Technology refers to the application of knowledge , skill, ideas to the production or improvement of goods and services.
Indicators of Technological development
1.Trends in the Science & Technology expenditure
2.Total number of technical foreign collaborations
3.Assistance by financial institutions for technological development & up-gradation
4.Total value of foreign outward remittances towards foreign technology like royalties, technical fees etc.
5.Investment in R&D infrastructure
India’s R&D expenditure – 0.8 % of GDP - $ 3.2 Bn
80 % India’s R&D expenditure is made by Government
Science & Technology Policy – 2003
1.Advancing scientific temper in the society and integrating it with all national activity
2.Strengthening mechanisms relating to technology development , its evaluation & upgrading
3.Ensuring food , agricultural , nutritional , water and energy security
4.Providing autonomy to all academic and R&D institutions
5.Promoting empowerment of women to all science & technology activities
6.Accomplishing national strategy & security strategies using technological advancement.
India’s Tech. Environment
1.Poor infrastructure for R&D
2.Low govt. Expenditure
3.Inadequate incentives
4.Low remuneration
5.Weak IP protection
6.Competition from MNC
India’s R&D Institutions & programs
Indian Council for Scientific Research ( ICSR )
Department of Science & Technology ( DST )
Indian Council for Medical Research ( ICMR )
Indian space program
Indian power program
R&D by Industry
Research Labs:
BITS, Pilani – Material science , IT, Robotics, Biotech
IISc – Bangalore – Organic,Inorganic,Physical chemistry
IIT, Kanpur – CAD/CAM , Semi-conductor
Technology Transfer
It is the sale, licensing of all forms of industrial property except trade mark
Channel of Technology Flow:
Foreign Direct Investment in Green field investment
Purely Technical Collaborations
Technical –Cum – Financial collaborations
Agencies facilitating Technology flow are:
1. Foreign Investment promotion Board ( FIPB )
2. Foreign Investment promotion Council ( FIPC )
3. Investment promotion & Infrastructure Development Cell ( IP&ID)
4. Secretariat for Industrial Assistance ( SIA )
5. RBI
Based on the type of collaboration approval will be given by:
1.RBI’s Automatic Route
2.SIA / FIPB Route
Technology Transfer
Methods of Technology Transfer:
Training or employment of technical experts
Supply of components , machinery etc.
Licensing agreement
Design transfer
Turn-key project - Build , transfer as per MOU
Tuesday, April 5, 2011
Social Environment
Social environment refers to the nature of social organisation and development of social institutions like Caste, Religion, customs , and socio-economic factors like Class structure, Social mobility , women employment etc.
Impact of Social environment on Business:
Caste – Competitive trading , Weaving , Metal , finance communities
Religion – Prohibition on Pork & Meat , Islamic finance
Customs – Women employment, restriction on overseas employment
Class Structure - Upper , Middle , Manual class
Social mobility – Middle to upper , Manual to Middle etc.
Poverty – Low purchasing power
Education – Availability of Skill & its cost.
Health – Long life – more allocation to senior citizens availability of knowledge.
Social Indicators :
1. Longevity & Health
2. Education
3. Standard of Living
Social responsibility of Business:
Business is affected by society and vice-versa. Society includes Internal & External segments.
Internal segment - owners & employees.
External segment – competitors , customers, suppliers , Government , Local community. No business can be in conflict with any of these segments. Hence the business has to take care of societal interets.
Responsibility to Owners :
Protect capital , provide fair return to owners , ensure longevity of business , Transparency in the operation of business
Responsibility to Employees :
Employees are key recourses of business. Hence fair compensation , welfare,trining, development have to be provided
Responsibility to Consumers :
Consumers are the foundation of business. A dissatisfied customer is a warning signal to business. The business has to ensure the following rights of customers :
1. Right to safety – Provide safe products
2. Right to product knowledge & Education – Provide through advertisements
3. Right to product choice – Avoid monopoly
4. Right to full value – Ensure product utility & performance as advertised
5. Right to justice – Through Consumer Protection Act
Responsibility to Suppliers :
A good relation with suppliers is essential for quality & continuous supply of raw materials & other inputs for continuous production. Responsible business avoid the following :
1. Unfair Practices – Break contract, Delay payment, take advantage of loopholes
Responsibility to Competitors :
To engage in healthy competition , the good business strategies & practices of competitors should be learned & should not engage in the following:
1. Competitors brand assassination
2. Restrictive trade practices – Price discrimination , tie-up sale, exclusive dealership
3. Unfair trade practices- misleading advertisement, tricky prices , unreasonable product guarantee.
Responsibility to Government :
Responsible companies are good corporate citizens. They contribute to the development of industry and economy. These responsibilities include:
1. Pay taxes
2. Provide data
3. Implement government schemes
4. Give preference to government companies
These companies find easier to obtain license, credit from public and supply order from government.
Responsibility to Local community :
Local support is important . The local population suffers due to companies such as water, land,polution. Hence companies should compensate indirectly by providing infrastructure, education, forestation etc.
Environmental Cost Audit
It is the method to understand & evaluate
1. How the environment is affected by companies operation
2. What are the losses both in terms of money and resources that is getting affected by the companies operation
3. How company can contribute to mitigate the loss to society and
4. To assess the performance of organisations with respect to its social responsibility.
This is done through reporting of various responsibilities undertaken by organisations. The reporting is done on various factors viz.
