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Investment panel moots removal of sectoral caps

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Proposes higher flexibility in labour laws, independent regulator

New Delhi , March 1

The Investment Commission constituted by the Prime Minister under the Chairmanship of Mr Ratan Tata (Chairman of Tata Sons) has recommended several procedural and regulatory changes in the existing investment promotion system. It has also mooted structural changes in local urban elections to remove infrastructural bottlenecks in key cities.

The commission, in its report submitted to the Prime Minister, Dr Manmohan Singh, on Wednesday has recommended the removal or reduction of restrictions on sector-specific investment caps. It has also suggested that the entry route for all sectors other than those considered strategic be put under the automatic route for all investments within the sector cap.

Promoting SEZs

While recommending higher flexibility in labour laws and the separation of the developer of a Special Economic Zone (SEZ), it has pitched for promoting SEZs for key sectors and redefining norms on the basis of scale, investment amount and sector focus.

As urban infrastructure is critical for attracting investments, the Ratan Tata-headed body has recommended a more individual-focussed political structure for key cities. The present party-focussed approach must be replaced with a directly elected mayor in key cities in line with the model followed in China and the US, it added.


The commission has called for a level playing field in sectors with PSU dominance. It has suggested the establishment of an Independent Central Regulatory Commission headed by a Chief Commissioner appointed by the President or the Prime Minister with independent Regulators for each regulated sector.

The recommendations include long-term visibility and consistency of policy, reduction in the number of procedures and making all approvals time-bound and non-discretionary.

The scope for discretionary interpretation must be eliminated to tackle corruption. Key laws and statutes must be updated by using Study Groups or Committees with joint participation from the Government industry.

An effective mechanism is needed to resolve Centre-State issues for the implementation of key policies. A high level, fast-track mechanism must be created for priority sector projects. The availability of skilled manpower for biotechnology, automotive engineering, textile engineering and IT can be increased by establishing private educational institutes with international collaborators, it added.

A single point contact is needed at the Centre to implement policies. It has pointed out that approvals from Ministry of Environment Forests are seen as major impediments. Other recommendations include clear identification of priority sectors and the removal of ineffective dispute resolution mechanisms.

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