In January two US regulators, Federal Aviation Administration (FAA) and Food and Drug Administration (FDA), penalized India's aviation regulator and drug manufacturer Ranbaxy Laboratories for falling short of their standards. Consequently, India`s aviation companies and the drug company are restricted from pursuing business opportunities in US. Coming on the heels of India`s diplomatic spat with US, there is a tendency to view these incidents through the prism of jingoism. That would be an incorrect way to approach the issue. January`s developments beg questions of Indian regulators in aviation and drugs. The question that should be asked is whether low standards among these regulators put Indian consumers at risk.
FAA has lowered India's aviation safety ranking after it found domestic regulator, Directorate General of Civil Aviation, did not exercise adequate regulatory oversight. The downgrade will hurt the aviation industry's, including Air India's, commercial interests in US. But what should worry us most is that DGCA seems ill-prepared to protect domestic fliers, even as it is intent on ensuring that 'royal' treatment is accorded to MPs at Indian airports.
Similarly, India's drug regulator, Drug Controller General of India (DCGI), was quick to point out society and economy here are different from US. DCGI's attitude is troubling because more than one Indian drug company had a problem with US FDA. The charges against them are serious, primarily ones dealing with falsifying data to make a drug seem more pure than it is. The issue is not about differences in manufacturing standards. It is about ethical standards and we should worry about whether all companies are accurately meeting domestic regulatory requirements. DCGI has no reason to be sanguine.
Regulations inevitably create entry barriers and inhibit competition. They make sense only when benefits outweigh costs. In case of DGCA and DCGI, consumers need to have reason to believe their presence means necessary standards in relevant areas are met. So far, they have done little to inspire confidence. Anecdotal evidence about poor aviation safety and spurious drugs was always present. An external check has only confirmed some fears. Successive governments have much to answer for regulators' failure. They have hobbled them through a bureaucratic maze that limits choice of personnel. Salaries of regulators are seldom market-linked, which deters qualified people from stepping in. An ineffective regulator is more harmful to consumers than no regulator at all.
FAA has lowered India's aviation safety ranking after it found domestic regulator, Directorate General of Civil Aviation, did not exercise adequate regulatory oversight. The downgrade will hurt the aviation industry's, including Air India's, commercial interests in US. But what should worry us most is that DGCA seems ill-prepared to protect domestic fliers, even as it is intent on ensuring that 'royal' treatment is accorded to MPs at Indian airports.
Similarly, India's drug regulator, Drug Controller General of India (DCGI), was quick to point out society and economy here are different from US. DCGI's attitude is troubling because more than one Indian drug company had a problem with US FDA. The charges against them are serious, primarily ones dealing with falsifying data to make a drug seem more pure than it is. The issue is not about differences in manufacturing standards. It is about ethical standards and we should worry about whether all companies are accurately meeting domestic regulatory requirements. DCGI has no reason to be sanguine.
Regulations inevitably create entry barriers and inhibit competition. They make sense only when benefits outweigh costs. In case of DGCA and DCGI, consumers need to have reason to believe their presence means necessary standards in relevant areas are met. So far, they have done little to inspire confidence. Anecdotal evidence about poor aviation safety and spurious drugs was always present. An external check has only confirmed some fears. Successive governments have much to answer for regulators' failure. They have hobbled them through a bureaucratic maze that limits choice of personnel. Salaries of regulators are seldom market-linked, which deters qualified people from stepping in. An ineffective regulator is more harmful to consumers than no regulator at all.
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