FM Nirmala Sitharaman pushed the focus on eight sectors—coal, minerals, defence production, civil aviation, power distribution, social infrastructure, space, and atomic energy in the fourth tranche of the economic package announced by PM Modi.
Easing of limits on FDI in defence manufacturing, privatisation of six more airports, opening up of more airspace, and allowing the private sector in commercial coal mining were some of the important announcements made by Sitharaman during the press conference.
Coal Sector
Sitharaman said that the government will introduce commercial mining in the country’s coal sector thus removing the government’s monopoly in coal mining. This would be done on the basis of a revenue-sharing mechanism instead of a fixed rupee per tonne regime. Any company can bid for a coal block and sell it in the open market.
India has the third-largest coal availability in the world within its untapped mines and yet India still imports coal. The emerging sectors suffer because of a lack of availability of raw material. Coalbed methane will also be auctioned and Rs 50,000 crore has been provided for evacuation infrastructure.
Mining Sector
Structural reforms in mineral mining have been announced through the introduction of a seamless composite exploration-cum-mining-cum-production regime. 500 mining blocks would be auctioned under this regime. Furthermore, to enhance the aluminum industry’s competitiveness, a joint auction of bauxite and coal mineral blocks would be done by reducing the cost of electricity generation. In order to allow the transfer of mining leases and the sale of surplus unused minerals, the government plans on removing the distinction between captive and non-captive mines. This will lead to better efficiency in mining and production.
Defence Production
The FDI limit in the defence manufacturing sector under the automatic route will be hiked from 49% to 74%. Time-bound defence procurement and faster decision making will also begin by setting up a Project Management Unit (PMU) to support contract management. It will ensure a realistic setting of General Staff Qualitative Requirements of weapons/platforms and overhauling of trial and testing procedures.
The government will also provide a list of weapons/platforms banned for imports. These items will only be allowed to be purchased from India. This list will be increased every year after consultation with the Department of Military Affairs. Sitharaman also said that a separate budget provisioning will be done for domestic capital procurement as part of the fourth tranche of the economic package, as this will help in reducing the defence import bill.
Civil Aviation
Only 60% of India’s airspace is freely available and the government plans on easing restrictions on the utilisation of Indian airspace so that the flying of civilian aircraft becomes more efficient. According to the minister, this will bring in benefits of nearly Rs 1,000 crore per year. Six more airports will be auctioned under the public-private-partnership (PPP) model. Additional investments are likely to happen in 12 airports for better world-class facilities. The FM also said that the Airports Authority of India (AAI) will get a down payment of Rs 2,300 crore. The first and second round of investment in 12 airports will get Rs 13,000 crore.
Power Distribution Sector
Power distribution companies in Union Territories (UT) are to be privatised. This will be in line with the tariff policy which is going to be announced soon. The tariff policy will have reforms, including consumer rights, promotion of industry, and sustainability of the sector.
Social-Infrastructure Projects
In the fourth tranche of the economic package, the FM also announced that the government has made a provision through viability gap funding (VGF) of Rs 8,100 crore to cater to the urgent requirement for social infrastructure in India. In most projects supported by Centre/States/statutory bodies, 20% is given as VGF. The Centre will give 30% VGF.
Space Sector
The government wants to provide a level playing field for private companies in satellites, launches, and space-based services and will allow them to utilise ISRO’s facilities and other relevant assets to improve their capabilities. Future projects for planetary exploration and outer space travel will be open to the private sector and there will be a liberal geo-spatial data policy for providing remote-sensing data to tech-entrepreneurs.
Atomic Energy
The finance minister said that the government will establish a research reactor in the PPP model for the production of medical isotopes to promote the welfare of humanity through affordable treatment for cancer and other diseases.
She also said that they will be establishing facilities under PPP mode to use irradiation technology for food preservation. This will complement agricultural reforms and assist farmers. The government will link India’s robust startup ecosystem to the nuclear sector to foster synergy between research facilities and tech entrepreneurs.
The fourth tranche has focussed on increasing ease of business and privatisation.
