The Supreme Court of India directed the Reserve Bank of India to amend the Foreign Exchange Management Act (FEMA) regulation rules within two weeks to facilitate the implementation of Foreign Direct Investment in the retail sector.

The court was hearing a Public Interest Litigation filed by lawyer M L Sharma against the government’s FDI policy for retail sector, claiming that the current FEMA regulations do not allow FDI in retail trading.

However, during the argument, the court said that the FDI policy has a “curable irregularity “and instructed the RBI to amend FEMA rules to allow the implementation of policy.

"At least it can be said that it is an irregularity that is curable and as soon as amendment is brought, it would be cured," the court said, as reported by PTI.

The bench of Justice R.M. Lodha and Justice Anil R. Dave hearing the PIL said that RBI should have amended the FEMA rules before the implementation of the FDI policy and asked the central bank to make necessary amendments to legitimize the FDI in retail trading within two weeks, PTI reported.

The ruling came as a respite to the government as it can now go ahead with its meeting on Oct. 19 to allot licenses to 50 companies for FDI in multi-brand retail trade in India.

Sharma had sought the cancellation of the FDI in retail policy on the grounds that government’s law lacked legal sanction as it was placed in front of the parliament or got the president's nod.

However, the court dismissed the arguments and said that a policy is not required to be placed before the parliament or the president, according to the constitution. It said that the government policy allowing FDI in retail could not be stopped on these grounds.

The Apex court adjourned the case for further hearing on Nov. 5 after Attorney General G E Vahanvati submitted that the RBI had already initiated the process of amending the FEMA regulation and had issued a circular on the issue. He also told the court that he would talk to the RBI governor to take immediate steps to make amendments.