1. Social factors
2. Ecological factors
3. Geographical factors
4. Natural calamities
Social factors:
a. Consumer care
Labeling Quality , quantity, price etc.
b. Environmental care
Upkeep waste, disposal , noise, etc
C. Society care
Contribution to education , health etc
d. Community care
Providing water , road , power , job etc
Ecological factors:
a. Natural resources
Forestation , etc.
b. Soil & Land
Soil conservation, recycle products etc.
C. Plant & Animal
Forestation , relocating animals etc
d. Forest
Forestation , alternate Raw material , Carbon credit etc.
Geographical factors:
a. Resource Endowment
Use resources judiciously & Increase export
b. Weather & Climate factors
Minimize water contamination , air pollution , Global warming
Natural Hazards:
The companies should support government & people in the event of Earthquakes and Cyclones etc.
Impact of Social environment on Business:
Caste – Competitive trading , Weaving , Metal , finance communities
Religion – Prohibition on Pork & Meat , Islamic finance
Customs – Women employment, restriction on overseas employment
Class Structure - Upper , Middle , Manual class
Social mobility – Middle to upper , Manual to Middle etc.
Poverty – Low purchasing power
Education – Availability of Skill & its cost.
Health – Long life – more allocation to senior citizens availability of knowledge.
Social Indicators :
1. Longevity & Health
2. Education
3. Standard of Living
Social responsibility of Business:
Business is affected by society and vice-versa. Society includes Internal & External segments.
Internal segment - owners & employees.
External segment – competitors , customers, suppliers , Government , Local community. No business can be in conflict with any of these segments. Hence the business has to take care of societal interets.
Responsibility to Owners :
Protect capital , provide fair return to owners , ensure longevity of business , Transparency in the operation of business
Responsibility to Employees :
Employees are key recourses of business. Hence fair compensation , welfare,trining, development have to be provided
Responsibility to Consumers :
Consumers are the foundation of business. A dissatisfied customer is a warning signal to business. The business has to ensure the following rights of customers :
1. Right to safety – Provide safe products
2. Right to product knowledge & Education – Provide through advertisements
3. Right to product choice – Avoid monopoly
4. Right to full value – Ensure product utility & performance as advertised
5. Right to justice – Through Consumer Protection Act
Responsibility to Suppliers :
A good relation with suppliers is essential for quality & continuous supply of raw materials & other inputs for continuous production. Responsible business avoid the following :
1. Unfair Practices – Break contract, Delay payment, take advantage of loopholes
Responsibility to Competitors :
To engage in healthy competition , the good business strategies & practices of competitors should be learned & should not engage in the following:
1. Competitors brand assassination
2. Restrictive trade practices – Price discrimination , tie-up sale, exclusive dealership
3. Unfair trade practices- misleading advertisement, tricky prices , unreasonable product guarantee.
Responsibility to Government :
Responsible companies are good corporate citizens. They contribute to the development of industry and economy. These responsibilities include:
1. Pay taxes
2. Provide data
3. Implement government schemes
4. Give preference to government companies
These companies find easier to obtain license, credit from public and supply order from government.
Responsibility to Local community :
Local support is important . The local population suffers due to companies such as water, land,polution. Hence companies should compensate indirectly by providing infrastructure, education, forestation etc.
It is the method to understand & evaluate
1. How the environment is affected by companies operation
2. What are the losses both in terms of money and resources that is getting affected by the companies operation
3. How company can contribute to mitigate the loss to society and
4. To assess the performance of organisations with respect to its social responsibility.
This is done through reporting of various responsibilities undertaken by organisations. The reporting is done on various factors viz.
1. Social factors
2. Ecological factors
3. Geographical factors
4. Natural calamities
Social factors:
a. Consumer care
Labeling Quality , quantity, price etc.
b. Environmental care
Upkeep waste, disposal , noise, etc
C. Society care
Contribution to education , health etc
d. Community care
Providing water , road , power , job etc
Ecological factors:
a. Natural resources
Forestation , etc.
b. Soil & Land
Soil conservation, recycle products etc.
C. Plant & Animal
Forestation , relocating animals etc
d. Forest
Forestation , alternate Raw material , Carbon credit etc.
Geographical factors:
a. Resource Endowment
Use resources judiciously & Increase export
b. Weather & Climate factors
Minimize water contamination , air pollution , Global warming
Natural Hazards:
The companies should support government & people in the event of Earthquakes and Cyclones etc.
Monday, March 28, 2011
EXIM POLICY
The foreign trade of India is guided by the Export-Import policy of the Government of India.
Regulated by The Foreign Trade Development and Regulation Act 1992.
Exim policy contain various policy decisions with respect to import and exports from the country.
Exim Policy is prepared and announced by the central government.
Exim Policy of India aims to developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payment position.
General Objectives of Exim Policy
To establish the framework for globalization.
To promote the productivity competitiveness of Indian Industry.
To Encourage the attainment of high and internationally accepted standards of quality.
To augment export by facilitating access to raw material,intermediate, components, consumables and capital goods from the international market.
To promote internationally competitive import substitution and self-reliance.
Highlights of the New Foreign Trade Policy
1.Special Focus Initiatives: Semi-urban and Rural Area
2.Agriculture : Vishesh Krishi Upaj Yojana and Agri Export Zones
3.Handlooms and Handicrafts: Mark under Market Access Initiatives Scheme and Proposed to Start new SEZ.
