Govt plans to amend rules to allow FDI in retail

The Centre on Monday agreed before the Supreme Court that its notification allowing foreign direct investment (FDI) in multi-brand retail should have come after the RBI brought in amendments in regulations.

A bench of Justices R M Lodha and A R Dave gave the Centre two weeks to set right the “irregularity” and refused to restrain the government from taking any decision in the wake of the notifications issued on September 21.

The court was hearing a PIL filed by advocate M L Sharma who urged the court to quash the notifications calling them “unconstitutional, arbitrary and also damaging fundamental rights of the citizens of the country”

“At best, it could be an irregularity which will be curable as soon as an amendment is carried out. This is done by the Central government and it is not that the RBI has been kept in the dark by the Centre. The RBI has already issued a circular amending FDI limit.

Still, it has not formally amended the regulations,” the court said.

Attorney General G E Vahanvati submitted that FEMA authorised the government to issue circular regarding capital account transactions.

“A more proper procedure to issue the notification was only after necessary amendments in the foreign exchange regulations of 2000, but the government had opted a different route since that is a legislative process and consume some time,” he said.