Vote on change in FEMA rules holds key to FDI

It will be back to square one if House rejects norms

The excitement over voting on FDI in retail may have faded, but for the UPA government, it is critical to win the vote on FEMA (Foreign Exchange Management Act) that it tabled in the House on Friday, failing which FDI in retail will not see light of the day.

The two Houses of Parliament will take up the debate followed by voting on FDI in retail over four days next week, starting Tuesday. Going by the interest it generated over the last few weeks and months, all eyes will be on how the Lok Sabha and the Rajya Sabha, where the government is in a minority, vote on the controversial policy decision that has allowed 51 per cent foreign direct investment in multi-brand retail.

Even if the government loses this vote, it will not make much difference. But if the government loses voting on FEMA rules, FDI in multi-brand retail policy will become invalid, as the FEMA changes are required to enable the government to notify the policy on FDI in retail. The government, for unknown reasons, has been keeping this under the wraps.

The amendments tabled in the House do not on their own require approval of Parliament. However, the issue becomes alive if any MP seeks changes to the amended rules. Leaders of the Left parties – Sitaram Yechury of CPM and D Raja of CPI - have made it clear that they will move statutory resolutions.

Yechury has said he would  do so once Parliament votes on FDI in retail. In what seems to be a little complex technical procedure, the MPs have to  move amendments within 30 sittings after the government tabled the changes. They have to be voted within a timeframe, as per the FEMA rules.

But this can be spread over two sessions, which means the FEMA amendments, if questioned, can be voted during next year’s budget session, if not in the current session. The requirement of voting on FEMA puts a question mark over the government’s repeated statement that its October 30 decision to allow 51 per cent FDI in multi-brand retail cannot be questioned in Parliament since it was an executive decision.

Raja told Deccan Herald on Saturday: “FDI in retail is a policy while FEMA contains rules to operationalise that policy. Once rules are questioned through statutory resolutions, there are only two ways for Parliament to deal with them: Either to send them to committee on subordinate legislation, or adopt them through vote.”

After the government’s announcement on FDI,  the apex Court had admitted a PIL which argued that the government had not followed proper procedure in introducing FDI policy.

Petitioner M L Sharma had contended that the amended regulations have to be passed by each House of Parliament within 30 days as per the statute. In case, the amended regulation failed to pass muster, the licences issued in between by the government would not be valid due to section 48 of the FEMA Act, he had said. The court, however, did not pass any order.

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