| WISH YOU AND YOUR FAMILY A VERY HAPPY AND PROSPEROUS DIWALI FESTIVAL REGARDS Retail FDI policy safe despite storm overFema regulation changes' |
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New Delhi, 11 November Arecent 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. There could be some trouble if objections are raised by members of Parliament (MPs) on the issue, but the government is eventually likely to cross the hurdle. 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 rule book. 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 — does not call for a debate in Parliament, a member can give notice for a debate. If the notice is admitted by the speaker of the House under Rule 193, there's a discussion but no voting. And, if the notice is accepted under Rule 184, there will be voting. According to Kashyap, only in an extremely rare case could there be anotice of motion for a regulation amendment. "Normally, no policy gets stuck over technical issues," he said. According to Suhaan Mukerji, partner, Amarchand Mangaldas, a prominent law firm, the recommendations of the committee on subordinate legislation, if any, is not binding on the government in the case of a regulation amendment. However, the government needed to offer sound reasons for that, Mukerji said. A Reserve Bank of India (RBI) spokesperson said the notification on amendment to Fema (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2012, had already been gazetted, and the Supreme Court was informed about it. In fact, Attorney General G Vahanvati had told the court recently that three amendments had been notified on October 30, enabling the government to allow FDI into the multi-brand sector. The apex court adjourned the hearing of the case until January 22, 2013. The Union Cabinet had in September partially opened up the multi-brand retail sector, allowing up to 51 per cent FDI. International chains like Walmart, Tesco and Carrefour have been waiting for India's retail sector to open up, but none has made any proposal to the government to open stores in the country yet. Complex conditions attached to the policy and other hurdles such as states getting the power to say yes or no to retail FDI, have kept global players from making any announcement so far. With the talk of Parliament vetting a FEMA regulation amendment linked to the retail FDI policy gaining prominence, the industry has started fearing arollback. The proposal of Swedish furniture giant IKEA to invest Euro 1.5 billion in India for opening stores in the single-brand retail category will be discussed at the November 20 meeting of the Foreign Investment Promotion Board (FIPB). The application of Ingka Holding Overseas, a group company of IKEA, is part of the agenda for FIPB next meeting. IKEA had sent its proposal to DIPP on June 22, and has been engaged with the government for simplification of rules in singlebrand retail, where up to 100 per cent FDI has been permitted. In September, the Cabinet had made changes in the conditions related to FDI in single-brand retail, mainly linked to sourcing from the small-sector industries in India. For the India market, Inter IKEA System, the owner of the IKEA brand, had recently signed a franchisee agreement with group company Ingka Holding Overseas. IKEA proposal reaches FIPB File photo of an IKEA store in the Brooklyn borough, New York. PHOTO: BLOOMBERG |
| Govtmulls e-auction of surplus land held by ministries and PSUs |
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New Delhi, 11 November With graft charges flying thickly, the government is mulling whether to make e-auction mandatory for sale of land valued at over ~50 crore held by it or public sector undertakings (PSUs). For land whose market value is less than ~50 crore, an open bidding process would be adopted. A note in this regard is being circulated to various ministries and departments, to elicit their views. The proposal is part of a broader policy in the making on transfer and alienation of land held by the government or PSUs. Besides plugging loopholes that breed corruption, the proposed policy is meant to maximise revenue realisation for the thousands of acres of state-held surplus land across the country, either directly with ministries or their affiliated PSUs. In big cities, large tracts are owned by the government or PSUs. A recent paper by Deloitte said major ports had combined land assets of 258,000 acres. Up to 20 per cent is not in use and could be leased out, it said. Similarly, according to some estimates, the Airports Authority of India has around 20,000 hectares in various cities. The defence services have about 17,00,000 hectares of surplus land. Officials said the note also seeks ministries' response on creating a transparent data bank of all government-held land. Recently, the Vijay Kelkar committee report on fiscal consolidation had recommended monetising the land resources held by PSUs and others to fund infrastructure needs in urban areas. However, while the Kelkar report talked of land resources held by port trusts, the railways and PSUs, the current proposal exempts those held by the railways. Also, land cleared by the public-private partnership approval committee and transfer of land between ministries would not come under this proposal. The railways hold around 10,000 acres of surplus land in urban centres. However, it has been kept out of the purview of the proposed policy because the railways already have their own land sale, lease and commercialisation policy in place. Those in the know said the note had proposed that leasing of stateheld land ask for an upfront payment equal to the sale value of the land on the day of lease agreement. The sale and lease proceeds of all such government-owned land could be used to create capital assets or retire debt, as land itself is acapital asset. The proposed policy also aims at creating a Public Sector Land Management Committee to oversee all sale, lease and transfer of all government or PSU-owned land. This is proposed to comprise the secretaries in charge of the departments of urban development, expenditure, space, land resources, legal affairs and public enterprises. "This committee will oversee all such sale, lease or transfer of government land and if need be, the Cabinet can also be asked to step in," an official said. The official said ministries are also being urged to specify surplus land to which they have the title, as in many cases these lie with the state governments or the title is unclear, making meaningful sale or lease difficult. The group of ministers asked to suggests ways to address corruption had identified land as among the main natural resources which need study to understand the implications of deals in these on breeding graft. In recent times, the government has come under attack for not having transparent policies for natural resources — be it on earth (land), under earth (mining) and in the air (spectrum). Note proposes more checks, transparent data bank in land sale or lease GROUND RULES |Uniform policy on transfer or alienation of land held by government or government controlled authorities such as public sector undertakings on the anvil |All government land having market value more than ~50 crore to be mandatory e-auctioned |Land valued at less than ~50 cr to be sold, leased through a transparent bidding process |Inter-ministerial transfer of land, land transfers cleared by PPPAC and those held by railways kept out of the purview of the proposed policy |Land sale proceeds should be to either retire debt or create capital assets |All government and PSU land transfers should be overseen by the Public Sector Land Management Committee, headed by the urban development secretary |Government to create a transparent data bank of land held by it along with the likely market value |Note on the proposed policy currently being circulated for comments and views |
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Company Secretary, Chennai
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