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2016 Amendment to the FCRA

2016 Amendment to the FCRA

  1. This article briefly examines the 2016 amendment to the Foreign Contribution (Regulation) Act, 2010 (“FCRA”), which allows Indian companies owned/controlled by foreign persons to be excluded from the purview of FCRA and how it directly defeats the very purpose of FCRA.

Background

  1. The FCRA regulates receipt of foreign contribution from any foreign source. “Foreign Source”, under Section 2(1)(j) is defined to include “a company within the meaning of the Companies Act, 1956 (1 of 1956), and more than one-half of the nominal value of its share capital is held, either singly or in the aggregate, by one or more of the following, namely:—
  2. the Government of a foreign country or territory;
  3. the citizens of a foreign country or territory;
  4. corporations incorporated in a foreign country or territory;
  5. trusts, societies or other associations of individuals (whether incorporated or not), formed or registered in a foreign country or territory;
  6. foreign company;”[1]
  1. Further, Section 2(1)(g) of the FCRA defines a “foreign company” as any company or association incorporated outside India and includes a foreign company as defined under the Companies Act, 1956; a company which is a subsidiary of a foreign company; a company whose registered office is outside India or a multi national company.
  1. Similarly, the repealed FCRA, 1976 also prohibited/regulated receipt of funds from foreign sources which included foreign companies and any company with more than 50% foreign shareholding.[2]
  1. Therefore, under the FCRA 2010 and FCRA 1976, a foreign company or an Indian company in which more than 50% shareholding was held by an offshore/foreign entity or person, would automatically become a “foreign source” and receipt of funds from such companies would become “foreign contribution” for the purpose of the FCRA.

Challenge to Vedanta’s funding of political parties

  1. In 2014, the Association for Democratic Reforms filed a writ petition before the Delhi High Court regarding the blatant violation of the FCRA by various political parties wherein they were receiving foreign contribution from Indian companies which were in turn held by foreign companies.
  1. In Association for Democratic Reforms v. Union of India, W.P.(C) 131/2013, the issued specifically was whether contributions received by political parties, upto 2009, from two companies- Sterling Industries India Ltd. and Sesa Goa Ltd. in which more than 50% shareholding was held by Vedanta Resources Plc. a company incorporated in the UK, would qualify as “foreign contribution” under the FCRA, 1976.
  1. The Delhi High Court held that, firstly, Vedanta Resources PLC would qualify as a “foreign company” under the Companies Act, 1956 and therefore under the FCRA, and secondly, the actual donor companies would come within the definition of foregin source under 2(e)(vi) of the FCRA, 1976, and therefore, ordered the re-examination of receipts of contributions of respondent political parties.

Amendment to the FCRA in May 2016

  1. The FCRA was amended by the Finance Act, 2016 (which was introduced as a money bill) and the following new proviso, to the abovementioned Section 2(1)(j)(vi), was introduced:

Provided that where the nominal value of share capital is within the limits specified for foreign investment under the Foreign Exchange Management Act, 1999, or the rules or regulations made thereunder, then, notwithstanding the nominal value of share capital of a company being more than one-half of such value at the time of making the contribution, such company shall not be a foreign source;”.

  1. This effectively allows for an intersection of the FEMA and the FCRA whereby it allows a company which is compliant with the foreign direct investment sectoral caps prescribed by the DIPP and the RBI, to freely contribute to any person (as defined under the FCRA) in India without adhering to the restrictions thereon since they are excluded from the definition of “foreign source”, as defined under S.2(1)(j).

 

Retrospective amendment and effect on ADR v. Union of India     

  1. The 2016 amendment has introduced the new proviso with retrospective effect from the 26th September, 2010.
  1. The Delhi High Court order was limited to an analysis of the provisions of the FCRA, 1976 which has since been repealed. Though prior to the 2016 amendment, the FCRA and FCRA 1976 were pari materia, the 2016 amendment has changed the basis of the order.
  1. An appeal against the Delhi High Court order in Association for Democratic Reforms v. Union of India, W.P.(C) 131/2013, was filed in the Supreme Court and thereafter withdrawn in November 2016.

