Procedural Implementation

8/2/2019 Procedural Implementation

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Procedural Implementation


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Procedural Implementation deals with the different aspects ofthe regulatory framework that Indian companies have toconsider.

Any organisation which is planning to implement strategiesmust be aware of the regulatory framework within which theplans, programmes , and projects have to be approved by thegovernment (central and state).


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Following the procedures laid down for implementation

constitutes an important component of strategy implementation inthe Indian context :

1) Licensing Procedure2) Foreign Collaboration Procedure3) FEMA Requirements4) MRTP Requirements5) Capital Issue Control Requirements6) Import and Export Requirements7) Incentives and Facilities Benefits8) Pollution Control & Labour Legislation Requirements


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The system of planning rests on three policy documents

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 newunit, manufacturing a new article, substantial expansion ofcapacity in existing business, and changing location.

Industrial PolicyResolution, 1956

Industries(Development& Regulation)

Act, 1951

IndustrialLicensing Policy,

1973


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The licensing procedure requires the applicant to approach theSecretariat for Industrial Approvals (SIA), which is common forreceiving & processing all types of applications related toindustrial 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


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The govt. policy, in general, allows foreign investment &collaboration on a selective basis in priority areas, exportoriented or high technology industries, and permitting existingforeign investment in non-priority areas up to 40% of theequity holding. This limit has been raised to 51% in 34 high-priority industries.

All proposals to set up projects with foreign collaborationrequire prior government approval. The regulatory framework deals with the need for foreigntechnology, royalty payments, terms & conditions forcollaborative agreement & foreign investment.


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Preliminary evaluation by the promoter, obtaining industriallicense (if necessary), or registration with the Directorate General ofTechnical 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 ofIndia (RBI).


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FEMA RequirementsAn Act to consolidate and amend the law relating to foreignexchange with the objective of facilitating external trade andpayments and for promoting the orderly development andmaintenance of foreign exchange market in India.If required, organization must fulfill the necessary requirements ofthe Foreign Exchange Management Act, 2000 which was earlierreferred as Foreign Exchange Regulations Act (FERA). Thoseorganizations willing to deal in foreign exchange transactions mustensure that they collect required information in context to provisionsof FEMA.


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The Monopolies & Restrictive Trade Practices (MRTP)Act,1969 seeks to prevent monopolistic & restrictive tradepractices, & the concentration of economic power. The MRTP Act requires that any substantial expansion whichincreases the assets or productive capacity or supply for

distribution not less than 25%, requires the approval of thecentral govt.


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The issue of capital by companies is regulated through theCapital Issues Control Act, 1956 & the Securities ContractsRegulation Act, 1956 for the purpose of ensuring thatinvestments are made in priority areas, & for the promotion ofcapital markets & protection of shareholders.

For the purpose of strategy implementation, these acts arerelevant so far as the provision of financial resources isconcerned. Apart from this, these acts also affect mergers &amalgamations as they regulate the capital reorganizationplans for mergers.


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The Controller of Capital Issues (CCI) under the Dept. ofEconomic Affairs, Ministry of Finance, is the nodal agency forthe 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.


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The legal framework for imports & exports in India is providedby the Import & Export (Control) Act, 1947. The Import Trade Control Policy Book (popularly called the

Red Book) is an annual govt. publication which outlines theimport licensing policy for individual industries & for differentcategories of importers (established, actual users & registered). Through the Import & Export Control Order, the govt. hasdelegated the power to issue licenses & to administer the act tothe Chief Controller of Imports & Exports.


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For capital goods imports, the Capital goods committeeexercises the powers. The Secretariat for industrial approvals handles theprocedural formalities. The detailed procedure for import licenses for capital goods

and raw materials is provided in Import Trade ControlHandbook of Rules & Procedures.


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Project Implementation for putting a strategy into actionrequires 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 ismanifested in various forms.


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In line with the objectives laid out in the Industrial Policyresolution, the govt. attempts to achieve employmentgeneration, correction of regional imbalances, promotion ofexport-oriented industries & utilization of installed capacitythrough higher production levels & productivity.

The Fiscal, Monetary & Budgetory policies of the govt. areaimed at promotion. The govt. also plays a promotional role in terms of purchasing,

pricing, distribution, availability of raw materials &provision of infrastructural facilities.


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Pollution Control & Labour Legislation RequirementsThe Govt. of India has passed several laws relating to the protection ofenvironment. The business organizations should have a good knowledge ofsuch 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, etcThe Govt. of India has passed several laws to protectthe interest of the workers. Business Organizations should have a goodknowledge 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


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From above sections, it is to be observed that the role of theGovt. is quite comprehensive and affects practically each andevery aspect of an organization's management especiallyactivities related to strategic management.


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Documents

Procedural Implementation