Regulations
SEBI finalises easier norms for foreign investors

SEBI's measures come at a time when concerns are being raised about outflows of foreign capital and weakening of the rupee against the dollar and other foreign currencies

Market regulator Securities and Exchange Board of India (SEBI) will soon notify new rules to make it easier for foreign entities to invest in Indian markets. SEBI's move follows finalisation of the necessary regulatory changes by the union government for a major overhaul of the existing regulations for overseas investments.

 

Under the new rules, which are likely to be announced in the next few days, SEBI is creating a new class of investors — to be called foreign portfolio investors (FPIs) and would classify them in three categories in line with their risk profile.

 

The know your client (KYC) and other regulatory compliance requirements for the FPIs would depend on their risk category and the norms would be easier for lower-risk investors.

 

The proposals are based on the report of KM Chandrasekhar Committee and were approved by SEBI in its board meeting in June. Thereafter, the regulator referred the recommendations to the union government for implementation.

 

SEBI is merging different classes of investors such as foreign institutional investors (FIIs), their sub-accounts and qualified foreign investors (QFIs) into a new category FPIs, to put in place a simplified and uniform set of entry norms for them.

 

The FPIs would be categorised into three categories — low-risk (for multilateral agencies, Government and other sovereign entities), moderate risk (for banks, asset management companies, investment trusts, insurers, pension funds and university funds) and high-risk (all the FPIs not included in the first two categories).

 

The third-category of FPIs would not be allowed to issue participatory notes.

 

The KYC requirements would be the simplest for the first category and most stringent for the third class.

 

The submission of personal identification documents of the designated officials of the FPIs would also be done away with for the first two categories.

 

These measures come at a time when concerns are being raised about outflows of foreign capital and weakening of the rupee against the dollar and other foreign currencies.

 

The new norms are expected to make it much easier for foreign investors to enter the country and make investment decisions.

 

The regulator had earlier sought certain changes in the provisions of the Prevention of Money Laundering Act, as also in the norms for taxation responsibility under the FPI regime, to facilitate the framing of new norms.

 

According to the new regulations, any portfolio investments would be defined as investment by any single investor or investor group if they do not exceed 10% of the equity of an Indian company.

 

Besides, any investment beyond the threshold of 10% would be considered as foreign direct investment (FDI).

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RTI Judgement Series: PIOs at PMO and MEA clueless about information

The CIC remarked that it was a sad reflection on two of the most important offices in India if the knowledge of where the information is held is not available in both places. This is the 172nd in a series of important judgements given by former Central Information Commissioner Shailesh Gandhi that can be used or quoted in an RTI application

The Central Information Commission (CIC), while allowing an appeal, directed the Public Information Officers (PIOs) at the Prime Minister's Officer (PMO) and Ministry of External Affairs (MEA) to provide information about selection of media, expenses during the PM's foreign tour to BRICS Summit and Kazakhstan. The PIO at PMO simply forwarded the Right to Information (RTI) application to MEA, despite having available on its records the information sought by the applicant.

 

While giving the judgement on 13 December 2011, Shailesh Gandhi, the then Central Information Commissioner said, "If a government does not know where its information lies on such important matters it should be a cause of concern to everyone. The PIO of MEA is directed to transfer the relevant queries back to PIO of PMO. The PIO of PMO is directed to provide the information as per the available records to the appellant".

 

Gurgaon (Haryana) resident Aseem Takyar, on 18 April 2011, sought from the PIO information regarding selection process and expenses incurred for media persons during the Prime Minister's foreign tour to BRICS Summit and Kazakhstan. Here is the information he sought and the reply provided by the PIO under the RTI Act...

 

1. For the sake of transparency, provide information containing copies of all noting, decisions, and correspondences take place for choosing and ultimately selecting 'media persons' to accompany, Prime Minister of India recent official foreign tours for 'BRICS' Summit and 'Kazakhstan'.   

PIO's reply—The selection of media representatives, who accompany the Prime Minister on his foreign tours, is undertaken by the Prime Minister's Office (PMO). XP Division (i.e. External Publicity Division) of the Ministry makes necessary logistical arrangements and also takes care of briefing the journalists.

 

2. Provide information as to what basis particular organisation and which empowered to finalise the whether any nomination solicited from media persons were short listed section or ministry of Government of above process. Who makes the necessary arrangement for the media?

PIO's reply—The selection of media representatives, who accompany the Prime Minister on his foreign tours, is undertaken by the Prime Minister's Office. XP Division of the Ministry of External Affairs (MEA) makes necessary logistical arrangements and also takes care of briefing the journalists.