 

Issues

 A. Effect on the aims of FCRA

  1. The 2016 amendment to the FCRA strikes at the very fundamental basis of the FCRA.

 

  1. The historical context of controlling foreign funding clearly shows that the basis for introducing, both, the (now repealed) Foreign Exchange Regulation Act, 1973 and the FCRA, 1976 was to address the threat of control of the Indian economy and polity by foreign powers.

 

  1. The Parliamentary debates at the time of introduction of the FCRA, 1976, shows that fear of neo-colonialism of India by way of economic means would ultimately result in foreign interference and would therefore be against national interest

 

  1. On this basis, the Delhi High Court had concluded that the FCRA, 1976 was enacted to shield the legislative armoury with in conjunction with other laws like the FERA, 1973.[3]
  1. At the time, foreign funds received through investments by companies under FERA or by other non-profit organisations under the FCRA, 1976, were treated and regulated so as to not compromise the interest of the country.
  1. This purpose apparently resonated with the Indian legislature even in 2010 when the FCRA was passed. That is, P. Chidambaram, the then Minister of Home Affairs, during the Lok Sabha debates on the introduction of the FCRA had stated that it aimed to ensure that legitimate activities are allowed and that “foreign money does not dominate social and political discourse in India”. [4]
  1. The aim to separate foreign funding from any power over Indian politics is clear from the plain reading of the FCRA itself since it even prohibits office bearers of political parties under Section 3, thus bringing within its purview persons who are not in any manner connected with the Government.

 

  1. Therefore, with the 2016 Amendment the way is paved, retrospectively, for all political parties to receive foreign funding from Indian companies as long as they are FEMA compliant, and thus be unregulated by the FCRA.

 

  1. If one views this along with the opening up of the Indian economy to foreign companies, this gives rise to much graver and direct risk of control over Indian politics by foreign nationals through companies.

 

  1. For example, Press Note No.12 (2015 Series) dated November 24, 2015, introduced by the Ministry of Finance, allows upto 49% foreign investment in the defence sector through the automatic route and beyond that with prior Government approval. The 2016 amendment now directly allows for a foreign owned defence company to contribute to a political party which can directly compromise our physical national security.[5]

 

 B.Foreign Source

  1. By allowing FEMA compliant Indian companies which may be fully owned and controlled by foreign persons, to be excluded from the definition of foreign source, amounts to allowing foreign Governments, international agency funded companies, etc. who set up Indian companies to contribute freely to political parties and other organisations, this in effect defeats the very definition of foreign source under Section2(1)(j) of the FCRA.

C.Manner of amendment

  1. The 2016 Amendment to the FCRA, was brought about by the Finance Act, 2016, which was introduced as a money bill.
  1. Therefore, in effect, the Government amended the FCRA through the Finance Bill, which is a money bill. This issue was also raised by Mr. Asaduddin Owaisi, in the Lok Sabha during the debate over the Finance Bill.
  1. Given that the FCRA would not qualify as a matter pertaining to a “money bill” as defined under Article 110 of the Constitution, the constitutionality of this amendment is questionable.
  1. Therefore, the 2016 Amendment to the FCRA has given rise to multiple issues of law and sovereignty which unfortunately very few are raking up currently.

 

[1] Section 2(1) (j) (vi) of the FCRA.

[2] Section 2(1)(e) (iii) and (vi) of the FCRA, 1976.

[3] Order dated March 28, 2014, of the Delhi High Court in Association for Democratic Reforms v. Union of India, W.P.(C) 131/2013, paras 18-22

[4] Lok Sabha Debates, August 19, 2010

[5] Press Note No.12 (2015 Series) dated November 24, 2015, Ministry of Finance

California May Soon Require Paid Sick Time for Restaurant Workers and Others

California is poised to become the second state in the country to require paid sick leave for workers, an issue that has serious food safety implications for the restaurant industry.

Under the just-passed legislation, which is awaiting Gov. Jerry Brown’s signature (and he has already expressed support), California workers as of July 1, 2015, would be guaranteed at least three paid sick days a year.

