Unit 2: Legal, public sector and ecological environment

• Companies Act, 2013: incorporation, governance (independent directors, committees), CSR (Section 135), audit and NFRA, class actions, fraud (Section 447); administered by MCA; NCLT/NCLAT.
• SEBI Act, 1992 and LODR Regulations for listed companies; IBC, 2016 for insolvency; LLP Act, 2008.

• Replaced FERA, 1973; came into force on 1 June 2000; objective — facilitate external trade and payments and promote orderly development of the forex market.

• Key provisions: current account transactions are free (except those restricted by the Central Government — Schedule I, II, III); capital account transactions regulated by RBI (FDI, ECB, investments abroad); authorised persons (banks, money changers); Liberalised Remittance Scheme (US$ 2,50,000 per year); penalties up to three times the amount involved; compounding of contraventions.

• Framed under the Foreign Trade (Development and Regulation) Act, 1992 by the Ministry of Commerce (DGFT).
• Foreign Trade Policy 2023: open-ended (no fixed five-year term), shift from incentives to remission (RoDTEP, RoSCTL), export target US$ 2 trillion by 2030, Districts as Export Hubs, e-commerce exports, amnesty for EPCG/AA defaults, rupee trade settlement.
• Schemes: Advance Authorisation, EPCG, EOUs, SEZs, Towns of Export Excellence, status holders.

Replaced the MRTP Act, 1969; the Competition Commission of India (CCI) became functional in 2009.

• Penalties: up to 10% of average turnover (now global turnover for abuse cases under the 2023 amendment); for cartels up to three times profit or 10% of turnover.
• Appeals: to the NCLAT (since 2017) and then the Supreme Court.
• 2023 amendments: settlement and commitment mechanisms, leniency plus, deal value threshold.

• Empowers citizens to obtain information from public authorities — application to the Public Information Officer (PIO); reply within 30 days (48 hours for life and liberty); fee ₹10.
• Exemptions (Section 8): national security, cabinet papers, commercial confidence, personal information, etc.
• Appeals: first appellate authority → Central/State Information Commission.
• Relevance to business: transparency in tenders, licences and regulatory decisions; PSUs are public authorities under RTI.

After independence, public sector enterprises (PSEs) led industrialisation in heavy industry, infrastructure and banking. Since 1991 their role has changed: disinvestment, greater autonomy (Maharatna, Navratna and Miniratna status), competition with private firms and a focus on efficiency and profitability.

Relevance of the public sector today

• Strategic sectors: defence, atomic energy, railways, space and mining need public control.
• Infrastructure and balanced regional growth: power, roads, steel plants in backward regions.
• Social objectives: affordable services (public sector banks in rural areas, LPG for the poor under Ujjwala).
• Countervailing power: prevents private monopolies; stabilises prices (FCI, oil marketing companies).
• Resource mobilisation: dividends and disinvestment proceeds fund the budget.

Problems of public enterprises

• Low returns on investment and losses in several units.
• Political interference and lack of autonomy.
• Over-staffing and slow decision-making.
• Under-utilisation of capacity and outdated technology.

Public sector reforms

• Memorandum of Understanding (MoU) system: annual performance targets agreed between the PSE and its ministry.
• Bank mergers (2019–20): ten public sector banks merged into four, reducing PSBs to twelve.

• Deficit financing: financing a budget deficit by borrowing from the central bank (money creation) or, more broadly, by borrowing.
• Effects: may fund development and counter recessions, but excessive use causes inflation, crowding out of private investment and rising public debt.
• India: ad hoc treasury bills abolished in 1997 (replaced by Ways and Means Advances); FRBM Act (2003) limits deficits; RBI barred from primary market purchase of G-secs except in specified circumstances.

The syllabus names the Consumer Protection Act, 1986 — it has been replaced by the Consumer Protection Act, 2019 (in force from 20 July 2020). Both are explained below.

Objectives

• Protect consumers against unfair trade practices, defective goods and deficient services.
• Provide simple, speedy and inexpensive redressal.
• Establish consumer councils and redressal agencies.

Consumer rights

Features

• Consumer: a person who buys goods or hires services for consideration, not for resale or commercial purpose; under the 2019 Act includes online and teleshopping buyers.
• Complaints about unfair or restrictive trade practices, defects, deficiency in service, excess price, hazardous goods.
• Three-tier quasi-judicial redressal machinery.
• 2019 Act additions: Central Consumer Protection Authority (CCPA), product liability, e-commerce rules, mediation, e-filing, penalties for misleading advertisements and endorsements, complaint can be filed where the complainant resides.

Structure of redressal agencies

• Consumer Protection Councils at central, state and district levels promote consumer rights.

• Green management: integrating environmental concerns into strategy and operations — eco-design, clean production, waste reduction, renewable energy, green supply chains, ISO 14001, ESG disclosures (BRSR).
• Carbon footprint: total greenhouse gas emissions caused by an organisation, product or person (tonnes CO2-equivalent); Scope 1 (direct), Scope 2 (purchased electricity), Scope 3 (value chain).
• India's commitments: net zero by 2070; Carbon Credit Trading Scheme (2023); Perform, Achieve and Trade (PAT) for energy efficiency; renewable energy target of 500 GW non-fossil capacity by 2030.
• Environment Protection Act, 1986: umbrella law after the Bhopal tragedy — Centre sets emission and discharge standards, restricts industries in areas, regulates hazardous substances, can direct closure; penalties (amended in 2023 to civil penalties for many violations); supported by Water Act 1974, Air Act 1981, NGT Act 2010.