UNIT-3

Economic and Legal Environment: Philosophies of Capitalism,

Socialism and Mixed Economy, Public Private Partnership,
Industrial Corridors, Special Economic Zones (SEZs), Ease of Doing
Business; salient features of ConsumerProtectionAct,1986,
Competition Commission of India (CCI), Foreign Exchange
Management Act (FEMA) and National Company Law Tribunal
(NCLT).
 Learning Outcomes
• After Completion of this lesson, you’ll be able to understand

• The Indian Economic and legal system

• Illustrate flows of income, output and expenditure in a market economy and account
for changes in the level and pattern of economic activity

 Analyse the role of government in the macro economy, including government

macroeconomic policies and the objectives on which they are based

• understand the rules and implications of legal system

• Identify the key international economic institutions and organisations which

influence the business environment in open, market economies
 Internal Assessment
VIDEO PRESENTATION (5Mnts)

Team-1 Public Private Partnership

Team-2 Industrial Corridors, Special Economic Zones (SEZs)
Team-3 Ease of Doing Business
Team-4 ConsumerProtectionAct,1986
Team-5 Competition Commission of India (CCI) Foreign Exchange
Management Act (FEMA)
Team-6 NITI AAYOG & National Company Law Tribunal (NCLT).
 What is Economic System

• To understand meaning of  economic systems, it refers to the role or

model of distribution and production which take place in the
society. Business is considered as an organized economic activity. The
primary objective of any business is to product and sale goods or
services. It exists to serve people living in the society with differ means.
There are some questions which a economic system must answer:
• What to produce and service to provide
• The organized of both the production and services
• What are the methods to distribute products and services
• Everyone knows that resources are limit and must be utilized in a manner
to get maximum output. In country people must decide what to produce
and also define the quantity. This decision involves many factors like
development level of a country, resource available, prevailing culture and
economic and social status of individuals in society.
• Types of Economic Systems
• There are four types of economic systems
namely
• Capitalism or Private Enterprise Economy
• Socialism
• Communism
• Mixed Economy or Government and Private
Sector
 Capitalism
• Capitalism is that part of economic systems where productions
are owned and managed by private individuals and institutions.
Or it is economic individualism wherein the individuals are the
one to decide what and how much to produced and distributed.
They are at liberty to use any technique of production and
produce anything they like. In this economic system, State is to
take care of only internal and external security of the country.
Normally the activities related to Defence, Police, Administration
and Courts of Justice are controlled by the government.
• A private enterprise economy characterized by the existence of
business fluctuations and considerable unemployment. In
capitalism there will be considerable ups and downs – swings of
the business cycle with their inevitable repercussions on the
people.
• Hong Kong ,singapore, newzealand, etc
 Socialism
• In socialist economic system means of production are owned and
managed by the State. Ownership of means of production is not
allowed. In socialism economic activities are carried on mainly for
social gains and personal interest is of less significance. In
this economic system the anti social activities like smuggling and
hoarding find no place. Economic activities are planned with the
motive of social benefit by a central planning authority.
• The individuals in socialistic society surrender their economic
freedom in exchange of assurance of freedom from wants by the
State. It is the responsibility of the State to provide food, lodging
and clothing besides other requirements, by assigning a suitable
job to each one of them.
• Denmark,Finland,Netherlands,Sweden,Norway,Ireland.
 Communism

• Communism is an economic system where means of production are

controlled and managed by a Central State Authority, and there is also a
restriction on the ownership of personal property. In communism
personal belongings, as clothing, watches, and shoes are allowed to be
owned by individuals and the houses are owned by the State.
• Communism is the extreme form of Socialism
• In communism individuals are assigned work by the State and they are
given a bit remuneration of their service normally in kind. People get
ration from Government department. People do not have choice of
their own. They have to be content with whatever is prescribed for
them. State provides all social services such as educational, recreational
and hospital facilities.
• China, Cuba, Laos, North Korea, and Vietnam.
 Mixed Economy

