Political parties deadlocking the parliament over the past few days have an easy way to make the government decision of allowing foreign direct investment (FDI) in retail sector redundant — by blocking the amendments in the rules and regulations of the Foreign Foreign Exchange Management Act (FEMA).
Notifications of rules and regulations are mandatory to be tabled in both the Houses of Parliament. Experts are asking the parties to ensure that the government does not resort to delaying the placing of the rules, resultantly jamming the Parliament. The rules framed by the government go to the committee on subordinate legislation of each House, which submit their reports to the presiding officer, and then the House decides the issue. The House is within its powers to agree, disagree or modify the notified rules. The two Houses still have the power to scuttle the rules.
The Confederation of All India Traders (CAIT) has shown MPs that they can scuttle the government’s executive order by challenging the amendments in the FEMA rules. The CAIT has written to the leaders of political parties that the FDI decision claimed by the government as an executive order — requiring no need of Parliament’s approval — will automatically lose its legal sanctity if they use their powers to block the amendments. Quoting parliamentary procedures, the CAIT Secretary-General Praveen Khandelwal said every rule and regulation made under this Act shall be laid, as soon as after it is made, before each House of Parliament, while it is in session. “If both Houses agree in making any modification...the rule or regulation shall thereafter have effect only in such modified form,” said Khandelwal.
It also dismissed commerce minister Anand Sharma’s contention that the FDI notification is just an enabling policy for the states. The federation asked him to consult the GATT agreement under WTO and 82 bilateral investment promotion treaties signed by the government. It pointed out that these bind the government to provide ‘national treatment’ to foreign investors which implies that no discrimination can be made between a domestic company and the foreign investor and hence, the states have no choice.