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Competition policy to be taken to the Cabinet: Moily

Washington: The draft of the National Competition Policy is likely to be placed before the Union Cabinet for approval in December, Indian Corporate Affairs Minister Veerappa Moily has said.

"The draft policy is already before the government. We have written to all the Chief Ministers… Possibly I may take it to Cabinet by the end of December, 2011, and possibly latest by January, 2012, we would have the final policy," said Moily, who is currently on a visit to Washington to meet top officials of the US government.

The new competition policy – which has been billed as the herald of the next wave of economic reforms in the country – seeks to integrate the principles of competition in various economic policies of the government and reap the benefits of the competition therein.

The basic premise of the competition policy – the draft of which has not been made public yet – is that the government should not restrict market activity any more than is necessary to achieve its social and other goals.

The National Competition Policy, its promoters argue, would also help promote good governance by bringing about greater transparency and accountability through competition.

The draft of the competition policy was recently submitted by the Chairman on the National Competition Policy, Dhanendra Kumar.

Once this policy is adopted, Kumar told a group of Indian reporters here, all ministries would be asked to undertake a review of their existing regulations with respect to tendering and procurement to ascertain if there are any anti-competitive elements.

"The idea is to increase competition. All the policies of the government should enhance competition… increase entrepreneurship and allow as many players to come as the economy gets sustained, allow new technologies to some, so opening up the remaining sectors," he said.

"India`s competition policy is of great interest to American investors," said Ron Somers, the president of the US India Business Council, adding that such policies with far-reaching impact are attuned to the need to create a welcoming business environment.

This would be a win-win not just for India and the United States, but also for all of the South Asian country`s Western partners, he said. "The competition policy will affect the business climate in India and, if properly calibrated and balanced, can serve as a tremendous impetus to growth. The USIBC looks forward to working with the Ministry of Corporate Affairs to ensure India`s adoption of international best practices and pro-growth, job-creating polices," Somers said.

India`s National Competition Policy, officials said, would endeavour to preserve the competition process, protect competition and encourage competition in markets so as to optimise efficiency and maximise consumer welfare.

It also aims to build and sustain a strong competition culture within the country, encourage adherence to competition principles in policies, laws and procedures of the central government, state Government and sub-state authorities, with a focus on greater reliance on well-functioning markets.

It also endeavors to ensure competition in regulated sectors and ensure institutional coherence for a synergised relationship between and among sectoral regulators and/or competition regulators and prevent jurisdictional grid locks.

It would strive for a single national market, as fragmented markets are impediments to competition and growth, as well as ensure that consumers enjoy greater benefits in terms of wider choices and better quality of goods and services at competitive prices.

Some of the key principles of the competition policy include effective prevention of anti-competitive conduct; institutional separation between policy making, operations and regulation; fair market process; competitive neutrality; fair pricing and inclusionary behavior; third party access to essential facilities; and public policies and programmes to work toward promotion of competition in the market place.

The draft policy notes that any deviation from the principles of competition should be only to meet desirable social or other national objectives, which should be clearly spelt out.

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