Delays in regulatory clearances can hurt India’s free trade negotiations (FTAs) with multiple countries as investors keenly watch these developments, Finance Minister Nirmala Sitharaman said on May 20.
Speaking at the 16th annual day of the Competition Commission of India (CCI), she highlighted how investors are closely observing the responsiveness of regulatory institutions, which can have a far-reaching impact on cross-border commerce and investment decisions.
“Entry barriers, licensing norms, or procurement rules can also create distortion. In today's interconnected and fast-paced economy, delays in regulatory clearance can lead to uncertainty, disrupt commercial timelines, and potentially erode the intended value of transactions,” she said.
The Finance Minister emphasised that the effectiveness and agility of regulators play a pivotal role in shaping the success of ongoing international trade negotiations.
“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're looking at fairly well within reasonable time agreeing on some free trade agreements. So, whether it is litigation, whether it is time-consumed in litigation, or whether when regulators are less transparent, negotiations can get complicated,” she said.
Calling for a balance between robust oversight and facilitation, Sitharaman noted that timely decisions on mergers and acquisitions that do not harm market competition are essential to ensure smoother transactions and reduce investor friction.
“It is therefore imperative that regulatory frameworks, while maintaining rigorous oversight, also facilitate swift and seamless approvals for combinations that pose no harm to competition. I'm also pleased to note that the Commission introduced a green channel mechanism in response to this need, which is a trust-based, risk-calibrated approach, which allows the 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.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