4.Gems and Jewellery: Import of gold of 18 carat and above has been permitted under the replenishment scheme
5.Leather and Footwear : Duty free import entitlement of specified items shall be 5% of FOB value of exports during the preceding year
Export Promotion Schemes
1.Assistance to States for Infrastructure Development of Exports [ASIDE]
2.Market Access Initiative [MAI]
3.Marketing Development Assistance [MDA]
4.Towns of Export Excellence
5.Target Plus Scheme
6.Served from India Scheme
7.Service Export Promotion Council
8.New Status Holder Categorization
9.Board of Trade: The role is to advising government on relevant issues connected with Foreign Trade Policy.
Implications of The Foreign Trade
Implications on Indian Economy:
This policy propose to simplify procedures and develop technology and infrastructure.
Implications on Agriculture:
Special Agricultural Produce Scheme has been introduced for promoting the export of fruits, vegetables, flowers, and their value added products.
Implications on Handlooms and Handicraft:
Establishment of Handicraft SEZ and Handicraft Export Promotion Council would promote development of Handloom and Handicraft Industry.
Implications on Gem and Jewellery Sector :
1.This is special thrust area in this policy.
2.Duty free imports of other inputs would give a further boost to this sector.
Implications on Leather and Footwear Industry :
1.Duty free import as a specified percentage of exports.
2.Exemption on customs duty on equipment for effluent treatment plants would help promoting export form this sector.
Implications on Service Industry :
1.An exclusive service promotion council has been set up in order to map the opportunities for key services in key market.
2.Develop strategic market access programmes like brand building in co-ordination with sectoral players and recognize nodal bodies of the service industry.
Annual Supplement to Foreign Trade Policy
Highlights of the Supplement:
1.Inter State Trade Council : To engage the State Government in providing an enabling environment for boosting international trade, by setting up an Inter State Trade Council.
2.Removal of Export Cess : Proposed to abolish cess on export of all agricultural and plantation commodities levied under various Commodity Board Acts.
3.Export Promotion Capital Goods Scheme (EPCG) : This scheme is extended to Agricultural sector, SSI sector, Retail Sectors in order to promote exports from them.
4.Service Export : To upgrade infrastructure in the service related companies.
5.Agri Export : Benefits under ‘Vishesh Krishi Upaj Yojana’ have been extended to exports of poultry and dairy products in addition to export of flowers, fruits, vegetables and their value added products.
6.Package for Marine Sector : Duty free import of specified specialized chemicals and flavoring oils as per a defined list shall be allowed to the extent of 1% of FOB value of preceding financial years export.
7.Advance Licensing Scheme : The Scope of Advance License for annual requirement has been extended to all categories of exporters having past export performance.
8.Duty Free Replenishment Certificate : Brass scrap, Additives, paper board, and dye stuff have been removed from the list of items prescribed for import under DFRC.
9.Procedural Simplification : Proposed to simplify procedures and reduce the documentation requirements so as to reduce the transaction cost of the exporters and thereby increase their competitiveness.
10.EDI Initiatives : DGFT shall introduce an automated electronic system for filing, retrieval and authentication of documents based on agreed protocols and message exchange with other authorities such including Customs and banks.
Regulated by The Foreign Trade Development and Regulation Act 1992.
Exim policy contain various policy decisions with respect to import and exports from the country.
Exim Policy is prepared and announced by the central government.
Exim Policy of India aims to developing export potential, improving export performance, encouraging foreign trade and creating favorable balance of payment position.
General Objectives of Exim Policy
To establish the framework for globalization.
To promote the productivity competitiveness of Indian Industry.
To Encourage the attainment of high and internationally accepted standards of quality.
To augment export by facilitating access to raw material,intermediate, components, consumables and capital goods from the international market.
To promote internationally competitive import substitution and self-reliance.
Highlights of the New Foreign Trade Policy
1.Special Focus Initiatives: Semi-urban and Rural Area
2.Agriculture : Vishesh Krishi Upaj Yojana and Agri Export Zones
3.Handlooms and Handicrafts: Mark under Market Access Initiatives Scheme and Proposed to Start new SEZ.
4.Gems and Jewellery: Import of gold of 18 carat and above has been permitted under the replenishment scheme
5.Leather and Footwear : Duty free import entitlement of specified items shall be 5% of FOB value of exports during the preceding year
Export Promotion Schemes
1.Assistance to States for Infrastructure Development of Exports [ASIDE]
2.Market Access Initiative [MAI]
3.Marketing Development Assistance [MDA]
4.Towns of Export Excellence
5.Target Plus Scheme
6.Served from India Scheme
7.Service Export Promotion Council
8.New Status Holder Categorization
9.Board of Trade: The role is to advising government on relevant issues connected with Foreign Trade Policy.
Implications of The Foreign Trade
Implications on Indian Economy:
This policy propose to simplify procedures and develop technology and infrastructure.
Implications on Agriculture:
Special Agricultural Produce Scheme has been introduced for promoting the export of fruits, vegetables, flowers, and their value added products.
Implications on Handlooms and Handicraft:
Establishment of Handicraft SEZ and Handicraft Export Promotion Council would promote development of Handloom and Handicraft Industry.
Implications on Gem and Jewellery Sector :
1.This is special thrust area in this policy.
