A recent public interest suit in the Supreme Court over foreign direct investment (FDI) in retail may have thrown the industry into a tizzy, but lawyers, constitutional experts and government officials indicate the multi-brand retail FDI policy is unlikely to get derailed, even as amendment to the Foreign Exchange Management Act (Fema) regulations will be tabled during the winter session of Parliament.
Department of Industrial Policy & Promotion (DIPP) secretary Saurabh Chandra told Business Standard: "It is clear that procedures laid down by law have to be followed. It is clearly stated in the Section 48 of Fema that any amendment has to be cleared by both the Houses of Parliament."
However, when asked whether the policy could be blocked if there was an opposition to the Fema regulation amendment in Parliament, Chandra said: "I do not comment on speculative matters."
DIPP, the administrative ministry for retail FDI, is learnt to have already consulted top lawyers on the Fema issue after protests against the government policy, citing violation of the rulebook.
Another government official argued there was no chance of the retail FDI policy getting grounded on a technical issue like amendment of Fema regulation, since it was an amendment of a regulation, and not law. "It does not materially alter Fema," the official stressed.
Constitutional expert Subhash Kashyap told Business Standard that amendment to any rule and regulation under an Act must be placed in Parliament for a period of 30 days, and that this clause was not specific to Fema or retail FDI.
Following the Supreme Court suit by lawyer Manohar Lal Sharma, members of the Opposition and traders' associations had pointed out that FDI in retail could not be implemented unless the Fema regulation dealing with the prohibition of foreign investment was amended by placing it in Parliament.
Explaining the procedure, Kashyap said rules and regulations were made by the government under any Act. It is an executive function.
While an amendment of a law had to go to Parliament for discussion and voting, that of a rule or a regulation needed to be tabled in both the Houses for 30 days, he said.
The amendment of the rule or regulation is automatically referred to the Committee on Subordinate Legislation.
If the committee feels the government has over-stepped its function or if there's a violation of law, it raises objections and sends the report to the House. If the objection is technical and minor, the government usually sets it right.
"Fundamentally, the policy remains the same," said Kashyap. Although the amendment of a regulation - in this case relating to Fema and retail FDI -
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