Industry chamber Federation of Indian Chambers of Commerce and Industry (FICCI) on Thursday warned that excessive curbs on India Inc's mergers and acquisition (M&A) activities could erode the country's growth momentum as it underlined the need for greater deregulation of the economy.
If India had to grow at double-digit rates and for its companies to become more competitive, there is an urgent need to revisit company laws.
The chamber has called for re-visiting 3,000 central statutes, of which it says 450 deals are directly or indirectly with the economic and commercial decision-making process.
FICCI President Habil Khorakiwala told
: "Indian companies have to contend with problems with regards to procedural laws, which are inefficient and time consuming that would lower the business confidence of investors, shareholders, creditors and employees. FICCI has suggested that the law, which the government is currently working on, only lay down broad parameters and guidelines, and that companies should have a free hand in running their business within this framework."
"The law must provide adequate protection to shareholders and should give more voice to them," added Khorakiwala.
Unhappy with the working of regulators like Ministry of Corporate Affairs and the Securities and Exchange Board of India (SEBI), Khorakiwala said that the test for vanishing companies from the bourses need to be tightened in a volatile market and that both regulators need to strengthen their oversight mechanisms. FICCI sources said that the chamber would meet the government to discuss the Competition Act, which is formulated by the Competition Commission of India. It has been suggested that the provisions in the law be interpreted in principle and not interpret it in a "hard-and-fast" manner.
"The new law should take into account facts that rigid structure, unnecessary controls and regulations inhibit risk taking initiatives of entrepreneurs," said a CEO of a Bangalore based IT company.