it. 2. Role of planning is better with government control. 3. A socialist society the government is compelled to enter directly into industrial and commercial activities. 4. Government decides patterns of price, subsides, incentive, of different kind in order to curb consumption 5. Government is responsible for social & economic well being of people eg. Taxation State participation is necessary to lay strong base for future development of Industry
- 3. Type of Intervention Formal and Informal control Coercive and Inductive Control Direct and Indirect Control Effect off Competition Promotion and R egulatory Control
- 4. Formation Stage Industrial policy Companies Act I.D.R. Act FERA Act. Control of capital Issue (1951) S.E.B.I. Financial arrangement with development banks Allotment of land by concerned state government Sanction of factory plan by concerned state government Import- Export know-how F.I.P.B. FEMA
- 5. Construction Stage Allotment of Iron & Steel & Allotment of cement(NA) Sanction of electricity board Long term loan (if required) with IDBI, IFCI, Banks And SFCIs
- 6. Machinery procurement & installation Import good license Opening of LC with banks Custom clearance
- 7. Pre-production &production stage Working capital arrangement with bank Registration for C.S.T. & central excise Pollution control Patent Purchasing Import of raw material and component Custom clearance Allotment of indigenous scarce material by concerned ministry, GOI
- 8. Financing Financial Institution R.B.I. Monetary Policy
- 9. PERSONNEL Factories Act ESI Act Workmen’s compensation Act Payment of wages Act Minimum wages Act Payment of bonus Act Industrial dispute Act Trade union Act Provident fund Act Payment of Gratuity Act Maternity Benefit Act Apprentices Act Equal Remuneration Act Exist Policy
- 10. Marketing Marketing Competition Act Drug Control Act Export Inspection agency Essential commodities Act I.S.I. Prevention of food adulteration Act. Standard Weight & Measure Act Consumer Protection Act Patents
- 11. SIA DEA SIA FC DEFENCE R&D NRDC CSIR DST DGTD FIPB ADMINISTRATIVE MACHINERY PLANNING COMMISSION COMMERCE MINISTRY DC SSI MINISTRY OF INDUSTRY FIPB SIA TECH.DEV COMMITTEE CABINET SIA APPROVAL Large cases Ordinary cases Procedure for Foreign Collaboration
- 12. AND NOW FIPB SIA RBI
- 13. State’s Intervention must continue for several reason To eliminate poverty To reduce failure in market ( success of Korea and Taiwan )
- 14. What should be the form of Intervention? Quality intervention Careful attention in selection of intervention Intervention strategy relates to its primary orientation and goal. ( role of the government in future must be redefined but not ended. The redefinition must be in the direction of improving quality of intervention. This must be India’s agenda in future
- 15. A good Control System It must be democratic It must be powerful enough to make an unwilling minority obey the will of the majority It must “ economic coercion” It must be adaptable Control must be guided by experience or by wise experiment and lastly social control must be capable of progressively raising the level of mankind.
- 16. A PARADIGM SHIFT IS NEEDED A case of classic clash between entrepreneurs and bureaucracy A entrepreneurial sprit has to be displayed by government as shown for Green revolution. Resources for development are more efficiently deployed if the central government & state government act as catalyst and Regulator –not as executor of development.
- 17. Junior engineer actually sees nothing wrong in offering another plot Instead of the one that was promised for Mr. Alok Aslok’s experience shows how Indian entrepreneurs have to take on additional management burden called “managing the hassle factor “ It is important to get to the root cause of this hassle factor
- 18. In past entrepreneur already faced government officials but now echelons of government are promoting their state as haven of entrepreneur . 2% of officer in government workforce gets 100% of training. Training sessions require –awareness of the meaning of the government as catalyst.
- 19. Each employees in government department see himself as a catalyst of economic development ( job opportunity for junior engineer son tomorrow) Government structure to ensure that head of relevant department have long enough tenures to be accountable for departments. A bit of “frontier sprits “ is needed that made America great in last century is still a key success factor in business.
- 20. CHAMPIONING REFORMS AT THE TOP IS NECESSARY ,BUT NOT SUFFICIENT. THERE IS NEED FOR COMMITMENT AND OWNERSHIP OF THE REFORMS ETHOS DOWN THE LINE NRI COME ,NRI DESPAIRS,NRI GOES BACK, ( Indians have proved their success at world level, now wanted to return home and with their money and expertise, do something in country of their birth)
- 21. Finally a word of advice to Alok and his ilk, Do not despair, India is changing, albeit slowly Do not look for the quick buck. Come here for the long haul. You will find reward and fulfillment