A question may arise: Doesnt Press Note 18 confer sweeping powers on FIPB to approve or reject an application Of course, FIPB would be required to record its reasons, whatever be its decision. This requirement in itself ensures a fair process. However, the decision of FIPB cannot remain immune from judicial scrutiny, and a reason which on its face appears arbitrary can surely be impugned.
Nevertheless, foreign investors wishing to operate here are not expected to challenge the government/FIPB in a court of law. But should the situation so warrant, a dispute pertaining to JV partners arising out of FIPBs decision on an interpretation of the Press Note may well land up in court. After all, it is the satisfaction of FIPB that is decisive and the possibility of subjectivity creeping in cannot be ruled out.
It is time, however, to scrap such regulations, which in the garb of protecting the interest of the existing JV, seeks only to perpetuate restrictive trade practices and stifle competition. With liberalisation, there is no scope for obsolete Press Notes
The author is an advocate with the Supreme Court