More precisely, the bill requires businesses to grant employees one paid hour off for sick time for every 30 hours worked.

“Tonight, the Legislature took historic action to help hardworking Californians,” Brown said in a statement after the bill was passed on Aug. 30. ”This bill guarantees that millions of workers — from Eureka to San Diego — won’t lose their jobs or pay just because they get sick.”

Campaigners for restaurant worker sick pay say that many employees in the restaurant industry are more likely to work while sick if they do not have the privilege of paid sick time. In turn, sick restaurant workers have a higher chance of causing foodborne illnesses due to their contact with food.

In 2010, 88 percent of restaurant workers in a survey reported not receiving paid sick leave, according to Restaurant Opportunities Center United (ROC). ROC’s report, “Serving While Sick,” also found that 63 percent of workers reported cooking or serving food while sick at some point.

Another ROC report, “Backed into the Corner,” found that 48 percent of restaurant workers in the Miami-Dade area of Florida reported working while sick at some point, with 11 percent saying they experienced diarrhea or vomiting during a work shift. That report also found that workers were twice as likely to work while sick if they did not have paid sick time.

Once the bill is signed, California would be joining the state of Connecticut and cities such as Washington D.C., Seattle, WA, and Portland, OR, in requiring paid time off for illness.

The National Restaurant Association (NRA) and other business groups have lobbied against paid-sick-time legislation at the state and local level, saying that the one-size-fits-all legislation hurts businesses and threatens jobs.

Groups, including the NRA, have successfully helped pass laws to prevent new local paid-sick-leave legislation in 12 states.

Food Safety News

Leaf-mining insects destroyed with the dinosaurs, others quickly appeared

After the asteroid impact at the end of the Cretaceous period that triggered the dinosaurs’ extinction and ushered in the Paleocene, leaf-mining insects in the western United States completely disappeared. Only a million years later, at Mexican Hat, in southeastern Montana, fossil leaves show diverse leaf-mining traces from new insects that were not present during the Cretaceous, according to paleontologists.

“Our results indicate both that leaf-mining diversity at Mexican Hat is even higher than previously recognized, and equally importantly, that none of the Mexican Hat mines can be linked back to the local Cretaceous mining fauna,” said Michael Donovan, graduate student in geosciences, Penn State.

Insects that eat leaves produce very specific types of damage. One type is from leaf miners — insect larvae that live in the leaves and tunnel for food, leaving distinctive feeding paths and patterns of droppings.

Donovan, Peter Wilf, professor of geosciences, Penn State, and colleagues looked at 1,073 leaf fossils from Mexican Hat for mines. They compared these with more than 9,000 leaves from the end of the Cretaceous, 65 million years ago, from the Hell Creek Formation in southwestern North Dakota, and with more than 9,000 Paleocene leaves from the Fort Union Formation in North Dakota, Montana and Wyoming. The researchers present their results in today’s (July 24) issue of PLOS ONE.

“We decided to focus on leaf miners because they are typically host specific, feeding on only a few plant species each,” said Donovan. “Each miner also leaves an identifiable mining pattern.”

The researchers found nine different mine-damage types at Mexican Hat attributable to the larvae of moths, wasps and flies, and six of these damage types were unique to the site.

The researchers were unsure whether the high diversity of leaf miners at Mexican Hat compared to other early Paleocene sites, where there is little or no leaf mining, was caused by insects that survived the extinction event in refugia — areas where organisms persist during adverse conditions — or were due to range expansions of insects from somewhere else during the early Paleocene.

However, with further study, the researchers found no evidence of the survival of any leaf miners over the Cretaceous-Paleocene boundary, suggesting an even more total collapse of terrestrial food webs than has been recognized previously.

“These results show that the high insect damage diversity at Mexican Hat represents an influx of novel insect herbivores during the early Paleocene and not a refugium for Cretaceous leaf miners,” said Wilf. “The new herbivores included a startling diversity for any time period, and especially for the classic post-extinction disaster interval.”

Insect extinction across the Cretaceous-Paleocene boundary may have been directly caused by catastrophic conditions after the asteroid impact and by the disappearance of host plant species. While insect herbivores constantly need leaves to survive, plants can remain dormant as seeds in the ground until more auspicious circumstances occur.

