Tranche IV of special economic package – policy reforms in coal, mining & defence sectors
May 18, 2020
While Tranche IIIof the special economic package pertained to Agriculture Infrastructure, Fisheries and Food Processing Sectors, Tranche IV covers policy reforms in the Coal, Mineral and Defence sectors, among others, as outlined below:
Liberalised regime in coal sector:
Introduction of Commercial Mining in Coal Sector
Revenue sharing mechanism instead of regime of fixed Rupee/tonne. Earlier, only captive consumers with end-use ownership could bid. Now, any party can bid for a coal block and sell in the open market.
Entry norms will be liberalized. Nearly 50 blocks to be offered immediately. No eligibility conditions, only upfront payment with a ceiling.
Exploration-cum-production regime for partially explored blocks, as against earlier provision of auction of fully explored coal blocks. Private sector participation in exploration to be allowed.
Production earlier than scheduled will be incentivized through rebate in revenue-share
Coal Gasification / Liquefication will be incentivised through rebate in revenue share. This will result in significantly lower environment impact and assist India in switching to a gas-based economy
Coal Bed Methane (CBM) extraction rights to be auctioned from Coal India Limited’s (CIL) coal mines.
Ease of doing business measures such as Mining Plan simplification. Mining Plan has been shortened, made amenable for loading online. Plan to allow automatic 40% increase in annual production. Concessions in commercial terms given to CIL’s consumers (relief worth Rs 5000 cr offered). Reserve price in auctions for non-power consumers reduced, credit terms eased, and lifting period enhanced.
Enhancing private investments in mineral sector:
Introduction of a seamless composite exploration-cum-mining-cum-production regime.
500 mining blocks will be offered through an open and transparent auction process
Introduction of Joint Auction of Bauxite and Coal mineral blocks to enhance Aluminum Industry’s competitiveness. Will help aluminium industry reduce electricity costs.
Remove distinction between captive and non-captive mines to allow transfer of mining leases and sale of surplus unused minerals, leading to better efficiency in mining and production.
Ministry of Mines is in the process of developing Mineral Index for different minerals
Rationalisation of stamp duty payable at the time of award of mining leases.
FDI limit in defence manufacturing under automatic route will be raised from 49% to 74%
‘Make in India’ for Self-Reliance in Defence Production. Notify a list of weapons/platforms for ban on import with year wise timelines. Indigenisation of imported spares. Separate budget provisioning for domestic capital procurement. Will help reduce huge Defence import bill.
Improve autonomy, accountability and efficiency in Ordnance Supplies by Corporatisation of Ordnance Factory Board.
Time-bound defence procurement process and faster decision making will be ushered in by setting up of a Project Management Unit (PMU) to support contract management; realistic setting of General Staff Qualitative Requirements (GSQRs) of weapons/platforms; overhauling trial and testing procedures.
Tariff Policy reforms:
Consumer Rights – DISCOM inefficiencies not to burden consumers. Standards of Service and associated penalties for DISCOMs. DISCOMs to ensure adequate power; load-shedding to be penalized
Promote Industry – Progressive reduction in cross subsidies. Time bound grant of open access. Generation and transmission project developers to be selected competitively
Sustainability of Sector – No Regulatory Assets. Timely payment of Gencos. DBT for subsidy; Smart prepaid meters.
To refer to Tranche IV of the FM’s announcements, click here.
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