In the fourth tranche of reforms promised by Indian Prime Minister Narendra Modi, the Finance Minister Nirmala Sitharaman announced far-reaching changes to encourage fresh investments as India slowly emerges from the economic slowdown brought about by the Covid-19 pandemic.
Indian Finance Minister Nirmala Sitharaman on Saturday announced far-reaching and paradigm-changing reforms in a wide range of sectors like coal, minerals, defence production, civil aviation, power, space, atomic energy and social infrastructure.
Besides making it easier for the Indian private sector, the reforms will also facilitate greater play for foreign investors in these sectors and make India a more attractive foreign direct investment (FDI) destination.
The government has finally given up its monopoly on the production of coal, as promised by it a couple of years ago. This will encourage several private and foreign players to bid for the 50 coal blocks that the government will offer to private companies. Importantly, there will be no eligibility criteria for bidders, Sitharaman said. Therefore, any party can bid for mines. Not many private Indian companies have experience in coal mining and so, some new players may also rope in foreign players for technology as well as financial support. This is in keeping with Prime Minister Narendra Modi's vision of self-reliance as private production of coal in India will reduce the country's dependence on imported coal, save precious foreign exchange outgo and generate additional direct and indirect jobs in the sector. In addition, the Finance Minister has allocated $7 billion for creating infrastructure to evacuate the enhanced production of coal in India - both from the 50 mines to be allocated to private players as well the targeted increase in output from the public sector Coal India Ltd.
In a bid to attract large private investors to the mineral sector, Sitharaman announced a seamless mining and exploration regime. This means that the holder of an exploration license will be assured of getting a mining license should his/her exploration lead to the discovery of financially viable mineral deposits. She said 500 mining blocks will be offered for auction and bauxite blocks would be auctioned along with coal blocks. This will improve the competitiveness of India's aluminium industry. In another major relief to miners, the artificial and arbitrary distinction between captive and non-captive coal mines has been removed. This will allow for transfer of unviable captive mines to companies that might want to exploit it for merchant purposes. Further, the stamp duty payable at the time of award of mining leases have been rationalised to make it easier for investors.