Regulatory frameworks play a vital role in the conduct of commerce and trade. The principal object is to bring order in businesses by defining good and valid practices. An authority is often tasked to monitor compliance of the prescribed practices. Depending upon the role of business activity in the society and public risks attached to it, the respective regulations may take a lenient or strict approach. For instance, oil and gas are hazardous substances, requiring well-prescribed regulations while agricultural activities may be regulated in a soft manner.

It is critically important for a regulatory framework to be fully aligned with the state policy. A regulatory framework acting in the opposite direction is likely to frustrate the policy or cause delays in achieving the policy goals. The state policies invariably prioritise investment in the economy which cuts across a multitude of regulatory frameworks. This essentially means that the regulatory frameworks for different business sectors may work in tandem to create an attractive environment for business and investment. At minimum, this requires that regulatory controls, processes and costs may be carefully set so as not to scare off investment. Wide consultation with the experts and concerned businesses helps to determine the best way to achieve the desired results without increasing regulatory hassle.

An inevitable feature of regulations is that they undergo change with time. A liberalised business may need to be curtailed at some point of time, or a well-controlled activity may require liberalisation. A good regulatory framework is not immutable. Consider the era before 1990s when strict regulatory controls were applied to foreign exchange movements in and out of the country. Post 1992, the forex framework was liberalised with general regulatory permission to open forex accounts and move forex amounts. Then, in the extraordinary economic circumstances of late 1990s, restrictions were applied to forex accounts, and removed a short time after.

When an economy needs momentous forex inflows, it is quite helpful to collaborate with friendly countries to get sovereign investments and tailor special facilitative measures for them. However, to sustain growth and productivity in the economy, the overall environment of business and investment needs to be improved. This mainly requires that the regulatory frameworks may be reviewed, reassessed and adjusted so that they are fully geared to promoting business and investment by all types of investors and entrepreneurs in general. This is the time when regulatory controls may be minimised and procedural hassle removed to allow increase in entrepreneurship and investment, particularly in the export-related fields.

Some believe that it all sounds impossible. Well, a group of cavemen with clubs changed their surroundings many centuries ago; now it’s the turn of humans holding smart phones and using AI.