2.Duty free imports of other inputs would give a further boost to this sector.
Implications on Leather and Footwear Industry :
1.Duty free import as a specified percentage of exports.
2.Exemption on customs duty on equipment for effluent treatment plants would help promoting export form this sector.
Implications on Service Industry :
1.An exclusive service promotion council has been set up in order to map the opportunities for key services in key market.
2.Develop strategic market access programmes like brand building in co-ordination with sectoral players and recognize nodal bodies of the service industry.
Annual Supplement to Foreign Trade Policy
Highlights of the Supplement:
1.Inter State Trade Council : To engage the State Government in providing an enabling environment for boosting international trade, by setting up an Inter State Trade Council.
2.Removal of Export Cess : Proposed to abolish cess on export of all agricultural and plantation commodities levied under various Commodity Board Acts.
3.Export Promotion Capital Goods Scheme (EPCG) : This scheme is extended to Agricultural sector, SSI sector, Retail Sectors in order to promote exports from them.
4.Service Export : To upgrade infrastructure in the service related companies.
5.Agri Export : Benefits under ‘Vishesh Krishi Upaj Yojana’ have been extended to exports of poultry and dairy products in addition to export of flowers, fruits, vegetables and their value added products.
6.Package for Marine Sector : Duty free import of specified specialized chemicals and flavoring oils as per a defined list shall be allowed to the extent of 1% of FOB value of preceding financial years export.
7.Advance Licensing Scheme : The Scope of Advance License for annual requirement has been extended to all categories of exporters having past export performance.
8.Duty Free Replenishment Certificate : Brass scrap, Additives, paper board, and dye stuff have been removed from the list of items prescribed for import under DFRC.
9.Procedural Simplification : Proposed to simplify procedures and reduce the documentation requirements so as to reduce the transaction cost of the exporters and thereby increase their competitiveness.
10.EDI Initiatives : DGFT shall introduce an automated electronic system for filing, retrieval and authentication of documents based on agreed protocols and message exchange with other authorities such including Customs and banks.
Public Sector Enterprises
The Industrial Policy Resolution of 1956 gave the public sector a strategic role in the Indian economy.
Public enterprises or public sector refers to that sector which is owned and
managed by the central government or the state government or a body set up
by the government to direct the undertaking in the public interest.
Forms or Types of Public Enterprises:
i. Departmental undertakings : Railways, Defence, etc
ii. Statutory Corporations : LIC, the Indian Airlines Corporations, etc
iii. Government Companies : Heavy Electricals Ltd, HMT Ltd, etc
iv. Holding Company : Steel Authority of India Ltd.
Objectives of Public Sector:
1.To promote rapid economic development through creation and expansion of Infrastructure
2.To generate financial resources for development
3.To create employment opportunities
4.To promote redistribution of wealth and income
5.To promote balanced regional growth
6.To promote exports and import substitution
7.To encourage SSIs
Role of Public Sector in Indian Economy:
•Capital Formation
•Development of Infrastructure
•Development of Defence Industries
•Development of Basic and Key industries:
•Iron and steel, cement, etc
•Development of Power projects
•Development of Banking and Insurance
•Balanced Regional development
•Balanced Economic Growth
•Strong Industrial Base
•Economies Of Scale
•Removal of Regional Disparities
•Import Substitution
•Export Promotion
•Expansion of Employment Opportunities
•Source of Revenue to the Government
•Saving in Foreign Exchange
•Better Allocation and Utilisation of Resources
•Diversity of Projects
Problems and Shortcomings of the Public Sector:
1.Mounting Losses
2.Price Policy of Public Enterprises
3.Delay in Completion of the Projects
4.Increase in Costs of Construction
5.Poitical factors influence decision about Location
6.Over-Capitalization
7.Under-Utilization of Capacity
8.Unfavourable Input-output Ratio
9.Use of Manpower Resources in excess of actual requirements
10.Faulty Planning and Controls
11.Inefficient Management
12.Labour Problem resulting in Strikes and Lockouts
13.Higher Capital Intensity -- Low Employment Generation
14.Shortage of Raw materials and Power
Remedies / Measures to be taken for the Performance of Public Sector:
1.Reduction in Unproductive Expenditure
2.Utilisation of Installed Capacity
3.Better Utilisation of manpower and materials
4.Proper Planning and Control
5.Improvement of Efficiency of Management
6.Suitable Price Policy
7.Making them Autonomous
8.Improvement of Industrial Relations
9.Motivation of Staff and Workers
Public enterprises or public sector refers to that sector which is owned and
managed by the central government or the state government or a body set up
by the government to direct the undertaking in the public interest.
Forms or Types of Public Enterprises:
i. Departmental undertakings : Railways, Defence, etc
ii. Statutory Corporations : LIC, the Indian Airlines Corporations, etc
iii. Government Companies : Heavy Electricals Ltd, HMT Ltd, etc
iv. Holding Company : Steel Authority of India Ltd.
