Delays in regulatory clearances can lead to uncertainty, says FM

New Delhi: Delays in regulatory clearances can lead to uncertainty and disrupt commercial timelines, Finance Minister Nirmala Sitharaman said on Tuesday as India negotiates trade deals with various countries, including the US.

According to Sitharaman, also the Corporate Affairs Minister, it is imperative that regulatory frameworks, while maintaining rigorous oversight, also facilitate swift and seamless approvals for combinations that pose no harm to competition.

At the function to mark the 16th Annual Day of the Competition Commission of India (CCI), Sitharaman said the regulator has emerged as a key institution in safeguarding the spirit of liberalisation while checking its excesses and stressed that competition drives efficiency, nurtures innovation, and benefits consumers.

Delving into the aspects of competitive markets, the minister said that not only business conduct but also government policies, laws and regulations should not influence competition as she mentioned that entry barriers, licensing norms or procurement rules can also create distortion. In today’s interconnected and fast-paced global economy, Sitharaman said delays in regulatory clearances can lead to uncertainty, disrupt commercial timelines, and potentially erode the intended value of transactions.

“Globally, it has an impact even as we negotiate free trade agreements with different countries because the ability, the nimbleness and the readiness of regulators is very keenly watched by investors. There is no need for me to underline the importance of that, but that has a very serious connotation when you are looking at fairly within a reasonable time, agreeing on some free trade agreements.

“So, whether it is litigation, whether it is time consumed in litigation or when regulators are less transparent, negotiations can get complicated,” the minister said. India is negotiating trade deals with various countries and blocs, including the US and the European Union.

While pitching for regulatory frameworks to facilitate swift and seamless approvals for combinations that pose no harm to competition, Sitharaman also mentioned about the Green Channel mechanism that has been put in place by CCI. The mechanism, which is a trust-based, risk-calibrated approach, allows for automated approval of combinations that are deemed to have no appreciable adverse effect on competition in order to reduce transaction costs and timelines for benign mergers and acquisitions, she added.