Need to support mergers and acquisitions to boost business size, says Finance Minister Arun Jaitley
December, 08th 2014
Finance Minister Arun Jaitley has said there is need to draw ared line to deter curbing of competition by big conglomerates created as a result of merger or acquisition.
"When our own corporates are of moderate size, mergers, acquisitions and consolidation need to be encouraged to promote size," Jaitley said, but added that "we draw the red line (in implementing competition law)...that is why we need an active and responsive regulator".
Inaugurating a workshop organised by the Competition Commission of India on Monday, the minister also underlined the need for applying the "principle of proportionality" while taking into consideration the consequences of competition norms."Another issue: what are the kind of consequences and penalties that we impose in the larger implementation of the law? Do we look at the evil sought to be curbed (or) the capacity of our own economy and therefore apply the principle of proportionality?" the minister asked.Jaitley said "jurisdiction" is emerging with regard to common turf issues on account of multiple regulators. "If two telecom majors are to amalgamate, will there be common turf areas between the telecom regulator and market regulator CCI? How do you build the jurisdiction of the two? Obviously jurisdiction in this area is emerging," he said, while observing that the competition regulator is becoming "extremely mature".
Mergers and acquisitions involving significant business activities and those meeting a certain threshold under competition norms are required to get clearance from CCI.
Speaking on the occasion, CCI chairman Ashok Chawla said competition is very essential in the market as it leads to innovations and is helpful to the consumers at large in order to get best and new products at reasonable and competitive prices.
He said that mergers and acquisitions are recognised the world growth of the market. Chawla, however, cautioned that some mergers and acquisitions adversely affect the competition and, therefore, there is need for regulation.
PINS HOPE ON GST
Jaitley exuded confidence that the much-awaited constitutional amendment bill to roll out the goods and services tax will be introduced in the current session of Parliament.
"We will try and introduce GST (Goods and Services Tax) Bill in this session...GST bill would be taken up by the Cabinet after the empowered committee (of state finance ministers) meeting on December 12," he said on Monday.
The government is keen to introduce GST from April 1, 2016, and the new Finance Commission may be set up ahead of its schedule to look into the issues related to the new indirect tax regime.
GST seeks to create a national market in the country by subsuming a plethora of indirect taxes such as excise duty and service tax at the central level and value-added tax and entry tax on the states front, besides local levies.
The Centre is hopeful of resolving differences over the framework of the proposed tax regime with state governments.
The government is now proposing to keep petroleum within the ambit of the GST as part of the amendment. The amendment is required to allow states to tax services and the Centre to tax goods at the retail level. The GST Constitutional Amendment Bill, which was introduced in Lok Sabha in 2011, had lapsed and the NDA government will need to come up with a fresh bill.