Objectives of Public Sector:
1.To promote rapid economic development through creation and expansion of Infrastructure
2.To generate financial resources for development
3.To create employment opportunities
4.To promote redistribution of wealth and income
5.To promote balanced regional growth
6.To promote exports and import substitution
7.To encourage SSIs
Role of Public Sector in Indian Economy:
•Capital Formation
•Development of Infrastructure
•Development of Defence Industries
•Development of Basic and Key industries:
•Iron and steel, cement, etc
•Development of Power projects
•Development of Banking and Insurance
•Balanced Regional development
•Balanced Economic Growth
•Strong Industrial Base
•Economies Of Scale
•Removal of Regional Disparities
•Import Substitution
•Export Promotion
•Expansion of Employment Opportunities
•Source of Revenue to the Government
•Saving in Foreign Exchange
•Better Allocation and Utilisation of Resources
•Diversity of Projects
Problems and Shortcomings of the Public Sector:
1.Mounting Losses
2.Price Policy of Public Enterprises
3.Delay in Completion of the Projects
4.Increase in Costs of Construction
5.Poitical factors influence decision about Location
6.Over-Capitalization
7.Under-Utilization of Capacity
8.Unfavourable Input-output Ratio
9.Use of Manpower Resources in excess of actual requirements
10.Faulty Planning and Controls
11.Inefficient Management
12.Labour Problem resulting in Strikes and Lockouts
13.Higher Capital Intensity -- Low Employment Generation
14.Shortage of Raw materials and Power
Remedies / Measures to be taken for the Performance of Public Sector:
1.Reduction in Unproductive Expenditure
2.Utilisation of Installed Capacity
3.Better Utilisation of manpower and materials
4.Proper Planning and Control
5.Improvement of Efficiency of Management
6.Suitable Price Policy
7.Making them Autonomous
8.Improvement of Industrial Relations
9.Motivation of Staff and Workers
Legal Environment
The government’s sets the legal framework within which business operates.
Legislations defining property and business organizations, laws of contracts and
bankruptcy, mutual obligations of labour and management and a multitude of laws and regulations constraining the way business activities are carried out constitute legal environment of business.
Economic legislations, as these, are often called, have a direct bearing on the business.
Economic legislations can be classified into two categories:
Legislations which have a facilitatory role.
Ex: The Contract Act provides the rules for systematic exchange transactions.
Legislations which are restrictive in nature.
Ex: MRTP Act and FERA
Legislations defining property and business organizations, laws of contracts and
bankruptcy, mutual obligations of labour and management and a multitude of laws and regulations constraining the way business activities are carried out constitute legal environment of business.
Economic legislations, as these, are often called, have a direct bearing on the business.
Economic legislations can be classified into two categories:
Legislations which have a facilitatory role.
Ex: The Contract Act provides the rules for systematic exchange transactions.
Legislations which are restrictive in nature.
Ex: MRTP Act and FERA
COMPETITION ACT
What is competition in the market?
In common parlance, competition in the market means
1.sellers striving independently for buyers’ patronage to maximize profit or other business objectives.
2.buyer prefers to buy a product at a price that maximizes his benefits whereas the seller prefers to sell the product at a price that maximizes his profit.
Why do we need competition in the market ?
Competition
1.makes enterprises more efficient and offers wider choice to consumers at lower prices.
2.ensures optimum utilization of available resources.
3.enhances consumer welfare since consumers can buy more of better quality products at lower prices.
4.beneficial for the consumers, producers / sellers and finally for the whole society since it induces economic growth.
What is meant by unfair competition?
Unfair competition means adoption of practices such as:
1.collusive price fixing,
2.deliberate reduction in output in order to increase prices,
3.creation of barriers to entry,
4.allocation of markets,
5.tie-up sale ,
6.predatory pricing,
7.discriminatory pricing,
What constitutes competition policy?
Competition policy is defined as those Government measures that affect the behavior of enterprises and structure of the industry with the view to promote efficiency and maximize welfare.
There are two elements of competition policy:-
First, a set of policies, such as liberalized trade policy, relaxed FDI policy, de-regulation, etc., that enhance competition in the markets.
Second, legislation to prevent anti-competitive practices with minimal government intervention.
When was the competition law enacted in India?
1.The Monopolies & Restrictive Trade Practices Act, 1969 is the first enactment to deal with competition issues and came into effect on 1st June 1970.
2.The Government appointed a committee in October 1999 to examine the existing MRTP Act for shifting the focus of the law from curbing monopolies to promoting competition and to suggest a modern competition law. Pursuant to the recommendations of this committee, the Competition Act, 2002, was enacted on 13th January 2003.
3.It provides for different notifications for making different provisions of the Act effective including repeal of MRTP Act and dissolution of the MRTP Commission.
Whether all provisions of the Competition Act have been notified?
Certain provisions such as those relating to establishment of the Commission, appointment of Chairperson and Members, appointment of staff, undertaking of competition advocacy have been notified.
Other provisions of the Act are yet to be notified such as those relating to adjudication of anti-competitive practices and regulation of combinations.
What are the objectives of the Competition Act?
The objectives of the Competition Act are
1.to prevent anti-competitive practices,
2.promote and sustain competition,
3.protect the interests of the consumers
4.ensure freedom of trade.
How would the objectives of the Act be achieved?
The objectives of the Act are sought to be achieved through the instrumentality of the Competition Commission of India (CCI) which has been established by the Central Government with effect from 14th October, 2003.
What are the functions of CCI?
1.CCI shall prohibit anti-competitive agreements and abuse of dominance, and regulate combinations (merger or amalgamation or acquisition) through a process of enquiry.
2.It shall give opinion on competition issues on a reference received from an authority established under any law (statutory authority)/Central Government.