 

3. Provide information regarding particulars of each media person accompanied both tours and cost of traveling, accommodation and other facilities, if any, for media persons, provided by which particular department.         

PIO's reply—XP Division of the Ministry extends necessary facilitation to the media and takes care of briefings to ensure suitable coverage. Facilitation includes procurement of visas, media accreditation in host country, establishment of media centres, arranging hotel accommodation (paid for by journalists) and media briefings. The journalists travel on the VVIP flight, and they are not required to bear any travel cost. A list of the media persons accompanying Prime Minister on the twin visits to BRICS Summit and Kazakhstan is enclosed at Annexure.

         

Not satisfied with the PIO's reply, Takyar filed his first appeal. In his order, the First Appellate Authority (FAA), said, "The CPIO of the Ministry of External Affairs had responded to the applicant's letter of 18 March 2011 vide his letter no.RTI/551/361/2011 dated 3 June 2011 forwarding the information available with the Ministry of External Affairs. I am satisfied that the CPIO has forwarded the information requested by the applicant that is available with this Ministry".

 

Citing unsatisfactory reply from the PIO and FAA order, Takyar, the appellant approached the CIC with his second appeal.

 

During the hearing before Mr Gandhi, the then CIC, the PIO stated that the RTI application was originally filed with PMO, which was transferred to the MEA. This implies that the PMO did not hold the information and that the information is held by MEA.

 

The PIO of MEA categorically stated that he held some of the information, which has been provided to the appellant and the balance information should be with the PMO.

 

Mr Gandhi said, "The Bench feels that it is a sad reflection on two of the most important offices in India if the knowledge of where the information is held is not available in both places."

 

While allowing the appeal, he then directed the PIO of MEA to transfer the RTI Application back to the PMO mentioning the points on which points information would be with PMO. The PIO at PMO was directed to provide the information as per the available records to the Appellant as per the provisions of the RTI Act.  

 

CENTRAL INFORMATION COMMISSION

 

Decision No. CIC/SG/A/2011/002605/16276

http://rti.india.gov.in/cic_decisions/CIC_SG_A_2011_002605_16276_M_72217.pdf

Appeal No. CIC/SG/A/2011/002605

 

Appellant                                            : Aseem Takyar,

                                                            Udyog Vihar, Gurgaon, Haryana.

                  

Respondent                                        : Manish Chauhan

                                                           Public Information Officer & Director (RTI)

                                                            Ministry of External Affairs

                                                            619- Akbar Bhawan

                                                            Chanakyapuri

                                                            New Delhi-110021

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GM crops-Part2: The myth about food security

The hype for promoting GM is that it increases food security. India produced bumper stocks of food grains, all without GM, yet 200 million people are hungry. GM will not address the issues of poverty, poor storage and corruption, which deprive the poor of food. This is the second part of a three-part series|

GM and food security:
GM is now encountering consumer resistance to its further expansion in most of the developed world. Given its huge profitability for companies who own or license patented GM seeds, there is enormous pressure for introducing GM crops in the developing world. In India, field trials and commercial release is being sought for as many as 17 GM crops. This includes food crops like rice, wheat, jowar, sorghum, groundnut, corn, potato, tomato, cabbage, cauliflower, okra, brinjal, mustard, watermelon, papaya and sugarcane.
 

The Technical Expert Committee (TEC) majority report observes that GM crops are mainly used for oil or animal feed elsewhere and states, “…Nowhere are Bt trans-genics being widely consumed in large amounts for any major food crop that is directly used for human consumption. The TEC could not find any compelling reason for India to be the first to do so”.
 

The hype for promoting GM is that it increases food security, whereas the truth is that GM has nothing to do with food security. India produced bumper stocks of food grains, all without GM, yet 200 million people are hungry even though buffer food stocks are two and a half times the official requirement. Food grains have rotted or been siphoned out of an inefficient and corrupt Public Distribution System (PDS), whose leakages have been estimated at 45%. The Agriculture Minister himself estimates food wastages cost Rs4500 million. Technology, GM or otherwise, is not the answer for this.
 

Even in countries where GM has been widely adopted, such as in the US, the food insecurity in 1995 was 12% (before the introduction of GM crops) and rose to 15% in 2011. In Paraguay, though nearly 65 % of the land is under GM, hunger has increased from 12.6% in 2004-06 to 25.5% in 2010-12. It is essential to question the unsubstantiated hype that GM will contribute to food security and look at the real causes of food insecurity. GM will not address the issues of poverty, poor storage and corruption, which deprive the poor of food. Nor does it provide the most effective way to increase production. A United Nations 2011 press release on its report “Agro-ecology and the right to food” states that: “Small-scale farmers can double food production within 10 years in critical regions by using ecological methods.” Such agro-ecological methods are also safer from an environmental and health perspective.  
 

