Business Policies

1. New Industrial Policy
PREPARED BY:
BRIJESH AGRAVAT (06)
URVESH PATEL (45)
MANMITSINH VAJA (25)
SACHIN MAHESWAR (41)

2. MRTP
Liberalization
Brijesh Agravat

3. I. MRTP Liberalisation
 The MRTP Act, brought into force form 1st June 1970, was a
very controversial piece of legislation
 The Monopolies and Restrictive Trade Practices Act (MRTP) has
been growth restricting regulation
 The existing restrictions on acquisition/transfer of shares have
also been removed
 The main objectives of MRTP Act 1969 were
(1) Prevention of concentration of economic power to
common detriment
(2) Control of Monopolistic, restrictive and unfair trade
practices which are pre judicial to public interest

4. II. MRTP Act to
Competition Act
 India has, in the pursuit of globalization, responded to opening
up its economy, removing controls and resorting to
liberalization
 The MRTP Act, 1969 has become obsolete in certain respects
in the light of international economic developments relating
more particularly to competition laws and there is a need to
shift the focus from curbing monopolies to promoting
competition
 The MRTP Act, in comparison with competition laws of many
countries, is inadequate for fostering competition in the
market and trade and for reducing, if not eliminating, anti-
competitive practices in the country‟s domestic and
international trade

5.  Effective Enforcement
 The gains sought through competition law can only be
realized with effective enforcement
 The Government should provide the required infrastructure
and funds to make the Competition Commission an effective
Tribunal to prevent
 The Future
 The opinion of the Commission is not binding on the
Government and it may formulate its Competition Policy as it
deems fit

6. III. Rise, Fall and Need for
Change
 India, in its formative years of freedom, laid down the seeds
of socialistic approach towards economic development
 the basic aim is to establish the reasons for the failure of the
MRTP and the subsequent reasons for the establishment of
the Competition Act
 The methodology adopted in this project is descriptive. The
research is based on findings and statistics provided in
primary sources like Statistical data and Committee
Reports and on secondary sources of books and articles
published in journals
 The research is limited to the resources available at the
NALSAR Library and the data sets available online and at
the NALSAR Library in the manner of Study Reports and
Research findings

7. IV. HC pulls up BMC for inaction
against unauthorized structure
 The Bombay High Court has pulled up BMC for not taking
action against an unauthorized construction in Prabhadevi
area of the city until they got authority from the city police to
proceed in this direction
 The counsel for the corporation was not been able to point
out any such provision in law, except referring to Section
53(6) of the MRTP Act
 The second petition was filed by Katkam, as a counter
application to the first petition
 "In that sense, the fact that the petitioner in the first writ
petition has invoked remedy of civil suit will not come in the
way of the first petitioner in pursuing the remedy of petition
which is pending in this court," the court noted

8.  However, Katkam alleged that even the first petitioner
had committed illegality and carried out unauthorized
construction in the premises occupied by him
 "Since we have directed the Deputy Commissioner to
look into the matter and take corrective measures in
respect of the premises referred to in the show cause
notice January 12, we hope and trust that even
grievance of the petitioner in the second petition in
respect of unauthorized structure put up by the petitioner
in the first petition is also examined and appropriate
action taken in accordance with law in that respect," the
judges

9. V. Forum wants cable contracts
registered under MRTP Act
 In a major development, the Pune consumer disputes
redressal forum has directed cable control room owners in
Maharashtra to register their contracts with broadcasters
under the MRTP Act, 1969
 This is expected to bring in the much needed legal
regulation to the cable television service industry
 The court gave this directive in the matter of a
representative complaint filed by subscribers' group Grahak
Hitvardhini (GH) against the Union of Cable Operators &
Control Room Owners, Maharashtra, and its
president, Vasant Patwardhan. The complaint (327/2002)
was decided by consent terms (mutual agreement) of the
parties involved

10.  He stated that when the conditional access system
(CAS) will be introduced in Mumbai, Delhi, Chennai and
Kolkata from July 14, channel companies are expected
to introduce individual rates for channels
 Even these rates can now be challenged in the MRTP
commission, Velankar said, adding that contrary to
popular belief, the MRTP Act is still very much valid in the
country
 Meanwhile, the GH, acting on behalf of subscriber Ajit
Gokhale, has filed another complaint with the consumer
court, seeking compensation from Shiva Cable
Vision, Baner road, for disconnecting cable connection
without due notice
 The case has been filed under Section 2(G) of the
Consumer Protection Act, 1986

