The primary problem in the infrastructure sector is the lack of clarity of policy. It is often not clear to an investor whether all government agencies (central and state) are in favour of investment or not. If an investor knew beforehand the process required and the agencies from which approvals had to be taken, and the time required for such approvals, then the investor could plan out how to meet these challenges.
Too often after an investment has been made, an agency will prop up and ask the investor why its approval was not obtained. Such situations call for prior engagement with the government. The government (central and state) has to ensure that all agencies under its command are involved in the approval process in a coordinated manner.
The legal safeguard here is to ensure that a memorandum or agreement is executed with the government where all such terms are recorded. It would be useful to record a term where all the approvals required for a particular project are listed and noted down. The clause should also state that in the event that there are any other approvals required it would be the responsibility of the government to obtain such approvals at its own cost. Another problem is the non-involvement of local communities in the approval process. Environment
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