23.1.13

SC seeks info on FDI in Retail


Though the Parliament has voted in favour of foreign direct investment in retail, the Supreme Court refused to wrap up proceedings on a public interest litigation challenging the policy and instead asked the government on how it planned to safeguard the interests of the country’s small traders.
The top court wanted the government to furnish fresh information on the checks and balances in the FDI policy that will protect small-time retailers and consumers. A two-judge bench, comprising Justices RM Lodha and SJ Mukhopadhaya, sought clarifications from the Attorney General representing the government, giving him three weeks to respond.
The AG, GE Vahanvati, said the issue had been discussed in both Houses of the Parliament and urged the court to dispose the PIL challenging the validity of the press notes that announced foreign direct investment in retail, media, aviation and power. He pointed out that foreign direct investment was a “policy” matter in which the court should refrain from interfering. The bench, however, did not relent. “What are the checks to ensure free trade in this policy?” Justice Mukhopadhaya wondered. “Will it affect the rights of other retailers, the poor?” Justice Lodha asked if the government’s policy had drawn any investors in the six to seven weeks since being approved by the Parliament. “Has it brought in any investments or is it just a political gimmick?”
The AG defended the policy saying it was part of the overall reforms initiated by the government. “FDI has changed the entire investment climate in the country,” he argued.
Justice Lodha conceded that the policy may give the consumer a wider choice. “But once the small retailer is not there, it may lead to a monopoly.”
Though the order set off a few alarm bells, experts were at pains to point out that the Court was yet to issue a formal notice to the government on this issue.
“The formal process has not commenced yet,” Tarun Gulati, partner, law firm ELP, pointed out. Constitution
lawyer Dr Rajeev Dhavan said: “The court is being cautious. It is concerned about the direct and inevitable impact this policy will have on the livelihood of others. This is essential. The court wants to know whether the government has taken into account all factors.”
“If the court were to issue notice, it would send ripples in all directions, including the Bombay Stock Exchange,” he said. “But the court hasn’t.”
Gulati said there was no cause for alarm yet. “The court probably wants to know more about the policy before it decides on whether to get into it.”

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