11. CURTAILMENT OF
PUBLIC SECTOR

12.  The new industrial policy curtailed public sector‟s pre-eminent role
in industry and threw open the industrial arena to the private
sector in almost full measure.
 Throughout the previous 40 years “a commanding role for the
public sector” had formed the cornerstone of India‟s industrial
policy. Public sector‟s exclusive domain now stands limited to a
few core industries like arms and ammunition, atomic energy and
railways. As much as three-forth of total industrial activity of the
country is now available for the private sector.
 Another significant measure under the NIP as regards the public
sector is the extension of the purview of the board for Industrial
and Financial Reconstruction (BIFR) to the public sector.
 The government amended the Sick Industrial Companies Act
(SICA) and armed itself with powers to tackle sick PSUs.
 According to the amended provisions of SICA, chronically sick
PSUs would be referred to BIFR for suggestions on rehabilitation.
Through this route, even closure of PSUs has become a real
possibility.

13. Article-1
Articles on Public Sector Employee Motivation --
Success Stories ... Employee Motivation
A supervisor's two most important functions are to develop and motivate their employees
Building a Better Carrot
This terrific article from GovernmentExecutive.com outlines some of the creative employee recognition strategies that Federal
managers have used with great success.
Motivation Secrets
This excerpt from John Baldoni's book Great Motivation Secrets of Great Leaders provides an excellent overview of
the leadership behaviors that contribute to employee motivation. Includes some excellent leadership stories and
summarizes the framework covered in the book.
Employee Engagement
.The Gallup Organization has graciously allowed GovLeader.org to post several articles
from the Gallup Management Journal
Making Creative Use of Employee Recognition Programs
This article discusses the importance of using a mix of employee recognition
techniques throughout the year. Includes free award certificate templates.
The Link Between Innovation and Motivation
This article discusses several techniques managers can use to foster innovation in a
way that can energize employees and improve your operation.
EPIC: The Science and Art of Delegating
This article, from the Spring 2002 issue of the Kravis Leadership Institute's leadership review,
provides a useful framework to help managers delegate more effectively

14. Article-2
Public sector cutbacks: Which IT contracts are at risk?
 As the UK government looks for ways to cut public spending, Tola
Sargeant, research director of TechMarketView examines which major
software and IT services (SITS) contracts are at highest risk of
cancellation, curtailment or 'de-scoping'. Which suppliers are likely to be
most affected as the axe falls and what can they do to minimise the risk?
 A complex issue
 The Labour government is considering which projects could be
sacrificed to cut costs. But, as you might expect, the risk of IT
programmes being cancelled or curtailed is significantly higher if there
is a change of government at the next election, due by June 2010.
 The National Identity Scheme (ID Cards)
 Gordon Brown's government has already announced plans to make ID cards
voluntary, rather than compulsory, at least for the next Parliament.
 National Programme for IT in the NHS (NPfIT)
 Any supplier tendering for these deals will have watched BT, CSC and former LSPs
Accenture and Fujitsu struggle to deliver and demand a very 'fair' price for the work.
Even with nationally agreed frameworks for purchasing such systems, the total cost
could well exceed the keen deals that former NHS IT chief Richard Granger originally
negotiated with the LSPs back in 2003

15. Article-3
9/11, Deep Events, and the Curtailment of U.S. Freedoms
 A war on terror is as inappropriate a cure as a U.S. war on drugs, which as
we have seen in Colombia makes the drug problem worse, not better.
The war on terror and the war on drugs have this in common: both are
ideological attempts to justify the needless killings of thousands –
including both American troops and foreign civilians – in another
needless war.
 The war on terrorism was not declared on September 11 [2001]; rather, it
was redeclared, using the same rhetoric as the first declaration twenty
years earlier.
 events which are systematically ignored, suppressed, or falsified in public
(and even internal) government, military and intelligence documents, as
well as in the mainstream media and public consciousness. Underlying
them is frequently the involvement of deep forces linked to either the
drug traffic or to agencies of surveillance (or to both together), whose
activities are extremely difficult to discern or document
 This brings us to 9/11. On that day, before the last plane had crashed in
Pennsylvania, the White House authorized the institution of so-called COG
plans. There is no doubt that COG was introduced – The 9/11 Report
confirms it twice, on pages 38 and 326.

16. Article-3
9/11, Deep Events, and the Curtailment of U.S.
Freedoms
 One of the post-Watergate reforms so detested
by Vice-President Cheney was the National
Emergencies Act. It requires specifically that “Not
later than six months after a national emergency
is declared, …, each House of Congress shall
meet to consider a vote on a joint resolution to
determine whether that emergency shall be
terminated
 Thanks to 9/11, followed by COG, we now have a
military command in the United States
(NORTHCOM), unprecedented surveillance of
both foreign nationals and U.S. citizens, and plans
for massive detention of folks like you and me, if
our protests should begin to threaten the war
machine.