GM effects on health and environment: The hype is that GM foods are safe because US citizens have been eating them since 1996 and nobody has dropped dead because of GM food consumption. The truth is that GM food was approved in that country without any mandatory labeling as it was deemed to be ‘substantially equivalent’ to non-GM food. Michael Taylor, was the deputy commissioner for Policy at the US Food and Drug Administration (FDA). He later became vice-president of Monsanto and is again back as deputy commissioner for Foods at USFDA. This is just one of the many examples of the revolving door in the US between GM regulators and GM corporates. Without labeling, it is impossible to pinpoint impacts and liability.
 

US consumers are now demanding it and GM corporates are strenuously resisting it. While it may take decades to prove the link between GM and illness, as happened for tobacco, the American Academy of Environmental Medicine has stated. “There is more than a casual association between GM foods and adverse health effects ... Multiple animal studies show significant immune dysregulation, including upregulation of cytokines (protein molecules involved in immune responses) associated with asthma, allergy, and inflammation”. 
 

In their critical review on “Health risks of genetically modified foods 2009”, A Dona and IS Arvanitoyannis of the Dept of Forensic Medicine and Toxicology, University of Athens, states that “Most studies with GM foods indicate that they may cause hepatic, pancreatic, renal and reproductive effects and may alter haematological (blood), biochemical, and immunologic parameters, the significance of which remains to be solved with chronic toxicity studies”.
 

On the other hand, regulators, who clear GM crops, emphasise that there are no proven health risks. Those who question their safety, point out that US regulators do not mandate independent long-term studies but rely on industry studies. These are of only 90 days on rats, which is equivalent to 10 to 15 years of a human lifespan and too short to show organ damage or cancer. One of the first long term studies (two years on rats) by French professor Gilles-Eric Seralini, at the Committee for Research & Independent Information on Genetic Engineering (CRIIGEN), showed that incidence of tumours and mortality were several fold higher for rats fed GM herbicide tolerant maize and its related herbicide than for the control group. The study has been criticised by some scientists and supported by others, but certainly reinforces the need for long-term independent research before GM approvals and the need for post release monitoring.
 

The TEC of the Supreme Court has recorded that the Ministry of Agriculture has admitted that segregation of GM and non GM food will not be feasible in India. This would effectively impinge on the rights of consumers to GM free food, at a time when the safety of GM food and any overwhelming need for it are yet far from being conclusively established. This apart, reports (Charles Benbrook and others) point to the fact that herbicide use has increased significantly in the US after it adopted GM corn, soybeans and cotton, whereas US insecticide use has decreased only slightly but is still high compared to European countries,  which do not use GM crops. These studies negate the claim that GM reduces pesticide use.
 

Similarly, though the hype is that there is no environmental damage, the truth is that there are almost 200 studies pointing to possible adverse impacts on soil microbes, agriculturally beneficial species such as pollinators and pest controllers, unintended gene transfer, imbalances developing due to GM resistant pests and plants. Extracts of all these studies are available over here. There is often a lack of understanding of the difference between technology and ecology. The effects of the former are limited and the technological applications can be halted or corrected as evidence of harm emerges. Ecological processes consist of highly complex inter-relationships, and any major intervention in living ecosystems may take time to manifest and are virtually impossible to predict, control or reverse.    
 

In the absence of conclusive proof of safety, the Precautionary Principle embodied in the United Nations Rio Declaration needs to be adopted. This is all the more necessary in view of the fact that GM has not yet shown significant benefits that make it worth incurring these risks. It is significant that introduction of new GM crops in the US is languishing and that most other countries have either rejected or severely restricted GM. India would be wise to move with equal caution. 
 

You may want to read..

GM crops-Part 1: The truth about genetically modified foods

 

(Dilnavaz Variava has been involved with the environmental movement in India for close to 40 years. She has held many roles, including CEO of WWF-India, Vice-President of the Bombay Natural History Society-BNHS, and on several apex committees of the Govt of India. Since about 10 years, ever since she was asked to Chair the Working Group on the Ecological Foundations for Sustainable Agriculture for a Govt of Maharashtra Expert Group on Agriculture,  she has been closely involved with this subject. She is  Honorary Convener of the Consumer Group of the Alliance for Sustainable and Holistic Agriculture- ASHA)

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