• Mixed Economy has an important public sector, i.e. a number

of industries which are owned and managed by the state. The
State is not the all pervasive owner of all means of production.
Private enterprise is allowed and even encouraged to operate a
large number of industries and to own the various means of
production.
• Thus in this economic system the public and private
sectors exist side by side. It supports reduction in the inequality
of incomes and seeks to achieve it through the fiscal machinery.
It acts as a welfare state and undertakes a large number of
functions and promotes the welfare of the common man.
• Types of Mixed Economy:
• The mixed economy may be classified in two categories:
• Capitalistic Mixed Economy:
• In this type of economy, ownership of various factors of
production remains under private control. Government does
not interfere in any manner. The main responsibility of the
government in this system is to ensure rapid economic growth
without allowing concentration of economic power in the few
hands.
• Socialistic Mixed Economy:
• Under this system, means of production are in the hands of
state. The forces of demand and supply are used for basic
economic decisions. However, whenever and wherever demand
is necessary, government takes actions so that basic idea of
economic growth is not hampered
• Some examples are India, USA, England, and Canada.
Circular Flow of Goods and Services
 Macro environment factors
Unemployment: Unemployment is a term referring to individuals
who are employable and seeking a job but are unable to find a job.
unemployment serves as one of the indicators of an economy’s
status. Unemployment went up to 24 percent in May 2020
Inflation: Inflation is a situation of rising prices in the economy.
Inflation means an increase in the cost of living as the price of
goods and services rise. India’s retail inflation spiked to 6.93 %
GDP: Gross Domestic Product (GDP) is the monetary value of all
finished goods and services made within a country during a
specific period. DP provides an economic snapshot of a country,
used to estimate the size of an economy and growth rate. Current
GDP is 8.9% from 9.6%
GDP = C + G + I + NX
 NITI AAYOG (NATIONAL INSTITUTION FOR
TRANSFORMING INDIA)
• India has undergone drastic changes over the
decades. These changes are the sum total of the
shifts in global scenario. Keeping with the
changing times, NDA Government, in 2014, has
decided to set up
• NITI Aayog (National Institution for Transforming
India), in place of the Planning Commission, as a
• way to serve the developmental aspirations of
the people of India.
• The new institution will be a catalyst to the developmental process; nurturing
an overall enabling
• environment, through a holistic approach to development going beyond the
limited sphere of the Public Sector and Government of India.

This will be built on the foundations of:

a) An empowered role of States as equal partners in national development;

operationalizing the principle of Cooperative Federalism.

b) A knowledge hub of internal as well as external resources; serving as a

repository of good governance best practices, and a Think Tank offering
domain knowledge as well as strategic expertise to all levels of
government.

c) A collaborative platform facilitating Implementation; by monitoring

progress, plugging gaps and bringing together the various Ministries at the
Centre and in States, in the joint pursuit of developmental goals.
 Functions of NITI Aayog
1) Cooperative and Competitive Federalism:
(2) Shared National Agenda:
(3) State’s Best Friend at the Centre:
(4) Decentralized Planning:
(5) Vision & Scenario Planning:
(6) Domain Strategies:
(7) Knowledge and Innovation hub:
(8) Conflict Resolution:
(9) Monitoring and Evaluation:
 NITI AAYOG Vs PLANNING COMMISSION

• Planning Commission had powers to allocate funds to Ministers

and States,this function will be now of FINANCE MINISTRY.NITI
AAYOG is essentially a think tank and a truly advisory body.
• The planning commission formed central plans, on the other
hand NITI AAYOG will not explicate them.NITI AAYOG has been
vested with the responsibility of evaluating the implementation
of policies and programmes and form medium and long term
vision documents rather than 5 year plans.
• The Role of state in NITI AAYOG is more as compare to the
PLANNING COMMISSION. Role of state in PC was
constrained.They had some limited function in the national
development council.
 ACTIVITY