3.CCI is also mandated to undertake competition advocacy, create public awareness and impart training on competition issues.
What is an “agreement” under the Competition Act?
An agreement includes any arrangement, understanding or concerted action entered into between parties. It need not be in writing or formal or intended to be enforceable in law.
What is an anti-competitive agreement?
An anti-competitive agreement is an agreement having appreciable adverse effect on competition. Anti-competitive agreements include:-
1.agreement to limit production & supply
2.agreement to allocate markets
3.agreement to fix price
4.bid rigging or collusive bidding
5.conditional purchase/sale (tie-in arrangement)
6.exclusive supply/distribution arrangement
7.resale price maintenance
8.refusal to deal
In common parlance, competition in the market means
1.sellers striving independently for buyers’ patronage to maximize profit or other business objectives.
2.buyer prefers to buy a product at a price that maximizes his benefits whereas the seller prefers to sell the product at a price that maximizes his profit.
Why do we need competition in the market ?
Competition
1.makes enterprises more efficient and offers wider choice to consumers at lower prices.
2.ensures optimum utilization of available resources.
3.enhances consumer welfare since consumers can buy more of better quality products at lower prices.
4.beneficial for the consumers, producers / sellers and finally for the whole society since it induces economic growth.
What is meant by unfair competition?
Unfair competition means adoption of practices such as:
1.collusive price fixing,
2.deliberate reduction in output in order to increase prices,
3.creation of barriers to entry,
4.allocation of markets,
5.tie-up sale ,
6.predatory pricing,
7.discriminatory pricing,
What constitutes competition policy?
Competition policy is defined as those Government measures that affect the behavior of enterprises and structure of the industry with the view to promote efficiency and maximize welfare.
There are two elements of competition policy:-
First, a set of policies, such as liberalized trade policy, relaxed FDI policy, de-regulation, etc., that enhance competition in the markets.
Second, legislation to prevent anti-competitive practices with minimal government intervention.
When was the competition law enacted in India?
1.The Monopolies & Restrictive Trade Practices Act, 1969 is the first enactment to deal with competition issues and came into effect on 1st June 1970.
2.The Government appointed a committee in October 1999 to examine the existing MRTP Act for shifting the focus of the law from curbing monopolies to promoting competition and to suggest a modern competition law. Pursuant to the recommendations of this committee, the Competition Act, 2002, was enacted on 13th January 2003.
3.It provides for different notifications for making different provisions of the Act effective including repeal of MRTP Act and dissolution of the MRTP Commission.
Whether all provisions of the Competition Act have been notified?
Certain provisions such as those relating to establishment of the Commission, appointment of Chairperson and Members, appointment of staff, undertaking of competition advocacy have been notified.
Other provisions of the Act are yet to be notified such as those relating to adjudication of anti-competitive practices and regulation of combinations.
What are the objectives of the Competition Act?
The objectives of the Competition Act are
1.to prevent anti-competitive practices,
2.promote and sustain competition,
3.protect the interests of the consumers
4.ensure freedom of trade.
How would the objectives of the Act be achieved?
The objectives of the Act are sought to be achieved through the instrumentality of the Competition Commission of India (CCI) which has been established by the Central Government with effect from 14th October, 2003.
What are the functions of CCI?
1.CCI shall prohibit anti-competitive agreements and abuse of dominance, and regulate combinations (merger or amalgamation or acquisition) through a process of enquiry.
2.It shall give opinion on competition issues on a reference received from an authority established under any law (statutory authority)/Central Government.
3.CCI is also mandated to undertake competition advocacy, create public awareness and impart training on competition issues.
What is an “agreement” under the Competition Act?
An agreement includes any arrangement, understanding or concerted action entered into between parties. It need not be in writing or formal or intended to be enforceable in law.
What is an anti-competitive agreement?
An anti-competitive agreement is an agreement having appreciable adverse effect on competition. Anti-competitive agreements include:-
1.agreement to limit production & supply
2.agreement to allocate markets
3.agreement to fix price
4.bid rigging or collusive bidding
5.conditional purchase/sale (tie-in arrangement)
6.exclusive supply/distribution arrangement
7.resale price maintenance
8.refusal to deal
New Economic Policy (NEP)
What is it?
in 1990-91-, Govt. was very low on cash, so they changed their economic policy, that's called LPG.
Why should I learn it?
1. Economy worth 100+M in Mains GS
2. International Relations worth 100+ Marks (GS paper 2 in Mains)
Whenever You want to understand india's Diplomatic relations with other nations, you've to see it pre & post cold war. same way
India's economic relation with others, you need to understand from pre & post LPG phase. that's why LPG is imp for international relation questions as well.
Why Govt. was low on cash?
1. First Gulf War = High crude oil prices
2. Fall of USSR (no one to help/ protect us)
3. Loss making Public sector undertakings (PSU)
4. Govt. was investing heavily in PSU, Development schemes, defence sectors.
5. these areas need lot money and it takes long gestation period after you see the recovery / benifit of that invested money.
6. + the usual Licence-Quota-Inspector raj. (explained later)
= Govt. has to borrow a lot from inside and outside the nation to run itself.
= We were so much out of money, that we could buy only 7 day's crude oil for the nation !
How did we get through it.
