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FDI issue to be discussed in Parliament, CAIT plans nationwide Political Campaign

 

Monday June 09, 2014

FOREIGN DIRECT INVESTMENT, FEMA ACT 1999, RESERVE BANK OF INDIA  
 

"Government of India is bound by the Foreign Exchange Management Act (FEMA), 1999, to face, willingly or unwillingly, both the houses of Parliament on the issue of FDI in Multi Brand Retail in its forthcoming session.

 

HNF Correspondent

 
 

After the Supreme Court of India directed the Reserve Bank of India to make necessary amendments in the Rules and Regulations to allow implementation of FDI Policy, it has almost become evident that the issues relating to FDI are to be discussed in both houses of the Parliament. However, the next hearing of the said case has been fixed for November 5, 2012.

While talking to the media in New Delhi, Secretary General of Confederation of All India Traders (CAIT) Praveen Khandelwal said, “Government of India is bound by the Foreign Exchange Management Act (FEMA), 1999, to face, willingly or unwillingly, both the houses of Parliament on the issue of FDI in Multi Brand Retail in its forthcoming session.

 

Majority of political parties demand a discussion on the decision of allowing FDI in Retail and the Government is avoiding discussing the issue in Parliament on the pretext that notification of allowing FDI in Retail is an executive decision which need not have approval of the Parliament. But now, there is no escape route available with the Government but to go to Parliament to place any amendment in Rules and Regulations of FEMA made by the Reserve Bank of India.”

Anil Sharma, CA and Head of the research wing of CAIT, said that as per the directions of the Supreme Court, the RBI has to amend the regulations. But, under section 48 of the FEMA, every rule or regulation made under this Act  shall be laid, as soon as may be after it is made, before each House of Parliament while it is in session for a total period of thirty days which may be comprised in one session or in two or more successive sessions. The Act also says that any amendment is possible on agreement of both Houses.

CAIT National President B. C. Bhartia said that FEMA was enacted with the object of facilitating external trade and payment and for promoting the orderly development and maintenance of foreign exchange market in India. It extends to whole of India. He further said that section 6 (3) of FEMA empowers the Reserve Bank to issue, modify or amend any rules or regulations pertaining to Foreign Direct Investment in India. He further said that in exercise of the powers conferred by clause (3) of article 77 of the Constitution, for allocation of the business of the Government of India, the Government of India (Allocation of Business) Rules, 1961 have been framed. As per these Rules the business of the Government of India is allocated to Cabinet Secretariat and deemed to have been, allotted to the Prime Minister. The President may, on the advice of the Prime Minister, allocate the business of the Government of India among Ministers by assigning one or more departments to the charge of a Minister.

The Department of Industrial Policy and Promotion in the Ministry of Commerce is allocated the business of direct foreign and non-resident investment in industrial and service projects excluding functions entrusted to the Ministry of Overseas Indian Affairs. The DIPP can only deal with policy matters relating to foreign direct investments in industrial and service projects including multi brand retail trade as the legal provisions for carrying out such activities in India are governed by FEMA and that can only be amended as provided in FEMA.

In the present set up the logical sequence of permitting FDI in multi brand retail trade is (a) Policy decision by DIPP (b) Amendments in Regulation governing FDI by RBI (c) Approval of both Houses of Parliament of amendment in Regulation framed under FEMA in terms of section 48 of the Act.

Both Bhartia and Khandelwal said that it is very clear from the above that though DIPP has taken a policy decision to allow FDI in multi brand retail trade but it can only be implemented after the next two processes are completed that is amendment in Regulations by RBI and approval of the amendment of Regulations by both the houses of Parliament.

The CAIT has appealed the Reserve Bank of India and Government of India that, before presenting the same to Parliament, wide publicity of the amendment in regulations to allow FDI in Multi Brand Retail be made so that the stakeholders can convey their views to Members of Parliament.

In the meanwhile, CAIT has decided to meet Leader of Opposition in both houses of the Parliament and senior leaders of all national and regional political parties to apprise them of the factual position so that a structured debate can be held on the issue as and when it is presented in Parliament in its forthcoming session by the Government. A CAIT delegation will also meet UPA Chairperson Sonia Gandhi to apprise her about the concerns of the stakeholders which has been ignored by the Government.

 
 

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