NEW DELHI, July 18: The Insurance Regulatory Authority Bill will be taken up for discussion in the next Cabinet meeting which is expected early next week, finance minister Yashwant Sinha said here on Saturday. The government would try to push the IRA Bill in the current session of Parliament which would pave the way for investment in the sector by domestic corporate houses and cooperatives.Amongst other bills the government has also proposed to introduce the much awaited Narcotics Bill, the Money Laundering Bill and the Foreign Exchange Management Act (FEMA) to replace the Foreign Exchange Regulation Act (FERA), during the current session of Parliament, said Sinha.On exports, Sinha said the government would soon announce a package of incentives to boost exports after his meeting with commerce minister, Ramakrishna Hegde early next week. The finance minister who was speaking to journalists in an informal chat after addressing the high level committee on credit support for IRDP in the Capital on Saturdaysaid the incentive package for exports will be designed to meet the competitive edge of East Asian economies whose drastic devaluation had given them an advantage against India in the global market. The economies of East Asian have witnessed devaluation of their currencies ranging from 40 to 400 per cent due to the currency meltdown in the area.Sinha said since the Exim policy had been announced before the presentation of the Budget this year, there was need to fine tune export incentives which the new package would take care of.Monitoring of export policy is a continuous process and we cannot be silent after unveiling one concrete policy for the purpose in the wake of the fierce competition in the international market and changing situations, he said.Sinha also justified the removal of withholding tax on external commercial borrowings (ECBs) saying this was done in the wake of rise in interest rates which was acting as a dampner for raising resources abroad.Since interest rates have gone up "wefelt the removal of withholding tax on external commercial borrowing would encourage the industry to access ECBs", he said.Asked why industrial recovery had not taken place despite the sops announced for the sector, Sinha expressed confidence that the economy will end this financial year with eight to 10 per cent industrial growth.Sinha asserted that the Rs 263 crore tax concessions announced on Friday would not have any major adverse effect on the fiscal deficit. "What impact could Rs. 263 crore have on revenue collection projections which run into several thousands of crore," he asked.Cabinet against MoF proposal for 26% foreign stakeNEW DELHI: The Cabinet had on July 15 shot down a proposal by the finance ministry to allow a 26 per cent foreign stake in private Indian insurance companies. The proposal was to allow an initial stake of 26 per cent which was to be later allowed to go up to 40 per cent.Power minister P Kumarmangalam, communications minister Sushma Swaraj, HRD ministerMurli Manohar Joshi were amongst those who opposed the proposal.The finance ministry's initiative was shot down not because the members of the Cabinet were opposed to foreign equity stake in insurance but they took objection to the definitions provided by the ministry on what is an `Indian company' who will be allowed to make a foray into the insurance sector.Well-placed sources in the Cabinet said that the finance ministry had put forward three elaborations of an Indian company first, is a company registered in India with equity capital owned by Indians, second, is a joint venture company registered in India with the foreign partner holding a 26 per cent stake which can go up to 40 per cent and, third, a company registered in India but whose shareholding is owned by a foreigner or a foreign company.BJP ministers in the Cabinet raised their voices in a chorus against the third definition given by the ministry. The finance ministry was accused by some of the members of the Cabinet of allowing 100 percent equity participation by "foreigners or foreign companies". "This would have amounted to a full back door entry for foreign companies in the insurance sector," a cabinet minister said.When it was pointed out that the third definition did not make sense in the light of the earlier elaboration of an `Indian company' which allows for a foreign stake of only 26 per cent which can go up to 40 per cent, the minister said, "This is precisely what we debated about and pointed out in the cabinet meeting." He went on to add, "The finance ministry's definition of allowing 100 per cent equity participation by foreign companies or foreigners was apparently only an enabling provision but we are opposed to any such caveats". The BJP cabinet minister said that a "Maruti-type situation will arise if a foreign company is allowed to take its equity".