* We borrowed 7 billion Dollars from IBRD (Internation board of reconstruction & Development ) aka world bank
* But for that, we had to obey World bank's conditions - they wanted us to change our economic policies.
* thus came the LPG.
so LPG is one thing?
No its 3 different things
Liberalization
what does that mean?
* to put end on rules / Regulation to control economy
* Open up various sectors of Economy
wasn't our economy opened before LPG?
* No we had Licence-Quota-Inspector Raj.
what is Licence Raj?
* you want to open a new mobile phone making company you need to get licence from Govt..
Quota Raj
.
* even after you get the licence, you can't produce as many phones as you wish, you'll be given a quota
* say 1000 mobiles per month - you can't manufacture more than that.
Inspector Raj
* there will be a factory inspector, who will come and check how many phones you actually made,
* he gives you the certification only then you can take out your phones from warehouse to retail shops!
so when all 3 combine -its heavy delay, red tape and corruption.
Methods for Liberalisation .(Govt. used following)
End of Licence Raj (Libzn Method #1)
no more licence required for
* starting factory
* closing it or,
* deciding amount of production (= end of Quota Raj)
However you still need license for starting
1. Wine
2. Cigar
3. Hazardous Chem
4. Explosive
5. Drug-Pharma
6. Electronic
7. Aerospace
Dereservation of many things produced by Small scale industries
sectors reserved for PSU -are now only limited to
1. Defence
2. Atom
3. Railways
= means pvt players can't open machine gun making factory.
Finacial Sector Reformed (Libzn method #2)
RBI role reduced from regulator to facilitator
Financial institutions (Stock market, Forex market etc) can take decision with out consulting RBI like
1. freedom to setup new Branches
2. generate resources from India- Abroad
Result = introduction of
1. pvt Sector Banks,
2. Foreign Institutionl investors
3. Merchant Bankers
4. Mutual / Pension Funds
Tax Reform (Libzn method #3)
* Earlier income tax was high, so people used every trick to evade it.
* Now tax rates were reduced, more people came in Tax net.
* Method to collect indirect Taxes - also simplified.
Forex Reform (Libzn method #3)
* to solve BOP Crisis
* Rupee was Devalued = increased inflow of Forex
* Market to Determine Exchange Rate based on supply & demand of foreign currency. (earlier RBI was doing that)
Trade investment reform
* Quota barriers removed
* you don't have to pay high taxes on imported luxery items (gold watches / perfumes) like you had to do previously.
* no more import licence required except for Harardous materials.
Privatisation ( the 'P' of LPG)
Means Sheeding of Ownership / Management of Govt. owned companies.
How? = by Disinvestment = Privatization of PSU
by Govt. ,Selling of part of Equity to Public
Benifit of privatization
1. increased finacial discipline
2. modernisation
3. increased performance of PSU by
4. pvt Capital
5. Managerial tech.
6. FDI incoming
Problem
1. instead of making Navaratna a Global Player,
2. income generated from Disinvestment used to fill Revenue deficit
NavRatna
* = profit making PSUs were given Nav ratna statuts = they get more autonomy in their work
* (Govt. doesn't interfere much when they're buying raw material or taking other decisions.)
Globalisation (the 'G' Of LPG)
its result of L+P
e.g. Outsourcing = Co. hires regular service from External Source (country ) due to Cheap - Skilled Labour Force
Globalisation is facilitated via WTO
What is the use of WTO?
1. to administrater Multilateral Trade Agrement
2. provide Equal opportunity to all in international market
3. Govt.s can't put arbitrary restriction on imports.
Criticism of Globalization / WTO
1. Major volume of International trade betn Developed Nations
2. 3rd World has to open up for 1st world but their products can't get access to 1st world.
How LPG changed India's international relations?
* Before LPG we were doing 'Import Substitution' strategy.
* Means Govt. would either prevent entry of foreign players in our local market or put so much tax on imported items that we can't afford to buy it.
* Import substitution is when we'll (or have to) buy Bajaj Scooter even when Japanese Honda (foreigner) has a cheaper / better vehicle to offer. (but Honda prevented by Govt. using above methods.)
* this sounds great from patriotic point of view,but citizens are denied all luxeries of life, even when they want to enjoy it.
* Result of Import Substion strategy was that we were not importing any luxery electronic items , walkman, VHS players, Stereos, cars etcs from Japan, Taiwan, America, etc.
* thus we didnot have any high business relations with ASEAN or any other nation.
* After LPG, our market was flooded with cheap electronic goodies. Our trade relations with Japan, Singapore, ASEAN, & America improved.
* Once Established, the Economic ties are harder to break than diplomatic / military pacts.
* Thus more economic relations we have with the world= more friends we make.
How LPG changed your life?
* Today you're able to surf internet, buy computer, mobile phones,
* have dozens of toothpastes, cars, bikes to select from...
* all that thanks to LPG.
in 1990-91-, Govt. was very low on cash, so they changed their economic policy, that's called LPG.
Why should I learn it?
1. Economy worth 100+M in Mains GS
2. International Relations worth 100+ Marks (GS paper 2 in Mains)
Whenever You want to understand india's Diplomatic relations with other nations, you've to see it pre & post cold war. same way
India's economic relation with others, you need to understand from pre & post LPG phase. that's why LPG is imp for international relation questions as well.
Why Govt. was low on cash?