The low-diversity flora at Mexican Hat is typical for the area in the early Paleocene, so what caused the high insect damage diversity?

Insect outbreaks are associated with a rapid population increase of a single insect species, so the high diversity of mining damage seen in the Mexican Hat fossils makes the possibility of an outbreak improbable.

The researchers hypothesized that the leaf miners that are seen in the Mexican Hat fossils appeared in that area because of a transient warming event, a number of which occurred during the early Paleocene.

“Previous studies have shown a correlation between temperature and insect damage diversity in the fossil record, possibly caused by evolutionary radiations or range shifts in response to a warmer climate,” said Donovan. “Current evidence suggests that insect herbivore extinction decreased with increasing distance from the asteroid impact site in Mexico, so pools of surviving insects would have existed elsewhere that could have provided a source for the insect influx that we observed at Mexican Hat.”

Story Source:

The above story is based on materials provided by Penn State. The original article was written by A’ndrea Eluse Messer. Note: Materials may be edited for content and length.

Agriculture and Food News — ScienceDaily

Leaf-mining insects destroyed with the dinosaurs, others quickly appeared

After the asteroid impact at the end of the Cretaceous period that triggered the dinosaurs’ extinction and ushered in the Paleocene, leaf-mining insects in the western United States completely disappeared. Only a million years later, at Mexican Hat, in southeastern Montana, fossil leaves show diverse leaf-mining traces from new insects that were not present during the Cretaceous, according to paleontologists.

“Our results indicate both that leaf-mining diversity at Mexican Hat is even higher than previously recognized, and equally importantly, that none of the Mexican Hat mines can be linked back to the local Cretaceous mining fauna,” said Michael Donovan, graduate student in geosciences, Penn State.

Insects that eat leaves produce very specific types of damage. One type is from leaf miners — insect larvae that live in the leaves and tunnel for food, leaving distinctive feeding paths and patterns of droppings.

Donovan, Peter Wilf, professor of geosciences, Penn State, and colleagues looked at 1,073 leaf fossils from Mexican Hat for mines. They compared these with more than 9,000 leaves from the end of the Cretaceous, 65 million years ago, from the Hell Creek Formation in southwestern North Dakota, and with more than 9,000 Paleocene leaves from the Fort Union Formation in North Dakota, Montana and Wyoming. The researchers present their results in today’s (July 24) issue of PLOS ONE.

“We decided to focus on leaf miners because they are typically host specific, feeding on only a few plant species each,” said Donovan. “Each miner also leaves an identifiable mining pattern.”

The researchers found nine different mine-damage types at Mexican Hat attributable to the larvae of moths, wasps and flies, and six of these damage types were unique to the site.

The researchers were unsure whether the high diversity of leaf miners at Mexican Hat compared to other early Paleocene sites, where there is little or no leaf mining, was caused by insects that survived the extinction event in refugia — areas where organisms persist during adverse conditions — or were due to range expansions of insects from somewhere else during the early Paleocene.

However, with further study, the researchers found no evidence of the survival of any leaf miners over the Cretaceous-Paleocene boundary, suggesting an even more total collapse of terrestrial food webs than has been recognized previously.

“These results show that the high insect damage diversity at Mexican Hat represents an influx of novel insect herbivores during the early Paleocene and not a refugium for Cretaceous leaf miners,” said Wilf. “The new herbivores included a startling diversity for any time period, and especially for the classic post-extinction disaster interval.”

Insect extinction across the Cretaceous-Paleocene boundary may have been directly caused by catastrophic conditions after the asteroid impact and by the disappearance of host plant species. While insect herbivores constantly need leaves to survive, plants can remain dormant as seeds in the ground until more auspicious circumstances occur.

The low-diversity flora at Mexican Hat is typical for the area in the early Paleocene, so what caused the high insect damage diversity?

Insect outbreaks are associated with a rapid population increase of a single insect species, so the high diversity of mining damage seen in the Mexican Hat fossils makes the possibility of an outbreak improbable.

