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PRESTIGE INSTITUTE OF MANAGEMENT

GWALIOR

Nidhi Dubey

Procedural Implementation

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Procedural Implementation deals with the

different aspects of the regulatory framework

that Indian companies have to consider.

Any organisation which is planning toimplement strategies must be aware of the

regulatory framework within which the plans,

programmes , and projects have to beapproved by the government (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 Procedure

2) Foreign Collaboration Procedure3) FERA Requirements

4) MRTP Requirements

5) Capital Issue Control Requirements

6) Import and Export Requirements

7) Incentives and Facilities Benefits

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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 new

unit, manufacturing a new article, substantial expansion of

capacity in existing business, and changing location.

Industrial Policy

Resolution, 1956

Industries

(Development &

Regulation) Act,

1951

Industrial

Licensing Policy,

1973

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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

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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 existing

foreign investment in non-priority areas up to 40% of the

equity holding. This limit has been raised to 51% in 34 high-

priority 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.

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Preliminary evaluation by the promoter, obtaining

industrial licence (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)

Finalisation of agreement and clearance from the

Reserve Bank of India (RBI).

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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.

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The MRTP Act applies to four types ofundertakings:

An undertaking having gross assets of Rs. 100 crore

& above

Interconnected Undertakings which together have

assets of Rs. 100 crore or above

A dominant undertaking (one which produce,

supplies, or controls one-third of any goods in thecountry) having assets of Rs. 1 crore & above

Interconnected dominant undertakings.

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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 & protectionof 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.

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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 freereserves have to be scrutinized by the CCI.

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The legal framework for imports & exports in India isprovided 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 theimport 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.

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For capital goods imports, the Capital goodscommittee exercises 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

Control Handbook of Rules & Procedures.

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Project Implementation for putting a strategy

into action requires a consideration of various

incentives, subsidies, & facilities which can

benefit an organisation.

In providing incentives, etc. the govt. does not

play a regulatory or controlling role but a

promotional role, which is manifested in

various forms.

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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 higherproduction 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.

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From above sections, it is to be observed that

the role of the govt. is quite comprehensive

and affects practically each and every aspectof an organization's management especially

activities related to strategic management.

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