1. First Gulf War = High crude oil prices
2. Fall of USSR (no one to help/ protect us)
3. Loss making Public sector undertakings (PSU)
4. Govt. was investing heavily in PSU, Development schemes, defence sectors.
5. these areas need lot money and it takes long gestation period after you see the recovery / benifit of that invested money.
6. + the usual Licence-Quota-Inspector raj. (explained later)
= Govt. has to borrow a lot from inside and outside the nation to run itself.
= We were so much out of money, that we could buy only 7 day's crude oil for the nation !
How did we get through it.
* We borrowed 7 billion Dollars from IBRD (Internation board of reconstruction & Development ) aka world bank
* But for that, we had to obey World bank's conditions - they wanted us to change our economic policies.
* thus came the LPG.
so LPG is one thing?
No its 3 different things
Liberalization
what does that mean?
* to put end on rules / Regulation to control economy
* Open up various sectors of Economy
wasn't our economy opened before LPG?
* No we had Licence-Quota-Inspector Raj.
what is Licence Raj?
* you want to open a new mobile phone making company you need to get licence from Govt..
Quota Raj
.
* even after you get the licence, you can't produce as many phones as you wish, you'll be given a quota
* say 1000 mobiles per month - you can't manufacture more than that.
Inspector Raj
* there will be a factory inspector, who will come and check how many phones you actually made,
* he gives you the certification only then you can take out your phones from warehouse to retail shops!
so when all 3 combine -its heavy delay, red tape and corruption.
Methods for Liberalisation .(Govt. used following)
End of Licence Raj (Libzn Method #1)
no more licence required for
* starting factory
* closing it or,
* deciding amount of production (= end of Quota Raj)
However you still need license for starting
1. Wine
2. Cigar
3. Hazardous Chem
4. Explosive
5. Drug-Pharma
6. Electronic
7. Aerospace
Dereservation of many things produced by Small scale industries
sectors reserved for PSU -are now only limited to
1. Defence
2. Atom
3. Railways
= means pvt players can't open machine gun making factory.
Finacial Sector Reformed (Libzn method #2)
RBI role reduced from regulator to facilitator
Financial institutions (Stock market, Forex market etc) can take decision with out consulting RBI like
1. freedom to setup new Branches
2. generate resources from India- Abroad
Result = introduction of
1. pvt Sector Banks,
2. Foreign Institutionl investors
3. Merchant Bankers
4. Mutual / Pension Funds
Tax Reform (Libzn method #3)
* Earlier income tax was high, so people used every trick to evade it.
* Now tax rates were reduced, more people came in Tax net.
* Method to collect indirect Taxes - also simplified.
Forex Reform (Libzn method #3)
* to solve BOP Crisis
* Rupee was Devalued = increased inflow of Forex
* Market to Determine Exchange Rate based on supply & demand of foreign currency. (earlier RBI was doing that)
Trade investment reform
* Quota barriers removed
* you don't have to pay high taxes on imported luxery items (gold watches / perfumes) like you had to do previously.
* no more import licence required except for Harardous materials.
Privatisation ( the 'P' of LPG)
Means Sheeding of Ownership / Management of Govt. owned companies.
How? = by Disinvestment = Privatization of PSU
by Govt. ,Selling of part of Equity to Public
Benifit of privatization
1. increased finacial discipline
2. modernisation
3. increased performance of PSU by
4. pvt Capital
5. Managerial tech.
6. FDI incoming
Problem
1. instead of making Navaratna a Global Player,
2. income generated from Disinvestment used to fill Revenue deficit
NavRatna
* = profit making PSUs were given Nav ratna statuts = they get more autonomy in their work
* (Govt. doesn't interfere much when they're buying raw material or taking other decisions.)
Globalisation (the 'G' Of LPG)
its result of L+P
e.g. Outsourcing = Co. hires regular service from External Source (country ) due to Cheap - Skilled Labour Force
Globalisation is facilitated via WTO
What is the use of WTO?
1. to administrater Multilateral Trade Agrement
2. provide Equal opportunity to all in international market
3. Govt.s can't put arbitrary restriction on imports.
Criticism of Globalization / WTO
1. Major volume of International trade betn Developed Nations
2. 3rd World has to open up for 1st world but their products can't get access to 1st world.
How LPG changed India's international relations?
* Before LPG we were doing 'Import Substitution' strategy.
* Means Govt. would either prevent entry of foreign players in our local market or put so much tax on imported items that we can't afford to buy it.
* Import substitution is when we'll (or have to) buy Bajaj Scooter even when Japanese Honda (foreigner) has a cheaper / better vehicle to offer. (but Honda prevented by Govt. using above methods.)
* this sounds great from patriotic point of view,but citizens are denied all luxeries of life, even when they want to enjoy it.
* Result of Import Substion strategy was that we were not importing any luxery electronic items , walkman, VHS players, Stereos, cars etcs from Japan, Taiwan, America, etc.
* thus we didnot have any high business relations with ASEAN or any other nation.
* After LPG, our market was flooded with cheap electronic goodies. Our trade relations with Japan, Singapore, ASEAN, & America improved.
* Once Established, the Economic ties are harder to break than diplomatic / military pacts.
* Thus more economic relations we have with the world= more friends we make.
How LPG changed your life?
* Today you're able to surf internet, buy computer, mobile phones,
* have dozens of toothpastes, cars, bikes to select from...
* all that thanks to LPG.
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