?FCRA Bill should exclude cos with 50% foreign holding?

The parliamentary standing committee on home affairs looking into the Foreign Contribution (Regulation) Bill, 2006 said the legislation should be suitably amended to define the term ?foreign source? more clearly in relation with Indian companies that have more than 50% foreign holding. The definition of foreign source in the Bill is ?vague?, the panel noted.

Foreign holdings above 50% in Indian companies are already under the purview of the the norms for Foreign Direct Investment (FDI) and Foreign Institutional Investor (FII) norms and permitted in some sectors.

Apart from a clearer definition of ?foreign source?, the Panel has mooted that companies with foreign holdings over 50% should be excluded from the purview of the term in the proposed law. The committee?s report was tabled in the Rajya Sabha on Tuesday.

On the issue of time-bound post decisional hearing after declaring an organisation as a political organisation and not a political party, the panel expressed its concern over the non-availability of a time frame for the hearing and the absence of an appellate authority before whom an appeal can be made against the Centre?s decision.

?In the absence of a time frame and an appellate authority, government may procrastinate a decision during this period of animated suspension, the sword of Damocles will be hanging on the organization,? the Committee pointed.

It recommended that a timeframe be provided within which the government would have to take a decision on the issue of specifying that an organisation is of political nature but not a political party. There should also be an appellate mechanism to redress the grievance arising out of the decisions of the government.

The committee has also suggested that the Bill be amended to allow receipt of foreign scholarship or stipend by Indian citizens studying in Indian or foreign academic institutions.

The panel?s recommendations did not, however, mention the suggestions made by former Reserve Bank of India governor Bimal Jalan who in his depositions had argued that that non-government organisations (NGOs), particularly the small ones engaged in social sector works and receiving grants from ministries and public sector units should be given the facility to register through an ?automatic route?. The ministry of finance and other economic ministries have set up similar ?automatic routes? for granting permission, Jalan had noted.

He had also sought extension of registration validity to 10 years from 5 years and said that for non-government aided NGOs, the registration certificates should be issued within 30 days of receiving application.

Except in respect of suspected terrorist activities, Jalan said, the government should not have any power to search, seize or inspect the NGOs, as mentioned in the Bill. ?In respect of terrorist activities such powers should be exercised under the anti-terrorism laws and not under the FCR Act,? he said.

The MPs? panel had extensive discussions with RBI, bankers, accountants, NGOs and the Planning Commission (to check the Bill?s compatibility with the National Voluntary sector Policy, before finalising its recommendations.