market

Stimulus Part 4: Govt ends Coal India's monopoly in coal mining; raises defence FDI limit to 74%


NEW DELHI: In its fourth tranche of stimulus, the government on Saturday announced a slew of reforms to bring in investments in India.

Among them is the commercialisation of coal. This would mean the monopoly of Coal India will be over. Nearly 50 coal blocks will be offered immediately, the FM said. This will be done via a revenue sharing mechanism instead of the regime of fixed rupee per tonnes. Any party could bid for coal blocks and sell in the open market, the FM said. This is against the earlier norm where only captive consumers with end-use ownership could bid.

There would be no eligibility of condition and there will only be upfront payment with a ceiling.

The FM allocated over Rs 50,000 crore for creating evacuation infrastructure for coal.

Sitharaman made announcements for eight sectors in total including coal, minerals, defence production, airspace management, airports, space, atomic energy and power distribution companies in union territories.

“Indigenisation of imported spares, corporatisation of Ordnance Factory Board and listing of the same in the stock exchange are indeed bold structural reform measures,” said VK Vijayakumar- Chief Investment Strategist of Geojit Financial Services.

“Raising the FDI limit in defence manufacturing will help in technology transfer and will be a major boost for domestic manufacturing. Auctioning of six more airports and privatisation of Discoms in UTs are welcome. In brief, liberalisation in fast forward mode,” he said.

In case of mining, the FM removed the distinction between captive and non-captive mines. This will allow transfer of mining leases and sale of surplus unused minerals. There would be rationalisation of stamp duty payable at the time of awarding of mining leases, she said.

A joint auction of co-dependent raw materials in the mining sector will take place. A total of 500 mining blocks will be offered through an open and transparent auction process, she said. Sitharaman also introduced a joint auction of bauxite and coal mineral blocks. The move is seen as cutting electricity costs for the aluminium industry.

In a boost to defence production, the FDI limit in defence manufacturing under automatic route has been increased to 74 per cent from 49 per cent.

The government will notify a list of weapons and platforms for ban on imports with year-wise timelines. The government announced plans to indigenisation of imported spares. There would now be a separate budget provisioning for domestic capital procurement.

“For us, this is a dream come true,” said Baba Kalyani, MD of Bharat Forge. This will create new industry, new employment, new technology and capabilities” Kalyani told ET NOW.

For the aviation sector, the FM announced efficient airspace management for civil aviation. Noting that only 60 per cent of the Indian airspace is freely available, the government has decided to ease the restrictions on utilisation of Indian air space so that civilian flying becomes more efficient. The move is seen to benefit about Rs 1,000 crore per year for the aviation sector due to reduction in fuel use and time.

AAI has already awarded three airports out of six for operation and maintenance on PPP basis in Round I. Now, the government has identified six more airports for the Round 2. For this, the bid process will be commenced immediately, the FM said.

The additional investment by private players in 12 airports in the two rounds is expected at Rs 13,000 crore. Another six airports will be put out for the third round of bidding.

The FM meanwhile, also announced the privatisation of power utilities in union territories. It would reduce cross subsidies, the FM said.





READ SOURCE

Leave a Reply

This website uses cookies. By continuing to use this site, you accept our use of cookies.