The researchers hypothesized that the leaf miners that are seen in the Mexican Hat fossils appeared in that area because of a transient warming event, a number of which occurred during the early Paleocene.

“Previous studies have shown a correlation between temperature and insect damage diversity in the fossil record, possibly caused by evolutionary radiations or range shifts in response to a warmer climate,” said Donovan. “Current evidence suggests that insect herbivore extinction decreased with increasing distance from the asteroid impact site in Mexico, so pools of surviving insects would have existed elsewhere that could have provided a source for the insect influx that we observed at Mexican Hat.”

Story Source:

The above story is based on materials provided by Penn State. The original article was written by A’ndrea Eluse Messer. Note: Materials may be edited for content and length.

Agriculture and Food News — ScienceDaily

Topco recognizes Hy-Vee, others with private label award

Hy-Vee, Roche Bros. and Tops are among the retailers Topco Associates honored for excellence in corporate brand marketing.

The Topco members received their awards during Topco’s Center Store Sales & Merchandising Conference, held May 19 to 21 at the Renaissance Convention Center in Schaumburg, Ill.

“Our award winners are true leaders in marketing store brands,” Chris Hooks, Topco’s vice president of Center Store, said in a statement. “They have successfully demonstrated, using a variety of new and innovative marketing methods, how to effectively market corporate brands and drive sales.”

Topco’s Corporate Brand Marketing award recipients:

Best-in-Class Brand Marketing: K-VA-T Food Stores, for promoting the Chuck Wagon pet brand to its Food City customers, with a strong mix of effective advertising and in-store promotional vehicles.
Best-in-Class Brand Marketing: Affiliated Foods Midwest, for developing and marketing a refreshed, best-in-class Shurfine Salty Snack program.

Best-in-Class Merchandising: Acme Fresh Market, for its Summer Sales Contest. Each Acme Fresh store created impactful displays for many products including Top Care cotton, first aid and oral care products.
Best-in-Class Promotions: Coborn’s, for advertising deals on legacy brands.
Best-in-Class Program Introduction: SpartanNash, for the launch of Tippy Toes by Top Care.


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Best-in-Class Program Introductions: Hy-Vee, for the launch of Hy-Vee Hickory House Barbecue program. The company was also recognized for its “Success by the Cup” promotion, highlighting Hy-Vee brand single-serve coffee.
Best-in-Class Cause Marketing: Tops Friendly Markets, for promoting Full Circle + Project 7 Breakfast Bars, Teas and Coffee with a mix of in-store displays, print and online advertising and natural and organic flyer support. Top’s customers’ purchases of Full Circle + Project 7 items resulted in the donation of nearly 74,000 meals to local food banks in New York and Pennsylvania.
Best-in-Class Cause Marketing: Roche Bros., for its marketing support Full Circle + Project 7 products.

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US (CA): Water issues could affect some more than others

While drought conditions in California are bad for the entire state, especially the fresh produce industry, some of the state’s growers will likely feel the effects of a water shortage more acutely than others. Depending on growing location and the source of their water, some California growers will have to pay more for the water they need to grow their crops.

“Growers are running into cash flow issues,” said Ken Melban, director of issues management for the California Avocado Commission. “They have to purchase water to irrigate, but there’s not any natural water coming.” A good portion of the industry’s growers from Ventura to San Diego have to buy water to supplement rainfall, and that’s become costly. Higher costs could lead to less production, and that could mean higher prices for the produce that is grown.


“Input costs for growers are escalating right now due to the water situation, but they are price-takers, in that the market determines prices, so they can’t turn around and charge more for their produce,” explained Melban. “But we will see situations where, because of supply and demand, a reduction in supply will lead to higher prices.” Which growers will suffer reductions could, in turn, depend on where they’re located.

“For the most part, well water is the main source of water for strawberry growers in the Wattsonville and Santa Maria areas,” said Carolyn O’Donnell, communications director for the California Strawberry Commission. “Those growers that are on wells seem to be doing okay right now, but it will be a concern if dry weather continues for another year.” But growers in Ventura County, who are more dependent on pipe water, will have to adjust their growing based on what the entities who manage that water supply do. While water management is not a new issue, and while the state’s growers have been planning for dry conditions for several years now, some of the state’s growers will definitely feel the lack of water.

