Draft national competition policy ready

A draft national competition policy that aims to introduce competition principles in the government's commercial activity such as merchandise procurement is ready.

An 18-member committee headed by former finance secretary Vijay L Kelkar has prepared the draft of the national competition policy. Its final version is expected to be sent to the Ministry of Company Affairs soon, which would then start the process to notify the policy.

The competition policy is independent of the passage of the Competition Bill, which was introduced in Parliament in March 2006 but has not yet been approved. It will apply only to the government's commercial activity and will guide its different arms in dealing with other entities.

The policy's broad thrust is the introduction of competition principles and transparency in the government's commercial activity. For instance, the policy would examine the way in which government procurement can done in the context of competitive neutrality.

Pradeep Mehta, secretary general of an advocacy group CUTS and member of the committee drafting the policy, described competitive neutrality in this context as the way in which a government arm could adopt a non-discriminatory approach between public and private sector competitors during procurement.

Another area where the competition policy may try to influence the government's approach is in the principle adopted to provide access to infrastructure controlled by state-owned companies.

In the telecom industry for instance, state-owned company BSNL has refused to allow private companies to use its last mile access to consumers. Similar issues are expected to crop up in the area of gas pipelines.

The policy may require the government to carry out a competition audit of all existing policies such as reservation of manufacture of some products for small scale industries.

All areas of the government's commercial activity may not be amenable to competition principles on account of its different obligations. "We realise there can be exceptions, but they have to be transparent," said Mehta.

The application of a national competition policy would not be sweeping. In areas such defence services, the policy would not be applicable.