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Sunday, 17 May 2020
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Finance Minister announces structural reforms across eight sectors (Part-IV)

 
Sectors
 
Union Finance & Corporate Affairs Minister Nirmala Sitharaman announced the fourth tranche under special economic package of Rs 20 lakh crore on 16 May 2020. 
 
The Finance Minister announced the following policy reforms to fast- track investment in an effort towards Aatmanirbhar Bharat Abhiyan:
 
a. Fast-tracking of investment clearance through Empowered Group of Secretaries.
b. Project Development Cell will be constituted in each ministry to prepare investible projects, coordinate with investors and Central/state governments.
c. Ranking of states on investment attractiveness to compete for new investment.
d. Incentive schemes for promotion of new champion sectors will be launched in sectors such as solar PV manufacturing; advanced cell battery storage, etc.
 
A  scheme was announced for upgradation of industrial sector which will be implemented in states through challenge mode for industrial cluster upgradation of common infrastructure facilities and connectivity. There will be availability of industrial land/land banks for promoting new investments and making information available on Industrial Information System (IIS) with GIS mapping. A total of 3,376 industrial parks, estates and special economic zones (SEZs) in five lakh ha are mapped on IIS to be ranked during 2020-21. 
 
Structural reforms in the eight sectors of Coal, Minerals, Defence Production, Civil Aviation, Power sector, Social Infrastructure, Space and Atomic Energy were announced.
 
The government will introduce competition, transparency and private sector participation in the Coal sector to be done through a revenue sharing mechanism instead of regime of fixed Rupee per tonne. Any party can bid for a coal block and sell in the open market and the entry norms will be liberalised. Around 50 blocks will be put on offer immediately. There will not be any eligibility conditions and only upfront payment with a ceiling will be provided. There will be exploration-cum-production regime for partially explored blocks. The move will allow private sector participation in exploration. Moreover, companies producing earlier than scheduled will be incentivised through rebate in revenue share. The coal gasification, liquefication will be incentivised through rebate in revenue share. Apart from this, infrastructure development of Rs 50,000 crore will be done for evacuation of enhanced Coal India (CIL) target of one billion tonne coal production by 2023-24, plus coal production from private blocks. This will include Rs 18,000 crore worth of investment in mechanised transfer of coal (conveyor belts) from mines to railway sidings. 
 
The Centre also announced for liberalised regime in the Coal sector. Coal Bed Methane (CBM) extraction rights will be auctioned from CIL’s coal mines. The government will undertake ease of doing business measures, such as Mining Plan simplification. This will allow for automatic 40 percent increase in annual production. 
 
The concessions in commercial terms given to CIL’s consumers (relief worth Rs 5,000 crore offered). The reserve price in auctions for non-power consumers reduced, credit terms eased, and lifting period has also been enhanced. 
 
For the Mineral sector the Centre will undertake structural reforms to boost growth, employment and bring state-of-the-art technology. The government will offer 500 mining blocks through an open and transparent auction process. A joint auction of bauxite and coal mineral blocks to enhance aluminum industry’s competitiveness.
 
The 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, will be removed. The Ministry of Mines is in the process of developing a Mineral Index for different minerals. There will be rationalisation of stamp duty payable at the time of award of mining leases. 
 
The focus in the Defence Sector focused upon self reliance in defence production. Make in India for self-reliance in defence production will be promoted by notifying a list of weapons/platforms for ban on import with year-wise timelines, indigenisation of imported spares, and separate budget provisioning for domestic capital procurement. This will help reduce defence import bill. The government will improve autonomy, accountability and efficiency in ordnance supplies by Corporatisation of Ordnance Factory Board. 
 
The foreign direct investment (FDI) limit in the defence manufacturing under automatic route will be raised from 49 percent to 74 percent. There will be time-bound defence procurement process and faster decision-making will be ushered in by setting up a Project Management Unit (PMU) to support contract management; realistic setting of General Staff Qualitative Requirements (GSQRs) of weapons, platforms and overhaul of  trial and testing procedures. 
 
In the Civil Aviation sector, restrictions on utilisation of the Indian Air Space will be eased. The move will bring a total benefit of around Rs 1,000 crore per year for the Aviation sector. The Airports Authority of India (AAI) has awarded three airports out of six bids for operation and maintenance (O&M) on public-private partnership (PPP) basis. The annual revenue of six airports in Round 1 was Rs 1,000 crore against current profit of Rs 540 crore per year. AAI will also get a down payment of Rs 2,300 crore. 
 
Six more airports have been identified for Round 2 bidding for (O&M) on PPP basis. Additional investment by private players in 12 airports in Rounds 1 and 2 is expected to bring around Rs 13,000 crore. Moreover, six more airports will be put out for Round 3 of bidding. 
 
Tax regime for maintenance, repair and overhaul (MRO) ecosystem has been rationalised.  Aircraft component repairs and airframe maintenance will increase from Rs 800 crore to Rs 2,000 crore in three years. Major engine manufacturers in the world are likely to set up engine repair facilities in India in 2021. Convergence between the Defence sector and the Civil MROs will be established to create economies of scale.
 
Under the Power sector, Tariff Policy laying out the following reforms was announced. 
 
(i) Consumer Rights
    a. DISCOM inefficiencies not to burden consumers
    b. Standards of Service and associated penalties for DISCOMs
    c. DISCOMs to ensure adequate power; load-shedding to be penalised
 
(ii) Promote Industry
    a. Progressive reduction in cross subsidies
    b. Time-bound grant of open access
    c. Generation and transmission project developers to be selected competitively
 
(iii) Sustainability of Sector
   a. No Regulatory Assets
   b. Timely payment of Gencos
   c. DBT for subsidy; Smart prepaid meters
 
Apart from this, power departments and utilities in the Union Territories will be privatised. 
 
In order to boost social infrastructure the Centre will enhance the quantum of Viability Gap Funding (VGF) up to 30 percent each of Total Project Cost as VGF by the Centre, state and statutory bodies. For other sectors, VGF existing support of 20 percent each from the government of India and states/statutory bodies will continue. The total outlay for the project is Rs 8,100 crore. The projects will be proposed by Central ministries, state governments and statutory entities.  
 
In order to boost private participation in space activities there will be level playing field provided to private companies in satellites, launches and space-based services. The private sector will be allowed to use the Indian Space Research Organisation (ISRO) facilities and other relevant assets to improve their capacities. Future projects for planetary exploration, outer space travel, etc will also be open for the private sector. There will be liberal Geo-Spatial Data Policy for providing remote-sensing data to tech-entrepreneurs. 
 
The Centre laid down some reforms in the Atomic Energy sector. A research reactor in PPP mode for production of medical isotopes will be established to promote welfare of humanity through affordable treatment for cancer and other diseases. Facilities in PPP mode to use irradiation technology for food preservation to compliment agricultural reforms and assist farmers will also be established. Technology Development-cum-Incubation Centres will be set up for fostering synergy between research facilities and tech-entrepreneurs.
 

Finance Minister announces government reforms & enablers across seven sectors (Part-V)

 
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