Political India: Engaging America

India is likely to have a National Competition Policy by January 2012, according to Minister for Corporate Affairs Veerappa Moily. He is here to hold consultations with officials this week.

In comments to a group of journalists, he said: “The draft policy is already before the government. We will take the opinions of the State governments. I have sent [the draft policy] to all the Chief Ministers.”

The Minister noted that numerous discussions were taking place on the draft policy. “Possibly, I may take it to the Cabinet somewhere before December end. Possibly, at the latest by January 2012, we may have a [new competition] policy.”

Mr. Moily and his colleagues emphasised that the aim of the new policy would be to unleash “a second wave of reforms,” following the first wave in 1991 that led to the liberalisation of numerous sectors of the economy.

Chairman of the Committee on the National Competition Policy Dhanendra Kumar indicated that once the new policy and its recommendations were adopted by the government, then all Ministries would be asked to undertake “a close hard look at all the laws, legislation in their charge to see if there are any anti-competitive outcomes as a result thereof.”

Mr. Kumar said the new policy would include a process called the Competition Impact Assessment, which entails the use of a number of parameters to examine whether government policies were imposing any restrictions in terms of the number of players, entry restrictions, exit restrictions or any other such qualifying prerequisites.

There would be a sharp focus on opening up sectors in which the Government of India held significant assets under sole ownership via subsidiaries or under public-private partnerships. In this context, the basic aim was to increase competition, officials said adding, “All the policies of the government should result in enhanced competition... increased entrepreneurship and allow as many players as the economy can sustain.”

Banking and insurance

To a question from The Hindu, an official said that while ideally the banking and insurance sectors would be covered under the new competition policy, he believed that “the Ministry of Finance wants the banking sector to be out of the Competition Act, [though] not out of the policy.”

The principles of the new policy would include: effective prevention of anti-competitive conduct; institutional separation between policymaking, operations and regulations; fair market process; competitive neutrality; fair pricing and inclusionary behaviour; third party access to “essential facilities;” public policies and programmes working towards promotion of competition in the marketplace; and national, regional and international cooperation in competition policy enforcement and advocacy.

Citing the example of the Bharat Sanchar Nigam Limited, an official said, it was “sitting tight” on its copper network. “If you allow third-party access to new players, more and more players can come up.” The official added that especially the core infrastructure that was mostly held by the public sector, including monopoly players, ought to be made available “on fair and equal terms to everybody.”