SC asks: Has FDI led to investments or is it a gimmick?

Jan 23 2013, 01:55 IST
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SummaryVahanvati submitted that the policy was part of a series of reforms

The Supreme Court Tuesday asked the Centre if its FDI in multi-brand retail policy was only a political gimmick or had fructified into some investments as well.

It is six to seven weeks that Parliament passed the policy. Have you brought some investment or was it a mere political gimmick? asked a bench led by Justice R M Lodha, even as Attorney General G E Vahanvati defended the FDI Bill that the UPA government managed to get cleared in Parliament against stiff opposition by the BJP.

Vahanvati submitted that the policy was part of a series of reforms and that its results would be seen in due course.

Reforms can go on but that should not close the door for small traders, replied the court. The bench also remained unimpressed with the attorney generals reply that the Competition Commission of India (CCI) could address issues like pricing. How many people or small traders would go to the CCI? the bench said.

Indicating that it was open to vetting the new policy, which allows up to 51 per cent FDI in multi-brand retail, the bench said it had to be ensured that there were adequate safeguards to protect the interests of small traders who would be compeing with multinational companies.

There is an apprehension. How are you going to take care of the interests of small traders? It is going to affect the fundamental rights to carry out trade? What are the checks that you are going to put to remove the obstruction as far as their trade is concerned? Some regulatory measures have to be there to ensure that they (small traders) are not affected, it said.

Vahanvati tried to reason that this was not the issue under consideration of the court, and that this was a policy decision taken after necessary amendments in the RBI rules and a vote in Parliament.

We are not policy makers but it is also not correct that policy has to be sacrosanct every time. It can be examined within the Constitutional parameters. We dont substitute government policy but some regulatory norms have to be there. The apprehension is that these (big) companies can artificially reduce the price which the small traders cannot afford to do, the court said. These apprehensions have to be cleared.

The court asked the Attorney General to file an affidavit within three weeks addressing issues relating to farmers interests. While posting the matter after five weeks, it also asked PIL petitioner advocate M L Sharma to respond to the Centres affidavit.

The PIL had challenged a government circular issued on September 20, allowing FDI in multi-brand retail, contending it had no legal sanctity since the RBI had not brought about the required amendments in the 2000 regulation as per the Foreign Exchange Management Act.

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