Group Discussion
ON
PLANNING COMMISSION Vs NITI AAYOG
 Public private partnership(ppp)
A public-private partnership (PPP) involves the private sector in aspects of
the provision of infrastructure assets or of new or existing
infrastructure services that have traditionally been provided by the
government. These collaborative ventures are built around the
expertise and capacity of the project partners and are based on a
contractual agreement, which ensures appropriate and mutually
agreed allocation of resources, risks, and returns
The Government of India defines a Public Private Partnership as: “Public
Private Partnership (PPP) Project means a project based on a contract
or concession agreement, between a Government or statutory entity
on the one side and a private sector company on the other side, for
delivering an infrastructure service on payment of user charges.”
• According to Asian Development Bank, the three main needs that
motivate governments to enter into PPP’s for infrastructure are:
1. To attract private capital investment (often to either supplement
public resources or release them for other public needs)
2. To increase efficiency and use available resources more effectively;
and
3. To reform sectors through a reallocation of roles, incentives, and
accountability.
Global PPP Scenario and India
PPPs are not new and have been around for a few centuries. In 16th-
and 17th-century France, roads and bridges were concessioned for
tolls in return for maintaining the routes. However, PPP’s have been
more in vogue in the last few decades as a model of financing,
especially infrastructure projects that the governments are so
interested in.
 Public Private Partnership Models
Design Build (DB)
Design Build Maintain (DBM)
Design Build Operate (DBO)
Under this model, the government contracts
with a private partner to design and build a
facility in accordance with the requirements
set by the government. After completing the
facility, the government assumes
responsibility for operating and maintaining
the facility. This method of procurement is
also referred to as Build-Transfer (BT).
This model is similar to Design-Build except
that the private sector also maintains the
facility. The public sector retains responsibility
for operations.
Under this model, the private sector designs
and builds a facility. Once the facility is
completed, the title for the new facility is
transferred to the public sector, while the
private sector operates the facility for a
specified period. This procurement model is
also referred to as Build-Transfer-Operate
(BTO).
Design Build Operate Maintain (DBOM This model combines the responsibilities
of design-build procurements with the
operations and maintenance of a facility
for a specified period by a private sector
partner. At the end of that period, the
operation of the facility is transferred
back to the public sector. This method of
procurement is also referred to as Build
Operate-Transfer (BOT).