“We just have to wait and see what happens,” said O’Donnell. “Especially for those on pipe water.”

FreshPlaza.com

Video: Parents of Sickened Girl Urge Others Not to Feed Children Raw Milk

Kylee Young was 23 months old when she contracted an E. coli O157:H7 infection from drinking raw milk. The illness hospitalized her for months, caused her to have a stroke and eventually required her to receive a kidney transplanted from her mother.

Kylee’s parents, Jill Brown and Jason Young, are now speaking out to urge other parents not to feed raw milk to their children, as children are especially vulnerable to foodborne pathogens potentially present in unpasteurized milk.

“There might be some benefits of raw milk, but there are huge risks,” said Brown, Kylee’s mother. “There needs to be more public awareness that this is a high-risk food. If I had known what I know now, I would never have fed it to my daughter.”

The owners of the family dairy that supplied her milk, Brad and Tricia Salyers, also suffered through four of their five children contracting E. coli infections. Like Kylee’s parents, they, too, are warning parents not to feed raw milk to their children.

Food Safety News published an in-depth story on Kylee’s experience yesterday: “A Mom and Dairyman Plead: Don’t Feed Children Raw Milk”

To help inform other parents about their family’s experience, Brown and Young participated in a video interview with videographer Terry Tainter. Watch it below:

Food Safety News

Marsh to Close 8 Stores, Rebrand Others

Marsh Supermarkets on Thursday said it would close eight stores by the end of this month, citing lower customer counts and in some cases, expiring store leases.

The Indianapolis-based retailer, however, also announced a three-year investment plan for its remaining stores — including rebranding all but two of its stores under the Marsh banner. The company will retire the Main Street Markets banner, currently used by 20 of Marsh’s 78 stores. The two O’Malia’s Food Markets stores will retain their name, a spokeswoman told SN Thursday.


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“Customers have spoken and we are reacting to the realities of the markets and making difficult decisions to address the long-term health of the company,” Marsh said in a statement. “This action is the first part of a three-year plan we are implementing this year to position Marsh Supermarkets for growth and profitability.  More specifically, we will be implementing a major capital program to bring all stores under the Marsh Brand, update and remodel existing stores and seek opportunities to build new stores in new or existing markets.”

Read more: Indianapolis Due for a Shakeup?

Stores to close are located in Muncie, Ind. (West Bethel and South Madison); Indianapolis (Lafayette Road and Thompson/Emerson); Franklin, Ind.; Lebanon, Ind.; Speedway, Ind. (Crawford Rd.) and in Franklin, Ohio.

Marsh said it would try to place impacted employees at other openings in the company.

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Japan, US, agree to accept each other’s organic imports

Japan, US, agree to accept each other’s organic imports

The Agriculture Department is planning to announce Thursday that organic products certified in Japan or in the United States may be sold as organic in either country. The agreement will allow producers to sell in both countries without going through the lengthy process of getting certified twice.

Japan imports a wide variety of organics from the United States, including soybeans, specialty crops like cauliflower and nuts, and processed products like frozen meals. The main Japanese imports to the United States are organic green tea, sake and mushrooms.

In agreeing to the deal, Japan dropped its objections to two substances allowed in US organic foods that are not allowed in Japanese organic foods.

While most of the two countries’ organic standards are the same, Japan has not allowed its organics to be produced with ligonum sulfonate, a substance used in post-harvest fruit production, or alkali-extracted humic acid, a fertilizer used to help grow a variety of organic crops. The United States allows those substances.

Annual organic sales to Japan from the United States now total around $ 80 million, and USDA estimates the new agreement could more than triple that amount to $ 250 million a year over the next 10 years.

“This partnership reflects the strength of the USDA organic standards, allowing American organic farmers, ranchers, and businesses to access Asia’s largest organic market,” said Agriculture Secretary Tom Vilsack.

Source: washingtonpost.com

Publication date: 9/26/2013


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