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Procedural Implementation

Procedural Implementation deals with the different aspects of

the regulatory framework that Indian companies have to


consider.

Any organisation which is planning to implement strategies


must be aware of the regulatory framework within which the plans, programmes , and projects have to be approved by the government (central and state).

Following the procedures laid down for implementation

constitutes an important component of strategy implementation in


the Indian context :
1) 2) 3) 4) 5) 6)

Licensing Procedure Foreign Collaboration Procedure FEMA Requirements MRTP Requirements Capital Issue Control Requirements Import and Export Requirements

7)
8)

Incentives and Facilities Benefits


Pollution Control & Labour Legislation Requirements

The system of planning rests on three policy documents


Industries (Development & Regulation) Act, 1951
Industrial Licensing Policy, 1973

Industrial Policy Resolution, 1956

Section 30 of the IDR Act, 1951 deals with the Registration & Licensing of industrial undertaking rules.
Under this Act, a license is necessary for establishing a new unit, manufacturing a new article, substantial expansion of capacity in existing business, and changing location.

The licensing procedure requires the applicant to approach the


Secretariat for Industrial Approvals (SIA), which is common for receiving & processing all types of applications related to industrial projects.

Composite applications are dealt by the Project Appraisal Board Application considered by a number of govt. agencies & ministries before a Letter of Intent is issued

After conditions are fulfilled , the Letter of Intent is converted


into an industrial license

The govt. policy, in general, allows foreign investment & collaboration on a selective basis in priority areas, export oriented or high technology industries, and permitting existing foreign investment in non-priority areas up to 40% of the equity holding. This limit has been raised to 51% in 34 highpriority industries. All proposals to set up projects with foreign collaboration require prior government approval.

The regulatory framework deals with the need for foreign technology, royalty payments, terms & conditions for collaborative agreement & foreign investment.

Preliminary evaluation by the promoter, obtaining industrial license (if necessary), or registration with the Directorate General of Technical Development

Obtaining clearance under the MRTP Act Applying for foreign collaboration to Foreign Investment Board Applying for import of capital goods (if required) Finalization of agreement and clearance from the Reserve Bank of

India (RBI).

FEMA Requirements
An Act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange market in India.

If required, organization must fulfill the necessary requirements of the Foreign Exchange Management Act, 2000 which was earlier referred as Foreign Exchange Regulations Act (FERA). Those organizations willing to deal in foreign exchange transactions must ensure that they collect required information in context to provisions of FEMA.

The Monopolies & Restrictive Trade Practices (MRTP) Act,1969 seeks to prevent monopolistic & restrictive trade practices, & the concentration of economic power.

The MRTP Act requires that any substantial expansion which increases the assets or productive capacity or supply for distribution not less than 25%, requires the approval of the central govt.

The issue of capital by companies is regulated through the Capital Issues Control Act, 1956 & the Securities Contracts Regulation Act, 1956 for the purpose of ensuring that investments are made in priority areas, & for the promotion of capital markets & protection of shareholders. For the purpose of strategy implementation, these acts are relevant so far as the provision of financial resources is concerned. Apart from this, these acts also affect mergers & amalgamations as they regulate the capital reorganization plans for mergers.

The Controller of Capital Issues (CCI) under the Dept. of Economic Affairs, Ministry of Finance, is the nodal agency for the administration of the acts. All proposals for fresh issues of equity or preference capital, issue of right shares, bonus shares, debentures, etc. & capitalization of free reserves have to be scrutinized by the CCI.

The legal framework for imports & exports in India is provided by the Import & Export (Control) Act, 1947. The Import Trade Control Policy Book (popularly called the Red Book) is an annual govt. publication which outlines the import licensing policy for individual industries & for different categories of importers (established, actual users & registered).

Through the Import & Export Control Order, the govt. has delegated the power to issue licenses & to administer the act to the Chief Controller of Imports & Exports.

For capital goods imports, the Capital goods committee exercises the powers. The Secretariat for industrial approvals handles the procedural formalities. The detailed procedure for import licenses for capital goods and raw materials is provided in Import Trade Control Handbook of Rules & Procedures.

Project Implementation for putting a strategy into action requires a consideration of various incentives, subsidies, & facilities which can benefit an organization. In providing incentives, etc. the govt. does not play a regulatory or controlling role but a promotional role, which is manifested in various forms.

In line with the objectives laid out in the Industrial Policy resolution, the govt. attempts to achieve employment generation, correction of regional imbalances, promotion of export-oriented industries & utilization of installed capacity through higher production levels & productivity. The Fiscal, Monetary & Budgetory policies of the govt. are aimed at promotion. The govt. also plays a promotional role in terms of purchasing, pricing, distribution, availability of raw materials & provision of infrastructural facilities.

Pollution Control & Labour Legislation Requirements


The Govt. of India has passed several laws relating to the protection of environment. The business organizations should have a good knowledge of such laws. To name few of them are as follows: The Water (Prevention & Control of Pollution) Act, 1974. The Air (Prevention & Control of Pollution) Act, 1981. The Environment Protection Act, 1986, etc The Govt. of India has passed several laws to protect the interest of the workers. Business Organizations should have a good knowledge of such laws, which include: The factories Act, 1948. The Workmen Compensation Act, 1923. The Bonus Act, 1965. The Minimum Wages Act, 1948. The Industrial Disputes Act, 1947, etc

From above sections, it is to be observed that the role of the Govt. is quite comprehensive and affects practically each and

every aspect of an organization's management especially


activities related to strategic management.