Cabinet Clears Fema Tribunal, Defers Hmt Divestment

The Union Cabinet yesterday approved the setting up of a foreign exchange appellate tribunal under the Foreign Exchange Management Act (Fema) and deferred the Rs 500 crore revival package for Hindustan Machine Tools (HMT).

The package for HMT has been referred to a group of ministers, comprising finance minister Yashwant Sinha, heavy industry minister Manohar Joshi, cultural and tourism minister Ananth Kumar, Planning Commission deputy chairman K C Pant and commerce and industry minister Murasoli Maran.

The Cabinet, at its meeting on Thursday, also approved Shipping Corporation of India's purchase of four crude oil tankers to meet the anticipated increase in oil demand.

 

The revival package for HMT was debated intensely in the Cabinet, with minister for disinvestment Arun Jaitely and finance minister Yashwant Sinha expressing strong opposition to it.

However, some ministers felt that the fate of the Srinagar factory should be delinked from the performance of HMT units elsewhere, as this would send a wrong signal. The matter was finally referred to a GoM.

The foreign exchange appellate authority will replace the Foreign Exchange Regulation Tribunal Board set up under the Foreign Exchange Regulation Act (Fera).

The new tribunal will have a full-time chairperson and two full-time and two part-time members. The tribunal will have benches in Delhi and possibly in other parts of the country. The Centre will decide the jurisdiction of these benches. Section 18 of FEMA says: "The central government by notification establish an Appellate Tribunal to hear appeals against the orders of the adjudicating authorities and the Special Director (Appeals) under this act."

The tankers to be purchased by SCI will be supplied by Hyundai Heavy Industries Company Limited, South Korea. They will cost Rs 157.02 crore each. SCI will get External Commercial Borrowings (ECB) up to 80 per cent of the contract price from international Fis. 20 per cent of the price will be paid for from its own internal resources. Guarantees will be obtained, if necessary from SBI or other Indian banks.