Procedural Implementation

Procedural Implementation
Procedural Implementation deals with the

different aspects of the regulatory framework
that Indian companies have to consider.
Any organisation which is planning to
implement strategies must be aware of the
regulatory framework within which the plans,
programmes , and projects have to be
approved by the government (central and
state).
Following the procedures laid down for
implementation constitutes an important
component of strategy implementation in
the Indian context :
1) Licensing Procedure
2) Foreign Collaboration Procedure
3) FERA Requirements
4) MRTP Requirements
5) Capital Issue Control Requirements
6) Import and Export Requirements
7) Incentives and Facilities Benefits

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
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
The govt. policy, in general, allows foreign investment &
collaboration on a selective basis in priority areas, export
oriented 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.
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).
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.
The MRTP Act applies to four types of
undertakings:
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 the
country) having assets of Rs. 1 crore & above
Interconnected dominant undertakings.
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 & protection
of 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.
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 free
reserves have to be scrutinized by the CCI.
The legal framework for imports & exports in India is
provided 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 the
import 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.
For capital goods imports, the Capital goods
committee exercises the powers.

The Secretariat for industrial approvals handles the
procedural formalities.

The detailed procedure for import licenses for capital
goods and raw materials is provided in Import Trade
Control Handbook of Rules & Procedures.
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.
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 higher
production 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.
From above sections, it is to be observed that
the role of the govt. is quite comprehensive
and affects practically each and every aspect
of an organization's management especially
activities related to strategic management.

Procedural Implementation

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Procedural Implementation

Procedural Implementation deals with the

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