India’s quick-fix approach to regulation won’t do - FT.com
India’s quick-fix approach to regulation won’t do
©AP
New Delhi was aghast last month when the US Federal Aviation Administration downgraded India’s flight safety rating, expressing lack of confidence in the domestic regulatory oversight of India’s burgeoning airline industry.
The downgrade means Indian carriers cannot launch new flights to the US, or have code-share deals with American partners. The two Indian airlines now flying to the US, Air India and Jet Airways, will be also subject to additional inspections at US airports.
It is a big embarrassment for a country that seeks to promote itself as amodern economy and emerging superpower but is now classed with the likes of Bangladesh, Ghana and Nicaragua in terms of its compliance with international air safety standards.
The FAA’s worries about the safety of Indian skies reflect a more pervasive problem now confronting India, its investors and consumers. For all its interventions in its domestic markets, New Delhi appears either unable – or unwilling – to provide strong, credible regulation for crucial sectors of its increasingly globalised economy.
“The lack of commitment to safety is a serious concern,” the Centre for Asia Pacific Aviation, a research group, wrote in a note soon after the FAA ratings downgrade. “India’s approach has been one of reacting to threats in order to scrape through and meet minimum requirements – and in this case, not even achieving that.”
Indians have long prided themselves on their ability to manage tough, resource-scarce situations through jugaad – a Hindi word implying a creative quick-fix, or an improvised arrangement. But as India strives to attract foreign investment, and win foreign markets, New Delhi’s jugaad approach to regulation simply will not do.
Questions are being raised about oversight of India’s $26bn pharmaceutical industry – which earns half its revenues from exports, mainly to advanced economies – after several US Federal Drug Administration bans on imports from Indian manufacturing plants that failed to meet basic standards.
India’s approach has been one of reacting to threats in order to scrape through and meet minimum requirements – and in this case, not even achieving that
- Centre for Asia Pacific Aviation research note
Last month, an international car safety and testing body also found most small, entry-level cars sold in India – mostly models not bound for export – did not meet global safety standards.
Indian atomic energy experts have issued warnings about the lack of independent regulator to oversee the country’s nuclear power plants, at a time when India has ambitious plans to scale up nuclear energy in conjunction with foreign partners.
The neglect of India’s aviation regulator offers telling insights into how the country’s Congress-led government, led by Prime Minister Manmohan Singh, has failed to recognise, or address, the needs of some of its fastest-modernising sectors of the economy.
India’s aviation industry has grown explosively during the Congress’s decade in power, aided by the take-off of private low-cost carriers. Between 2003 and 2008, the country’s domestic passenger numbers tripled, with 30m new trips added.
But the industry regulator did not expand in tandem with the country’s fleet. According to CAPA, the Directorate General of Civil Aviation had just 400 of the 928 people it said it needed to monitor the industry and was facing an acute shortage of trained personnel to oversee air worthiness and air safety.
The regulator’s manpower crisis has only worsened. India’s air traffic has grown 50 per cent since 2009, but the DGCA has managed to recruit just 67 full-time staff, plus retain another 62 consultants.
India’s new government will have to tackle these problems urgently. That may require a significant shift in mindset among ruling elites towards safety and quality
The story is similar in pharmaceuticals, another rapidly growing sector. In 2011, the Central Drugs Standard Control Organisation had just 124 staff members, though it felt it needed about 1,000 to adequately fulfil its wide-ranging responsibilities. A 2012 parliamentary committee also found the watchdog lacked proper infrastructure, such as modern testing laboratories, to do its work.
India’s regulatory problems will not be easily rectified. Agencies need highly educated, highly skilled professionals. But low salaries – in comparison to the private sector – make it tough to recruit qualified talent to state agencies.
India’s new government will have to tackle these problems urgently. That may require a significant shift in mindset among ruling elites towards safety and quality. New Delhi is under pressure from its foreign trading partners to up its game. As Indian consumers wake up and take notice, their vociferous demands will not be far behind.