Build Own Operate Transfer (BOOT) The government grants a franchise to a

private partner to finance, design, build
and operate a facility for a specific period
of time. Ownership of the facility is
transferred back to the public sector at
the end of that period.
 Examples
• https://www.youtube.com/watch?v=-gyimy-U
mKM
PROJECT NAME SECTOR FINANCIAL INVESTMENT ($US
CLOSURE YEAR MILLION)
Mumbai-Pune Roads 2020 $868.19
Expressway
Ahmedabad Airports 2020 $98.00
Airport concession
L&T Hyderabad Railways 2011 $3,639.50
Metro Rail Private
Limited
 Industrial Corridor
• A country's industrial growth shapes the overall health of its
economy. The different sectors of an economy are inter-
dependent on each other. Industrial corridors, recognizing this
inter-dependence, offer effective integration between industry
and infrastructure, leading to overall economic and social
development. Industrial corridors constitute world-class
infrastructure, such as: 
• High-speed transportation network – rail and road
• Ports with state-of-the-art cargo handling equipment
• Modern airports
• Special economic regions/industrial areas
• Logistic parks/transhipment hubs
• Knowledge parks focused on catering to industrial needs
• Complementary infrastructure such as townships/real estate
• Other urban infrastructure along with enabling policy framework
• Following five industrial corridor projects have
been identified and approved for
development of the Government of India: 
• Delhi Mumbai Industrial Corridor (DMIC)
• Amritsar Kolkata Industrial Corridor (AKIC)
• Chennai Bengaluru Industrial Corridor (CBIC)
• East Coast Economic Corridor (ECEC) with
Vizag Chennai Industrial Corridor (VCIC) as
Phase-1
• Bengaluru Mumbai Industrial Corridor (BMIC)
• development of these five industrial corridor
projects will be implemented through the
National Industrial Corridor Development and
Implementation Trust (NICDIT).
• These corridors are spread across India, with
strategic focus on inclusive development to
provide a boost to industrialization and planned
urbanization.
• Smart cities are being developed along these
corridors. These cities, with state-of-the-art
infrastructure, will house the new workforce that
is required to power manufacturing, in turn
leading to planned urbanization
• https://www.youtube.com/watch?
v=W3EVOmklLyY
 Special Economic Zone (SEZ)
A special economic zone (SEZ) is an area in a country that is subject to different
economic regulations than other regions within the same country. The
SEZ economic regulations tend to be conducive to—and attract—foreign
direct investment (FDI). FDI refers to any investment made by a firm or
individual in one country into business interests located in another country.
When a country or individual conducts business in an SEZ, there are typically
additional economic advantages for them, including tax incentives and the
opportunity to pay lower tariffs.
• Special Economic Zone – Definition
• An SEZ is an enclave within a country that is typically duty-free and has
different business and commercial laws chiefly to encourage investment and
create employment.
• Apart from generating employment opportunities and promoting
investment, SEZs are created also to better administer these areas, thereby
increasing the ease of doing business.
• SEZ Background
• An SEZ Policy was announced for the very first time in 2000 in
order to overcome the obstacles businesses faced. 
• There were multiple controls and many clearances to be obtained
before starting a venture.
• Infrastructure facilities were shoddy and well below world
standards in India.
• The fiscal regime was unstable as well.
• In order to attract huge foreign investments into the country, the
government announced the Policy.
• The Parliament passed the Special Economic Zones Act in 2005
after many consultations and deliberations.
• The Act came into force along with the SEZ Rules in 2006.
• However, SEZs were operational in India from 2000 to 2006
(under the Foreign Trade Policy).
Note:- A precursor to the SEZs, the Export Processing Zones were set
up in India well before. The first EPZ came up in Kandla in 1965 to
promote exports. This was the first EPZ not only in India but in all
of Asia as well.
• Special Economic Zones Act, 2005
• “It is defined as an Act to provide for the establishment,
development and management of the Special Economic Zones for
the promotion of exports and for matters connected therewith or
incidental thereto.”
• The chief objectives of the SEZ Act are:
• To create additional economic activity.
• To boost the export of goods and services.
• To generate employment.
• To boost domestic and foreign investments.
• To develop infrastructure facilities.
• SEZs Facilities & Incentives
• The government offers many incentives for companies and businesses established in
SEZs. some of the important ones are:
• Duty-free import or domestic procurement of goods for developing, operating and
maintaining SEZ units.
• 100% Income tax exemption on export income for SEZ units under the Income Tax Act
for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export
profit for next 5 years. (Sunset Clause for Units will become effective from 2020).
• Units are exempted from Minimum Alternate Tax (MAT).
• They were exempted from Central Sales Tax, Service Tax and State sales tax. These have
now subsumed into GST and supplies to SEZs are zero-rated under the IGST Act, 2017.
• Single window clearance for Central and State level approvals.
• There is no need for a license for import.
• In the manufacturing sector, barring a few segments, 100% FDI is allowed.
• There is no need for separate documentation for customs and export-import policy.
• (Sunset Clause: Clause specific to certain laws or provisions saying that the law will
expire after a particular date.)
• Companies try to minimise giving taxes by taking advantage of depreciation,
deductions, exemptions, etc from the government. So the government imposes a
Minimum Alternate Tax or MAT as an advance tax on these companies
• SEZs in India
• Currently, about 240 are operational in the
country. About 64% of the SEZs are
located in five states – Tamil Nadu,
Telangana, Karnataka, Andhra Pradesh
and Maharashtra.
• The following table gives data about the
SEZs as of February 2nd, 2020.
SEZs approved 421
SEZs notified 354
SEZs approved in-principle 33
SEZs operational 240
 caselet
Postage stamps have been unveiled to commemorate 140 years of
existence of the country’s first stock exchange the Bombay Stock
Exchange (BSE). The setting up of BSE is considered to be the
greatest revolution that took place in the financial markets in India
as it acts as a key driver for economic growth of a country. This is
due to the fact that there exists a strong correlation between
economic growth and capital accumulation.

