Policy and regulation can have a significant impact on businesses. Exactly three decades ago, beginning with 1991, the Government had made some radical changes in its policies related to foreign trade, Foreign Direct Investment, exchange rate, industry, fiscal discipline etc. Termed as liberalisation, this was aimed at ending the licence-permit raj by decreasing the government intervention in the business, thereby pushing economic growth through reforms. This opened up the country to the global economy and endeavoured towards creating a more competitive environment in the economy as a means to improving the productivity and efficiency of the system. The shift in the approach necessitated the regulation of sectors where private operators were permitted. Following the broad model adopted by several countries, India established independent regulators to guarantee a level playing field for public and private agencies and to ensure their independence from government departments. It established independent regulators through statutes in a variety of sectors such as electricity, telecommunications, insurance, securities market, and oil and gas.
Policymakers find significant advantages in governance through a regulator where they can build expertise matching the complexities of the task and evolve processes to enforce authority rapidly and proactively and better than the government to take unpleasant, but necessary decisions in larger interests.
Some of the most important regulators in India are:
RBI – Reserve Bank of India
SEBI – Securities and Exchange Board of India
IRDAI – Insurance Regulatory and Development Authority of India
SIDBI – Small Industries Development Bank of India
TRAI – Telecom Regulatory Authority of India
FSSAI – Food Safety and Standards Authority of India
ASCI – Advertising Standards Council of India
AMFI – Association of Mutual Funds in India
ICC – Indian Chemical Council
CDSCO – Central Drugs Standard Control Organisation
AAI- Airport Authority of India
Regulatory bodies are institutionalized for independent management of the sector. Besides these regulatory bodies, CCI (Competition Commission of India), a statutory body has an overarching role as a market regulator across all sectors with the focus on anti-competitive behaviour of enterprises that may distort competition.
Sector rules and regulations are framed ex ante (laying down performance criterion) after consultation with industry and consumers, and reviewed from time to time for correction, whereas the market regulator, CCI, performs mostly ex post functions only to curb concentration in the market.
Here lies the essential difference in their approaches as anti-competitive activities or any conduct that may harm competition usually involve collusion/cartelization or strategies to concentrate in a particular market. Legislation with regard to sectors neither defines cartels or abuse of dominance nor provides the investigative mechanism to establish such economic irregularities. The Competition Act, 2002, has overriding effect and jurisdiction.