The document discusses India's Foreign Direct Investment (FDI) policy, specifically regarding allowing 51% FDI in multi-brand retail. It provides background on the Foreign Exchange Management Act of 1999 and notes that in September 2012, the government issued a notification permitting 51% FDI in multi-brand retail under certain terms and conditions. This move was challenged in the Supreme Court, but the court ruled the policy was within the government's powers and asked the Reserve Bank of India to amend its regulations to allow implementation. The amendments were subsequently notified and tabled before Parliament for approval as required by law.
The document discusses India's Foreign Direct Investment (FDI) policy, specifically regarding allowing 51% FDI in multi-brand retail. It provides background on the Foreign Exchange Management Act of 1999 and notes that in September 2012, the government issued a notification permitting 51% FDI in multi-brand retail under certain terms and conditions. This move was challenged in the Supreme Court, but the court ruled the policy was within the government's powers and asked the Reserve Bank of India to amend its regulations to allow implementation. The amendments were subsequently notified and tabled before Parliament for approval as required by law.
The document discusses India's Foreign Direct Investment (FDI) policy, specifically regarding allowing 51% FDI in multi-brand retail. It provides background on the Foreign Exchange Management Act of 1999 and notes that in September 2012, the government issued a notification permitting 51% FDI in multi-brand retail under certain terms and conditions. This move was challenged in the Supreme Court, but the court ruled the policy was within the government's powers and asked the Reserve Bank of India to amend its regulations to allow implementation. The amendments were subsequently notified and tabled before Parliament for approval as required by law.
St of Problem: Notification passed to allow 51% FDI in multi retail
brands and treating the notification as law of the land.
Foreign Exchange Management Act (FEMA), 1999: FEMA was passed in the winter session of parliament in the year 1999 to replace Foreign Exchange Regulation Act. FEMA was an act to consolidate and amend the law relating to foreign exchange with the objective of facilitating external trade and payments and also for promoting the orderly development and maintenance of foreign exchange market in India. Apart from being applicable all over India, the Act also applies to all branches, offices and agencies outside India owned or controlled by a person residing in India and also to any contravention there under committed outside India by any person to whom this Act applies. To ensure that the provisions of the Act are carried out correctly, certain rules and regulations have to be made from time to time According to Section 46 of FEMA, 1999 the Central Government, and- according to Section 47 of FEMA, 1999- the RBI, respectively have the power to make rules and regulations to carry out the provisions of the said Act. FDI: FDI is the abbreviation for Foreign Direct Investment. FDI is direct investment into production or business in a country, by a company in another country, either by buying a company in that country or by expanding operations of an existing business in that country. In India, The Government has put in place a policy framework on FDI, which may be updated from time to time to keep up with the changing environment. The Department of Industrial Policy and Promotion (DIPP), Ministry of Commerce & Industry, Government of India makes policy pronouncements on FDI through Press Notes or Press Releases which are notified by the Reserve Bank of India as amendments to the Foreign Exchange Management (Transfer or Issue of Security by Persons Resident Outside India) Regulations, 2000 (notification No. FEMA 20/2000-RB dated May 3, 2000). Unless specified otherwise, these notifications take effect from the date of issue of Press Notes or Press Releases. In case of any conflict, the relevant FEMA Notification will prevail. The instructions are issued by the Reserve Bank of India vide A.P. Dir. (series) Circulars. Notification allowing 51 per cent FDI in Multi Brand Retail Trading: Retail: The High Court of Delhi defines the term retail as a sale for final consumption in contrast to a sale for further sale or processing i.e. a sale to the ultimate consumer. In RBI/2012-13/217 A.P. (DIR Series) Circular No.32 September 21, 2012, FDI up to 51 per cent was permitted in Multi Brand Retail Trading under the government route, subject to the terms and conditions specified in Press Note No. 5 (2012 series) dated September 20, 2012 issued by the Department of Industrial policy & Promotion, Ministry of Commerce & Industry, Government of India. This notification about 51 per cent investment in FDI operationalises the decision taken by the cabinet on 14 th September 2012. It comes with the important clauses like,- the State Governments and Union Territories would be free to take their own decisions in regard to implementation of the policy, Fresh agricultural produce may be unbranded and Government will have the first right to procurement of agricultural products. .The notification also released a list of States and Union Territories which have given their approval for allowing 51 per cent FDI in multi-brand retail. All the applications would be first processed by the Department of Industrial Policy and Promotion (DIPP), after which they will be placed before the Foreign Investment Promotion Board (FIPB) for approval. The notification states that retail trading in any form, by means of e-commerce, would not be permitted for companies with FDI, engaging in multi-brand retail trading. The States and Union Territories which have given their approval for allowing 51 per cent FDI in Multi Brand retail trading are: Delhi Assam Maharashtra Andhra Pradesh Rajasthan Uttarakhand Haryana Manipur Jammu and Kashmir Union Territory of Daman and Diu and Dadra and Nagar Haveli. VIEW OF THE SUPREME COURT: Advocate Manohar Lal Sharma, in a Public Interest Litigation (PIL) filed in the Supreme Court of India challenging the new policy decision which allowed 51 per cent FDI in Multi Brand Retail trading, stated that the new policy was against the law, as it had been taken without the approval of the parliament or the president of India and he further said that the policy lacked the approval of RBI, which made it illegal according o FEMA, 1999. The Supreme Court, on November 5 th , posted the matter to 22 nd January 2012. In previous hearings of the said case, the bench consisting of R M Lodha and A R Dave had stated that policy making is the sole prerogative of the executive and hence it is not necessary to place policies before the parliament. The bench had also said that it is not constitutionally required that a policy should be in the name of the President. In the previous hearing on October 15 th , the Supreme Court had refused to stay the Centre's decision to allow FDI in retail sector saying that the policy suffers from "curable" irregularity of want of legal sanction and asked the RBI to amend the FEMA regulations, within two weeks, to allow implementation of the government's policy. During the hearing on November 5 th , the Attorney General, G.E. Vahanvati informed the bench that RBI had amended the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000 according to powers conferred by clause (b) of sub section (3) of Section 6 and Section 47 of FEMA, 1999 to allow implementation of the government's policy and that it has also been notified and published in the Gazette of India no.795 (E) on October 30, 2012. The bench also stated, since Section 48 of FEMA, 1999 requires the amendment to be tabled before the Parliament, it will be done so and the presumption that the amendment would not be placed in the winter session of the parliament is immature.
TABLED FOR APPROVAL OF THE PARLIAMENT: The Government on November 30, 2012 tabled the amendments made to FEMA, 1999 allowing 51 per cent FDI in multi-brand retail. The notifications were tabled as per the Section 48 of the 1999 Act which requires their acceptance by both Houses of Parliament; which gives the government 30 working days of Parliament to get the amendment passed. The debate in Lok Sabha will be held under Rule 184, and in Rajya Sabha, it will be held under Rule 168.
ST of Problem: Notification Passed Amending FEMA, To Allow 51% FDI in Multi Retail Brands and Treating The Amendment As Law of The Land, Before Getting Parliamentary Approval