In the context of the above case:

• Identify the dimension of business environment of India being
referred here.

• State any three factors which broadly affect the dimension of

business environment of India as identified in part (a) of the
question.
 Ease of Doing Business
Ease of doing business is an index published by the World Bank. It is an
aggregate figure that includes different parameters which define the ease of
doing business in a country.
 It is computed by aggregating the distance to frontier scores of different
economies. The distance to frontier score uses the ‘regulatory best practices’
for doing business as the parameter and benchmark economies according to
that parameter.
 For each of the indicators that form a part of the statistic ‘Ease of doing
business,’ a distance to frontier score is computed and all the scores are
aggregated. The aggregated score becomes the Ease of doing business index.

Indicators for which distance to frontier is computed include construction

permits, registration, getting credit, tax payment mechanism etc. Countries
are ranked as per the index.
 Rankings
• The Ease of Doing Business (EoDB) index is a ranking system established by the World
Bank Group. In the EODB index, ‘higher rankings’ (a lower numerical value) indicate
better, usually simpler, regulations for businesses and stronger protections of property
rights.
• The research presents data for 190 economies and aggregates information from 10
areas of business regulation:
• Starting a Business
• Dealing with Construction Permits
• Getting Electricity
• Registering Property
• Getting Credit
• Protecting Minority Investors
• Paying Taxes
• Trading across Borders
• Enforcing Contracts
• Resolving Insolvency
• Rankings and weights on each of the mentioned parameters are used to develop an
overall EoDB ranking. A high EoDB ranking means the regulatory environment is more
conducive for starting and operating businesses.
India jumps to 63rd position in World Bank's Ease of Doing Business 2020 report
• India’s score remains dismal on registering property,
where it ranks 166. While it takes 69 days to register a
piece of property in India, in Newzealand this can be
done in a single day!
• What is the Importance of the Doing Busines Rank?
• Doing Business Rank attempts to quantitatively capture
the regulation that small- and medium-sized firms
encounter in 190 countries around the world.
• EODB rankings are carefully evaluated by foreign
investors when they look to start a firm in any country.
 problems with the Ease of Doing business ranking?

• In large economies, only two cities are taken for

consideration under the rankings. This includes the
largest and the second largest business city. In India, it is
done for Delhi and Mumbai. Thus, it does not give a true
reflection of the economy. If ease of doing business was
calculated across other areas then the performance
would most certainly have dropped.
• It only measures the policy side i.e. government efforts
and ignores market forces and other factors like human
resource.
 Challenges for Ease of doing business in India
 It takes approximately a month to start a business in India
while the OECD average is 12 days. Though some states like
Telangana have eased up the procedures for starting a
business, this is yet to be achieved on a pan India basis.
 On his visit, the Prime Minister of Singapore has cited land
acquisition, over-regulation, and legal hassles as bottlenecks
for ease of doing business in India. This signals the hurdles
faced by investors in working with India.
 A plan for the industrial park in Gujarat with Singapore has
been abandoned due to issues of land acquisition.
 Lack of coordination among different government ministries
and departments, Central and State governments.
 Prospects and Way forward
India fares among the best in access to credit in the South Asian
region. Access to credit should be assured for small businesses and
rural entrepreneurs through penetration of formal banking channels
into rural areas.
Effective implementation of reforms like GST, Insolvency and
Bankruptcy code is needed. The limit of 180 days prescribed in
Insolvency and Bankruptcy code should be pertained
States can work towards providing a robust online system for
registering property.
Digitizing land records, improving titling and streamlining procedures
for transfer of property should be taken up.
A fair judicial and executive system need to be in place to achieve the
confidence of domestic and foreign investors.
Fast track commercial courts, paper-less courts need to be set up to
speed up the judicial processes.
 ConsumerProtectionAct,1986
• Consumer Protection is a term given to a practice wherein we need
to protect the consumer from the unfair practice, educating them
about their rights and responsibilities and also redressing their
grievances.
• The redressal agency has been established in order to safeguard
the interests of the consumers which has following three levels:
• o District Forum
• o State Commission
• o National Commission
Right to Safety: The protection must be against any product which
could be hazardous to their health – Mental, Physical or many of the
other factors.
Right to Information: The product packaging should list the details
which should be informed to the consumer and they should not
hide the same or provide false information.
Right to Choose: This also means consumer should have a variety of
articles to choose from. Monopolistic practices are not legal.
Right to Heard: If a consumer is dissatisfied with the product
purchased then they have all the right to file a complaint against it.
Right to Seek Redressal: In case a product/service is unable to satisfy
the consumer then they have the right to get the product replaced,
compensate, return the amount invested in the product
Right to Consumer Education: Consumer has the right to know all the
information and should be made well aware of the rights and
responsibilities of the government.
 Case-study