17. Foreign exchange regulatory
regimes in India - from control to
management

18.  Context of foreign exchange regulations
 There is a German word called zeit-geist which, I am
told, can broadly be translated as the „spirit of time‟.
Nothing better describes the evolution of foreign
exchange regulation in India. Let me start with a brief brush
of history. Soon after independence, a complex web of
controls were imposed for all external transactions through
a legislation i.e., Foreign Exchange Regulation Act
(FERA), 1947.
 Control- to- management: FERA-to-FEMA
 In the 1990s, consistent with the general philosophy of
economic reforms a sea change relating to the broad
approach to reform in the external sector took place. The
Report of the High Level Committee on Balance of
Payments (Chairman: Dr. C. Rangarajan, 1993) set the
broad agenda in this regard.

19. As emphasized by the Rangarajan Committee that there could be capital
outflows from residents in the guise of currentaccount transactions after
current account convertibility, certain safeguards were also built into the
system after FEMA came into effect. For example:
 First, the requirement of repatriation and surrender of export proceeds was
continued, with provision of Exchange Earners Foreign Currency (EEFC) account for
use by exchange earners.
 Second, all authorized dealers were allowed to sell foreign exchange for underlying
current account transactions supported by documentary evidence.
 Third, a proactive approach in the development of money, government securities
and forex markets has been adopted.
 Fourth, effort has been made to improve the information base on transactions in
the forex markets with respect to its nature and magnitude through reports and
statements. The insistence on adequate and timely reporting requirements
from authorised dealers for various foreign exchange transactions also helped
in simplification and liberalisation process.
 Fifth, as a general rule, genuine hedging of exposures under specified conditions is
allowed.

20.  Capital account liberalization approach
 Globalization of the world economy is a reality that makes opening up of the
capital account and integration with global economy an unavoidable process.
Today capital account liberalization is not a choice. Governor, Dr. Reddy once
commented that, “capital account liberalisation is a process and it has to be
managed keeping in view the elasticity in the economy, and vulnerabilities or
potential for shocks. These include fiscal, financial, external, and even real
sector say, oil prices and monsoon
conditions for India.”
 Recent policy initiatives
 India adopted a gradualist approach while initiating a process of gradual
capital account liberalisation in the early 1990s and treated it as a process
rather than an event. In recent past, there has seen significant changes in the
external sector policy of the Reserve Bank.
 Investment overseas
 To further the process of capital account liberalisation, steps were taken to
encourage the strategic presence of the Indian corporates overseas. Overseas
investment are also permitted for undertaking agricultural activities including
purchase of land incidental to this activity either directly or through the overseas
offices

21.  External commercial borrowing
 Keeping in view India‟s external sector
position, as reflected in country‟s various external
debt sustainability indicators, a comprehensive
review of the ECB guidelines was carried out in
consultation with the Government and revised
ECB guidelines, effective February 1, 2004, were
announced to encourage corporates to access
ECB for undertaking real investment activity in
India and for overseas direct investment in JVs
and Wholly Owned Subsidiary (WOS). The
maximum amount of ECB that can be accessed
under the Automatic Route is enhanced to USD
500 million (from USD 50 million previously) per
financial year

22.  Procedural simplifications
 No liberalisation effort is complete unless the customers or the
end-users of the forex market can access the same through
simple and transparent procedures. A number of initiatives have
been taken towards procedural simplification with an objective
of reducing the transaction cost.
 Way ahead
 India‟s capital account liberalisation measures have been
largely effective. Among other factors, suitable policy measures in
respect of the external sector insulated India from the 1997 Asian
crisis. We have moved forward gradually towards Capital
Account Convertibility with a broad reform agenda that
encompasses trade, competition, reform of the financial system
and industrial restructuring.

23. FROM FERA TO FEMA
Summary
Government of India and RBI managed our foreign exchange better than
several other countries.
However, today FERA is doing more harm than good.
The policy of consistent devaluation of rupee is counter productive and
harmful.
We must move much faster towards Foreign Exchange Management Act. It
is good that both GOI & RBI are serious about it.
India is at such a fortunate position in terms of foreign exchange that -
It is possible to start revaluing the rupee;
This can only help us in controlling inflation and simultaneously achieving
growth.
The presentation is more on macro policy level than on technicalities of the
law.
Conclusion is - there is reason for considerable optimism on the FERA front. It
is for the nation to exploit the available potential.

24. Paradigm Shift.
Paradigm shift means,
for the same issue/problem which you want to solve,
Have an entirely new model, a new structure.
Be prepared to consider radically new ideas. Probably
contrary to our thinking so far.
Purposes of FERA
1) To help RBI in maintaining exchange rate stability.
2) To conserve precious foreign exchange.
3) To prevent/regulate Foreign business in India

25. Exports
No country can survive in the long run without
exports paying for imports. However, there can be
phases in the growth cycle of a nation - when
foreign investments can pay for trade deficit. At
present, some of the exports are deeply hurting
India.

