In a move to attract foreign investment into India’s coal and mining sector, the Union Cabinet on Wednesday approved an Ordinance that would make the process of auctioning coal mines easier.
The government plans to promote foreign direct investment in the sector by removing restrictions and eligibility criteria for participation in coal block auctions, according to Coal Minister Pralhad Joshi.
The Promulgation of Mineral Laws (Amendment) Ordinance 2020 would allow successful bidders or allottees to utilise the coal mine “in any of its subsidiaries or holding companies,” he said.
The Ordinance will amend the Mines and Minerals (Development and Regulation) Act, 1957, and the Coal Mines (Special Provisions) Act, 2015.
It would allow companies that do not have coal mine operations in India to also participate in coal block auctions, according to the minister.
“Previously, there was a restriction that anybody, to participate, should have the coal mine operation in India. That restriction we are removing,” he said.
The end-use restriction had led to “comparatively less” participation in the coal block auctions. Of 204 coal block allocations cancelled by the Supreme Court in 2014, only around 29 had been auctioned, he said.
In August, the government allowed 100 per cent FDI in coal mining for open sale under the automatic route.
“The opening up of coal sector without end-use restrictions will also boost both production and mining efficiency, besides substituting import of coal worth approximately Rs 30,000 crore,” said Vikram Kirloskar, president, CII.
The Ordinance also provides for composite prospecting licence-cum-mining lease for coal and lignite blocks, according to the minister. This provision was previously not applicable to coal mines, he said.
“These amendments will open up a new era to the growth in coal and mining,” said Joshi.
The government aims to curb imports of coal through these amendments and encourage the use of the country’s coal reserves, which had earlier been available only for the captive use of the steel and power industry. Though India is the fourth largest resource in the world, it imported 235 million tonnes of coal last year, said Joshi.
Of this, 135 million tonnes could have been substituted with domestic reserves, according to him. “The total cost of that is Rs 1.71 lakh crore,” he said.
He added that “adequate” coal blocks have been allocated to Coal India, a major player in this sector. The government has given it a target to achieve a billion tonnes by 2023-24.
“Allowing commercial mining of coal will ensure assured coal supply, accountable allocation of coal and affordable fuel leading to affordable electricity prices for consumers,” said Kirloskar.
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