• Dipika Pallikal wins consumer case against Axis Bank

•A consumer court in Chennai has directed Axis Bank to pay a
compensation of Rs 5 lakh to Dipika Pallikal, squash champion and
Arjuna awardee, for "deficiency in service". The bank was also
directed to pay her Rs 5,000 as expenses The Padma Shri recipient, in
a petition filed in 2012, said she had faced humiliation and loss of
reputation, as a transaction using the bank’s debit card at a hotel in
the Netherlands’ Rotterdam failed, though she had a balance of more
than 10 times the billed amount in her account. The bank claimed the
incident was a case of “force majeure”, which means a natural and
unavoidable catastrophe or an act of god, and beyond their control.
• Besides, a cheque of Rs 1 lakh, issued by the government of India as
an award to Pallikkal, was returned to the sportsperson. The bank,
later, blamed it on a technical error.
• It was then that Pallikal, ranked Number 1 in India and
11th in the world, approached the consumer redressal
forum, seeking compensation of Rs 10 lakh.
• “This is a victory for the consumers of India. It reaffirms
our faith in consumer courts. It will motivate other
consumers who are wronged by service providers to
stand up and fight for justice. A big thank you to all
those who stood by me,” said Pallikal, in a statement.
• “Service providers like banks cannot leave their
customers in the lurch, wash their hands of and hide
behind disclaimers like force majeure. That’s the stern
message this verdict will send out to all those who
shortchange consumers,” said Sanjay Pinto, her lawyer,
in the statement.
 Competition Commission of India

 Competition Commission of India (CCI) is India’s competition

regulator.
 It is a statutory body in charge of enforcing the Competition Act,
2002 which received the President’s assent in 2003.
 This Act was amended by the Competition (Amendment) Act, 2007.
 This led to the establishment of the CCI and the Competition
Appellate Tribunal.
 Its aim is to establish a competitive environment in the Indian
economy.
 This is done through proactive engagement with all the
stakeholders, including industry, the government, and international
jurisdictions.
 What is Competition Act, 2002?

