Law in the works to regulate lobbying

Lobbyists might come under Companies Act; could be asked to register with RoC

Even as lobbying has come under a cloud in the past few years, especially with revelations made by the Niira Radia tapes in the 2G telecom spectrum scam, the government is set to bring in regulations for lobbying by individuals and companies. It is working on modalities to institute a law under which lobbying firms will have to mandatorily register with an authorised department.

Recently, the issue of lobbying had come to the fore when the government last year set up an inquiry committee to examine whether American retail major Walmart lobbied to get access to the Indian market. The committee was set up after an uproar over Walmart’s disclosure to the US Senate that it had spent $25 million on lobbying, including for enhanced market access in India.

According to senior officials involved in the process, the government will take cues from the US’ Lobbying and Disclosure Act, 1995, under which lobbyists in that country are required to register with the Clerk of the House of Representatives and the Secretary of the Senate. Those failing to do so could be punished by a civil fine of up to $50,000. The law requires firms to file their financial activity reports, detailing their list of clients, and ensures transparency in lobbying activities.

Top government departments, including the Department of Industrial Policy & Promotion (DIPP) and the corporate affairs ministry, are involved in the process of framing the law and are said to have already held preliminary meetings on the issue. A top official in the ministry says: “Yes, our opinion has been sought on this. We are of the view that lobbying firms should be mandatorily registered with the Registrar of Companies and come under the preview of the Companies Act.”

A top DIPP official confirms: “We are being consulted and an inter-ministerial consultation has been held. We are in agreement with the idea of a Bill to regulate the lobbying industry.”

In June last year, when the Walmart issue was on the boil, Corporate Affairs Minister Sachin Pilot had kicked off a debate over lobbying in New York, saying all stakeholders in India — individuals, companies, industry chambers — should have a discussion on what constituted legal lobbying. He had argued it was time India clearly defined what amounted to lobbying and what did not. The definition needed a wider discussion, after which the matter could be settled for good, he had said.

Two years ago, the then corporate affairs minister, Salman Khurshid, had suggested corporate lobbying should be within legitimate limits to remain legal. Corporate honchos like Tata Sons Director R Gopalakrishnan, too, had argued a few years ago that lobbying was a fundamental basis to express a point of view. Besides, many others have said the industry chambers representing various interests have been indulging in lobbying for decades.