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Merger and acquisition policies in India

Combination movement in India has lagged far behind the one in western countries. Indeed, there has hardly been any movement in their direction for there has not been any evolutionary development as in more industrialised countries, but only a merger here or an amalgamation there according to the exigencies of circumstances. Absence of competition, managing agency system, India dualistic outlook, want of adequate impetus, larger member of units etc. are the reason for the slow growth of combination in India. The policy of the government of India in this regard is to encourage growth of combination in some favourable cases as well as to discourage or prevent formation of combination in other cases. Evils of monopoly is one of the disadvantages of combination. Government in this regard always tries to enact some special legislation to control monopoly prices and profits and regulate evils of combination movement. The aim of consumer legislation it is to protect consumers againsts unfair business practices and to maintain competition in the markets. Strict implementation of legislation is more important. Publicity to expose evils of monopoly and to create strong public opinion against monopoly is another step taken by the government. Freedom for restraint on entry into industry through subsidies, tax incentives and facilities in favour of small business as well as active steps and measures to encourage fair and healthy competition in the market price to prevent exploitation of workers, consumers, and the community in general are the strong policies of Government for the control of business combination.
     Nationalization is the last alternative to get rid of monopoly combinations. Abolition of managing agency system was a right step to kill the monopoly business.
     MRTP Act 1969 is required to ensure the prevention of the emergence of the monopolistic business combination resulting into the evils of monopoly and prevention of monopolistic and restrictive trade practices sacrificing consumers and public interest and prevailing free competition in the market place. This Act does not apply to Government companies and public corporation. It also does not apply to corporate societies and trade unions. Government also adopt the following policies for preventation of any evil economic concentration and the growth of monopoly power likely to be arised from business combination.

   (i) Growth of the public sector.
  (ii) Convention of debt of public financial institution to large                business into equity capital sometimes called back door                    nationalisation.
 (iii) Encouragement of small scale and medium scale industries.
 (iv) Expansion of cooperative sector and consumerism.
  (v) Development of the concept of joint sector or national sector,           allowing big business houses to enter core sector (reserved for         government so far)
  (vi) Stricter administration of the prevensions of the Companies            Act and MRTP Act.
  (vii) Ceilling in urban properly.
  (viii) Fiscal and taxation policies.
  (ix) Licensing system
  (x) Judicious control over mergers and amalgamations
  (xi) Comprehensive consumer legislation to eliminate all unfair and restrictive or monopolistic trade practice.


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