The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP

Act) was repealed and replaced by the Competition Act, 2002, in
accordance with the recommendations by Raghavan Committee.
This Act was amended by the Competition (Amendment) Act, 2007.
The provisions of the Act relating to the anti-competitive agreements
and abuse of dominant position were notified on May 20, 2009.
This Act prohibits anti-competitive agreements and abuse of a
dominant position of enterprises.
It also regulates combinations (acquisition, acquiring of control and
Mergers and Acquisition) that may cause substantial adverse effects on
the competition within India.
As previously mentioned, through the Amendment Act, the Competition
Commission of India and Competition Appellate Tribunal have been
established.
The Indian government had replaced the Competition Appellate Tribunal
(COMPAT) with the National Company Law Appellate Tribunal (NCLAT) in
2017.
 What is the Composition of CCI?
• The CCI consists of:
• Chairperson
• Not less than two and not more than 10 members who shall be
appointed by the Centre.
• Currently, the CCI has a Chairperson and two members.
• The commission’s Chairperson and other members shall be full-
time Members.
• Eligibility: The Chairperson and every other Member should be a
person of ability, integrity, and standing and who, has been, or is
qualified to be a judge of a High Court, or has special knowledge
of, and profession experience not less than 15 years in
international trade, economics, business, commerce, law,
finance, accountancy, management, industry, public affairs,
administration or in any other matter which, in the opinion of the
Central Government, may be useful to the commission.
 What are the functions of CCI?
• Making sure that the Indian market works for the benefit and welfare of the consumers.
• Ensuring fair and healthy competition in the economic activities of the nation for faster
and inclusive economic growth and development.
• Execution of competition policies that enables the efficient utilization of economic
resources.
• Effective undertaking competition advocacy.
• Spreading awareness on the benefits of competition among the stakeholders to create
and foster competition culture in the Indian economy.
• The CCI is an antitrust ombudsman for smaller organizations which are not able to
defend themselves against large corporations.
• It also has the power to notify organizations that sell in India if it feels they are creating
negative impacts on competition in India’s domestic market.
• The Competition Act ensures that no enterprise abuses its dominant position in the
market through the control of supply, manipulation of the purchase prices or adopting
practices that may refute market access to other competing firms. The CCI is in charge
of enforcing this law.
• A foreign company that seeks entry into India through an acquisition or merger should
abide by India’s competition laws and will come under the scrutiny of CCI.
 Why do we need Competition laws?
• Uphold free enterprise: The Competition laws have been described as the
Manga Carta(a document constituting a fundamental guarantee of rights and
privileges)of free enterprise. Competition plays a significant role in preserving
economic freedom and the free enterprise system.
• Security against market distortions: These laws are necessary to prevent the
market from being harmed due to failures and distortions, and there is a
constant risk of various players resorting to anti-competitive activities such as
cartels and abuse of dominant position in the market, etc. These activities can
adversely impact economic efficiency and consumer welfare. Therefore, there is
a need for competition laws and CCI as it acts as a regulative force that can
establish control over economic activities.
• Promotion of domestic activities: During the era of the domination of
globalisation, there is a need for an effective competition law and commission
that can ensure the continued viability of the domestic industries while also
carefully balancing the attaining of the foreign investment benefit and
competitive market.
 Competition Commission of India – Recent News

• A group of 15 startup founders held a virtual meeting with the Competition Commission
of India (CCI) recently to apprise the regulator about Google’s anti-competitive policies in
India. The discussion involved Google’s recent imposition of its Play Store billing system
on Indian developers, as well as the 30% commission the company charges for selling
digital goods and services through the system.
• Vide its order dated 10 July 2020 (Order), the Competition Commission of India (CCI)
found that ten (10) enterprises had indulged in cartelization during the period 2009 to
2017. The Advisory further clarified that businesses were not allowed to take advantage
of COVID-19 to contravene any of the provisions of the Indian Competition Act (`Act’).
• Considering restrictions placed on physical movement, CCI immediately allowed
flexibility within its procedures—including electronic filing of antitrust cases as well as
combination notices including Green Channel notifications and deferment of non-urgent
cases. CCI also made the Pre-Filing Consultation (PFC) facility for combinations available
through video conference. A dedicated helpline was set up to attend to the queries of
stakeholders during the pandemic. Relevant public notices were regularly put on the
website of CCI for information of the relevant stakeholders. CCI has also put in place a
mechanism to conduct proceedings through video conferencing to avoid physical contact
and presence.
 Foreign Exchange Management Act (FEMA)

