Announcing the fourth tranche of economic measures to revive the economy from the COVID-induced slowdown, Finance Minister Nirmala Sitharaman announced the Centre's decision to increase FDI limit in defence manufacturing from 49 per cent to 74 per cent. The government has also permitted commercial mining of coal on a revenue sharing basis to increase its availability at market prices. Among the major announcements were opening up of sectors such as space, atomic energy and power distribution in Union Territories to private players.
Addressing the media for the fourth time in as many days, the finance minister's announcements on Saturday covered sectors including coal, minerals, defence production, civil aviation, power distribution in union territories, atomic energy and space.
Coal
The commercialisation of coal mining will end the Centre's monopoly in the segment. However, in order to minimise the coal usage, the government will provide incentives for gasification of coal. Initially, the government will offer 50 blocks for commercial coal mining. The Centre will allow liberalised entries for a range of coal blocks along with incentives.
Defence
Apart from increasing the FDI limit, the government will also corporatise ordnance factory boards to improve autonomy and accountability. However, it will not be privatised, emphasises the finance minister. There will be a separate budget for defence procurement. The government aims to enhance self-reliance in defence production. The government will notify weapons or platforms banned from imports. Indigenisation of some imported spares to be also given priority.
Minerals
The Centre has also announced enhancing private investments in the mineral sector, including structural reforms to boost growth, employment and bring state-of-the-art technology. It will allow a seamless mining and exploration regime. Joint auction will be conducted for bauxite and coal blocks. Initially 500 mining blocks will be offered for the auction. The government will also remove the distinction between captive and non-captive mines, while a mineral index will be brought in. Stamp duty rationalisation is another major decision announced by the FM on Saturday.
Civil Aviation
The government has decided to rationalise air space to reduce flying time and save fuel. The government has emphasised on efficient airspace management for civil aviation, including easing of restrictions on utilisation of the Indian air space so that civilian flying becomes more efficient. The move will bring in a total benefit of Rs 1,000 crore per year for the aviation sector and will reduce fuel use and time, in addition to green impact on the environment. The Centre has also announced the convergence of defence and civil MROs to be established to save money on maintenance. The move is aimed to reduce flying cost of passengers. Six more airports to come up for auction, while an equal number of airports will be newly built. Private players will be given room for investment in airports management. The move is expected to bring in Rs 13,000 crore.
Discoms
Discoms in Union Territories to be privatised in line with the tariff rates, the FM announced. The functions of the discoms will be streamlined to improve accountability and
Space
The Centre has also opened up the space sector to provide a level-playing field for private players. The private firms will be given access to ISRO's expertise and facility as part of the move.
Social infrastructure
Further, to boost private sector investments in social infrastructure, the Centre has, through revamped Viability Gap Funding Scheme, set aside an amount of Rs 81,00 crore.
Atomic Energy
The government will also establish a research reactor in public-private-partnership mode for production of medical isotopes, which will promote affordable treatment for cancer and other diseases. In order to use irradiation technology for food preservation, facilities will be established in PPP mode to complement agricultural reforms and assist farmers. The Centre is also looking to provide access to India's startup ecosystem to the nuclear sector through Technology Development-cum-Incubation Centres, to foster synergy between research facilities and tech entrepreneurs.