India’s quick-fix approach to regulation won’t do
New Delhi was aghast last month when the US Federal Aviation Administration downgraded India’s flight safety rating, expressing lack of confidence in the domestic regulatory oversight of India’s burgeoning airline industry.
The downgrade means Indian carriers cannot launch new flights to the US, or have code-share deals with American partners. The two Indian airlines now flying to the US, Air India and Jet Airways, will be also subject to additional inspections at US airports.
It is a big embarrassment for a country that seeks to promote itself as amodern economy and emerging superpower but is now classed with the likes of Bangladesh, Ghana and Nicaragua in terms of its compliance with international air safety standards.
The FAA’s worries about the safety of Indian skies reflect a more pervasive problem now confronting India, its investors and consumers. For all its interventions in its domestic markets, New Delhi appears either unable – or unwilling – to provide strong, credible regulation for crucial sectors of its increasingly globalised economy.
“The lack of commitment to safety is a serious concern,” the Centre for Asia Pacific Aviation, a research group, wrote in a note soon after the FAA ratings downgrade. “India’s approach has been one of reacting to threats in order to scrape through and meet minimum requirements – and in this case, not even achieving that.”
Indians have long prided themselves on their ability to manage tough, resource-scarce situations through jugaad – a Hindi word implying a creative quick-fix, or an improvised arrangement. But as India strives to attract foreign investment, and win foreign markets, New Delhi’s jugaad approach to regulation simply will not do.
Questions are being raised about oversight of India’s $26bn pharmaceutical industry – which earns half its revenues from exports, mainly to advanced economies – after several US Federal Drug Administration bans on imports from Indian manufacturing plants that failed to meet basic standards.
India’s approach has been one of reacting to threats in order to scrape through and meet minimum requirements – and in this case, not even achieving that
- Centre for Asia Pacific Aviation research note
Last month, an international car safety and testing body also found most small, entry-level cars sold in India – mostly models not bound for export – did not meet global safety standards.
Indian atomic energy experts have issued warnings about the lack of independent regulator to oversee the country’s nuclear power plants, at a time when India has ambitious plans to scale up nuclear energy in conjunction with foreign partners.
The neglect of India’s aviation regulator offers telling insights into how the country’s Congress-led government, led by Prime Minister Manmohan Singh, has failed to recognise, or address, the needs of some of its fastest-modernising sectors of the economy.
India’s aviation industry has grown explosively during the Congress’s decade in power, aided by the take-off of private low-cost carriers. Between 2003 and 2008, the country’s domestic passenger numbers tripled, with 30m new trips added.
But the industry regulator did not expand in tandem with the country’s fleet. According to CAPA, the Directorate General of Civil Aviation had just 400 of the 928 people it said it needed to monitor the industry and was facing an acute shortage of trained personnel to oversee air worthiness and air safety.
The regulator’s manpower crisis has only worsened. India’s air traffic has grown 50 per cent since 2009, but the DGCA has managed to recruit just 67 full-time staff, plus retain another 62 consultants.
India’s new government will have to tackle these problems urgently. That may require a significant shift in mindset among ruling elites towards safety and quality
The story is similar in pharmaceuticals, another rapidly growing sector. In 2011, the Central Drugs Standard Control Organisation had just 124 staff members, though it felt it needed about 1,000 to adequately fulfil its wide-ranging responsibilities. A 2012 parliamentary committee also found the watchdog lacked proper infrastructure, such as modern testing laboratories, to do its work.
India’s regulatory problems will not be easily rectified. Agencies need highly educated, highly skilled professionals. But low salaries – in comparison to the private sector – make it tough to recruit qualified talent to state agencies.
India’s new government will have to tackle these problems urgently. That may require a significant shift in mindset among ruling elites towards safety and quality. New Delhi is under pressure from its foreign trading partners to up its game. As Indian consumers wake up and take notice, their vociferous demands will not be far behind.