• Foreign Exchange Management Act, 1999 (FEMA) came into force by

an act of Parliament. It was enacted on 29 December 1999. This new
Act is in consonance with the frameworks of the World Trade
Organisation (WTO). It also paved the way for the Prevention of
Money Laundering Act, 2002 which came into effect from July 1,
2005.
• It is a set of regulations that empowers the Reserve Bank of India to
pass regulations and enables the Government of India to pass rules
relating to foreign exchange in tune with the foreign trade policy of
India.
• FEMA replaced an act called Foreign Exchange Regulation Act (FERA).
 Main Features of Foreign Exchange Management Act, 1999

 It gives powers to the Central Government to regulate the flow of payments to

and from a person situated outside the country.
 All financial transactions concerning foreign securities or exchange cannot be
carried out without the approval of FEMA. All transactions must be carried out
through “Authorised Persons.”
 In the general interest of the public, the Government of India can restrict an
authorized individual from carrying out foreign exchange deals within the current
account.
 Empowers RBI to place restrictions on transactions from capital Account even if it
is carried out via an authorized individual.
 As per this act, Indians residing in India, have the permission to conduct a foreign
exchange, foreign security transactions or the right to hold or own immovable
property in a foreign country in case security, property, or currency was acquired,
or owned when the individual was based outside of the country, or when they
inherit the property from individual staying outside the country.
 What is the penalty for violation of FEMA Act?

• Under Fema, the adjudicator (an officer with

the ED) can impose a penalty three times the
size of the contravention involved where the
sum is quantifiable. In case the contravention
is not quantifiable, the penalty is set at Rs 2
lakh. Further, where the violation is a
continuing one, an additional penalty of Rs
5,000 per day of contravention can be
imposed.
 National Company Law Tribunal (NCLT)

• The National Company Law Tribunal or NCLT is a quasi-

judicial body in India adjudicating issues concerning
companies in the country. It was formed on June 1, 2016,
as per the provisions of the Companies Act 2013 (Section
408) by the Indian government.
• NCLT was formed based on the recommendations of the
Justice Eradi Committee that was related to insolvency
and winding up of companies in India.
• As of now, the Ministry of Corporate Affairs has 15 NCLT
benches
• Each Bench is headed by a President, 16 judicial
members, and 9 technical members. The current and
the first President of the NCLT is Justice MM Kumar.
• Aspirants should also know that the National
Company Law Appellate Tribunal (NCLAT) is
a tribunal which was formed by the government
under Section 410 of the Companies Act, 2013.
NCLAT is responsible for hearing appeals from the
orders of the National Company Law Tribunal.
• Decisions taken by the NCLT can be appealed to the
National Company Law Appellate Tribunal (NCLAT).
The decisions of the NCLAT can be appealed to
the Supreme Court on a point of law.
 NCLT Functions
• All proceedings under the Companies Act such as arbitration,
arrangements, compromise, reconstruction, and winding up of the
company will be disposed of by the Tribunal.
• The NCLT is also the Adjudicating Authority for insolvency proceedings
under the Insolvency and Bankruptcy Code, 2016.
• In the above-mentioned subjects, no civil court will have jurisdiction.
• The NCLT has the authority to dispose of cases pending before the
Board for Industrial and Financial Reconstruction (BIFR), as well as,
those pending under the Sick Industrial Companies (Special Provisions)
Act, 1985.
• Also to take up those cases pending before the Appellate Authority for
Industrial and Financial Reconstruction.
• It can also take up cases relating to the oppression and
mismanagement of a company.
 Significance of NCLT

• The formation of the NCLT and the NCLAT is also a significant

step towards attaining fast and efficient resolution of
disputes relating to affairs of the Indian corporates. Being
the sole forum dealing with company related disputes, these
tribunals would also eliminate any scope for overlapping or
conflicting rulings and minimise delays in resolution of
disputes, thus, proving to be a boon for litigants.
• Instead of getting different decisions on the same matter by
different High Courts, consolidation of jurisdiction will help
the Tribunal Members and Judges in delivering uniform
decisions and thereby removing any ambiguity and friction.
 Major Functions of NCLT

• Registration of Companies
• Transfer of shares
• Deposits
• Power to investigate
• Freezing assets of a company
• Converting a public limited company into a
private limited company