JOIN USAtma Nirbhar Bharat: Key takeaways from Finance Minister Nirmala Sitharaman's presser
Today’s announcement address structural reforms in various sectors of the economy.
At the start of her address, the finance minister said that efforts have already started for upgradation of industrial infrastructure.
"Public sector bank reforms infused equity and also ensured that they are professionally managed, also giving them independence. No cronyism has been developed through banks," said Sitharaman.
"Many sectors need policy simplification, to make it simpler for people to understand what each sector can give, participate in activities & bring transparency. Once we decongest sectors, we can boost the sector, for growth and jobs," said the finance minister.
She further said incentive schemes for the promotion of new champion sectors will be established in sectors such as solar photovoltaic manufacturing; advanced cell battery storage and others.
"Prime Minister has a very strong record in taking up deep systemic reforms. Direct Beneficiary Transfer enabled giving money directly to people, GST brought in One Nation One Market, IBC resolved insolvency issues, ease of doing business steps taken," said the finance minister.
Policy reforms to fast-track investments
Fast-track investment clearance through Empowered Group of secretaries will be done, said the finance minister. A project development cell will be set up in each ministry to prepare investible projects and coordinate with investors and central/state governments. States will be ranked on investment attractiveness to compete for new investments, she added.
A new scheme will be implemented in states through challenge mode for Industrial cluster upgradation of common infrastructure facilities and connectivity. Availability of industrial land and land bank for promoting new investments and making information available on Industrial Information System (IIS) with GIS mapping. 3,376 industrial parks and SEZs in 5 lakh hectares will be mapped on IIS.
The finance minister's reform announcements will affect the following sectors:
- Coal
- Mineral sector
- Defence production
- Airspace management
- Maintenance Repair Overhaul
- Power distribution companies in Union Territories
- Space
- Atomic Energy
Coal sector
The finance minister said that there is a need to reduce the import of substitutable coal and increase self-reliance in coal production. The government will introduce competition, transparency and private sector participation in the coal sector through a revenue-sharing mechanism instead of fixed rate. Entry norms will be liberalised, nearly 50 blocks will be offered immediately. Coal will be gasified in order to reduce environmental burden, said the finance minister. This is expected to produce diverse opportunities.
Rs 50,000 crores being given to ensure evacuation infrastructure is provided. Exploration cum production regime for partially explored blocks, against earlier provision of auction of fully explored blocks.
Minerals 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 is expected to enhance the aluminium industry’s competitiveness. This will help the aluminium industry reduce electricity costs. Removal of 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. Rationalisation of stamp duty payable at the time of award of mining leases will be undertaken.
Defence Production
'Make in India' will be leveraged for self-reliance in defence production, said the finance minister.
A list of weapons/platforms for ban on import with year-wise timelines will be notified. Imported spares will be indigenised. These reforms will help reduce the defence import bill. Another step that will be taken to improve autonomy, accountability and efficiency in ordnance supplies by Corporatisation of Ordnance Factory Board. This does not mean it will be privatised, emphasised the finance minister.
FDI limits will be raised from 49% to 74% under automatic route. Time-bound defence procurement processes and faster decision making will be ushered in by setting up of a project management unit to support contract management. Realistic setting of general staff qualitative requirements of weapons and platforms will be done. Trial and testing procedures for defence will be overhauled.
Civil aviation
These reforms will bring in a reduction of flying costs by Rs 1,000 crores. Only 60% of Indian airspace is freely available, said the finance minister. Airspace will be rationalised to save fuel, travel time and pilots’ flying time. This will have a positive environmental effect. 6 more airports will be identified for 2nd round of auction. Bid process will start immediately. AAI has awarded 3 out of 6 airports for operation and maintenance on PPP basis. Additional investment by private players in 12 airports in first and second rounds expected around Rs 13,000 crores. Annual revenue of six airports in the first round is expected to be Rs 1,000 crores against a current profit of Rs 540 crores per year. Airports Authority of India will get Rs 2,300 crores in downpayment.
Making India an MRO hub
Tax regime for MRO ecosystem has been rationalised. Convergence between the defence sector and the civil MROs will be established to create economies of scale. Maintenance cost for airlines is expected to come down. Major engine manufacturers are expected to bring in their services to India.
"India to become a global hub for Aircraft Maintenance, Repair and Overhaul (MRO). The tax regime for the MRO ecosystem has been rationalized. Aircraft component repairs and airframe maintenance to increase from Rs 800 crores to Rs 2000 crores in 3 years," said finance minister Nirmala Sitharaman.
Power DISCOMS in Union Territories
Power distribution companies in UTs will be privatised.
A tariff policy laying out of the following reforms will be relaxed. DISCOMs will be penalised for load-shedding. DISCOM inefficiencies not to burden consumers. DBT for subsidy and smart prepaid meters will be installed. "In UTs, suboptimal performance and power distribution and supply are not in favour of consumers," said the finance minister. This will lead to better service to consumers and improvement in operational and financial efficiency in distribution. This would also provide a model for emulation across the country.
Social infrastructure projects
Rs 8,100 crores to given in the form of viability gap funding for social infrastructure. Government will enhance the quantum of viability gap funding to 30% each of total project cost as VGF by centre and state/statutory bodies. Social infrastructure projects will be proposed by central ministries, state govt and statutory entities.
Other sectors will receive 20% of existing support from GOI and states and statutory bodies each will continue.
Space
"Indian private sector will be a co-traveller in India’s space sector journey," said the finance minister. These reforms will provide level playing field for private companies in satellite launches and space-based services and will provide predictable policy and regulatory environment to private players. Private sector entities will be allowed to use ISRO facilities and other relevant assets to improve their capacities. Future project for planetary exploration, outer space travel and others to be open for the private sector. Liberal geospatial data policy for providing remote-sensing data to tech entrepreneurs.
Atomic energy
Research reactor in PPP model for the production of medical isotopes will be established to promote welfare of humanity through affordable treatment for cancer and other diseases.
"PPP mode will be used for irradiation technology for food preservation to compliment agri reforms and assist farmers," said the finance minister.
This is will help link India’s robust startup ecosystem to the nuclear sector. Technology development cum incubation centres will be set up for fostering synergy between research facilities and tech entrepreneurs.