26.  Future role of RBI
In future, the role of RBI has to be similar to that of Central Banks
world over.
It is not RBI's function to sit in judgment over several business
decisions to be taken by the businessmen - Indian as well as foreign.
In a fast moving economy, one can not expect that for several
business decisions, the businessman has to go to RBI and take a
"prior permission". This is the bottleneck in expanding Indian
economy.
RBI has to act like SEBI.
Businessman can go ahead and do his business. There will be
prescribed guidelines and regulations for business. It will be
expected that the businessman will follow these guidelines. There will
be no question of taking prior permissions. If anybody violates the
guidelines, RBI/enforcement directorate will strike just as SEBI or
police may strike a violator of law.

27. Foreign Exchange Regulation
Act [FERA]
PREPARED BY:
MANMITSINH VAJA-25

28. CONTENTS
 HISTORY
 INTRODUCTION OF FERA
 OBJECTIVES
 PROVISIONS
 AMENDMENTS

29. FOREIGN EXCHANGE
REGULATION ACT(1973)

30.  Foreign exchange is the system or
process of converting one national
currency into another, and of
transferring money from one country to
another

31. FOREIGN CURRENCY
 Foreign currency means any currency other than Indian
currency.
FOREIGN SECURITY
 Foreign security means any security, in the form of
shares, stocks, bonds, debentures or any other
instrumental denominated or expressed in foreign
currency and includes securities expressed in foreign
currency but where redemption or any form of return such
as interest or dividends is payable in Indian currency.

32. HISTORY
Reason

33. The 1973 law was created during the tenure of Prime
Minister Indira Gandhi with the goal of conserving
India's foreign exchange resources. The country was
facing a trade deficit, which was followed by a
devaluation of the currency and an increase in the
price of imported oil. The act specified which foreign
exchange transactions were permitted, including
those between Indian residents and nonresidents.

34. AN INTRODUCTION TO FERA
 The FERA (Foreign Exchange Regulation Act) deals with laws
which relate to foreign exchange in India
 The laws were made to manage foreign investments in India.
The FERA has its origin at the time of Indian Independence.

35. In the beginning, it was a temporary
arrangement to control the flow of foreign
exchange. In 1957 the act was made
permanent. As the industrialization grew in
India, there was an increase in the foreign
exchange investments. As a result, there
arose a need to protect it.

36. AN INTRODUCTION TO FERA
 The FERA (Foreign Exchange Regulation Act) deals with laws
which relate to foreign exchange in India
 The laws were made to manage foreign investments in India.
The FERA has its origin at the time of Indian Independence.

37. In the beginning, it was a temporary
arrangement to control the flow of foreign
exchange. In 1957 the act was made
permanent. As the industrialization grew in
India, there was an increase in the foreign
exchange investments. As a result, there
arose a need to protect it.

38.  . Accordingly, in 1973 the Foreign Exchange
Regulation Act was amended.
 FERA consists of 81 complex sections
 Under FERA, any offence was a criminal one
which included imprisonment as per code of
criminal procedure, 1973.

39. OBJECTIVE‟S
 prevent the outflow of Indian
currency
 To regulate dealings in foreign
exchange and securities
 To regulate the transaction
indirectly affecting foreign
exchange
 To regulate import and export of
currency and bullion

40.  To regulate employment of foreign
nationals
 To regulate foreign companies
 To regulate acquisition, holding etc of
immovable property in India by non-
residents
To regulate certain payments .
To regulate dealings in foreign exchange and
securities.
To regulate the transactions indirectly affecting
foreign exchange.

41. PROVISIONS
 Regulation of dealing in foreign exchange.
 Restrictions on payments.
 Restrictions regarding assets held by non residents and import
& export of certain currency & bullion .
 Duty on persons entitled to receive foreign exchange and
payment for exported goods.
cont…

42.  Restriction on appointment of certain persons and companies
as agents or technical or management advisers in india
 Restriction on establishment of place of business in india
 Prior permission of Reserve Bank required for taking up
employment in india by nationals of foreign state
 Restrictions on immovable property

43. AMENDMENTS TO THE ACT
 Government proposed to introduce
comprehensive amendments in FERA due
to changes in economic policy
,especially liberalization of industrial
sector and most to open up the
economy through changes in trade
policy and encouragement of foreign
investment .As a result ,the required
changes were announced in budget
speech of 1992-1993. The changes so
introduced by issue of notification by RBI
or Central Government.
 cont…