Big reforms in coal, defence, space, aviation

The Centre on Saturday rolled out the biggest reform in coal sector by allowing private players to start commercial mining. It also enhanced foreign direct investment cap in defence production, freed up more air space for civilian flights and encouraged further private participation in the space sector, including satellites and launches -- all aimed at making post-Covid economy more self-reliant.

At present, private sector firms in India are only allowed to mine coal for their own use in cement, steel, power and aluminum plants. Coal India is the sole commercial miner in the country with 80% market share.

In her fourth consecutive announcement on reform and relief measures amid the pandemic, Finance Minister Nirmala Sitharaman said the foreign direct investment limit in defence manufacturing under automatic route will be raised from 49% to 74%.

India will also stop importing weapons that can be manufactured indigenously. The government will notify a list of weapons for ban on import with year-wise timelines. Every year this list will be increased.

"The move will improve self-reliance in defence manufacturing and reduce a huge defence import bill," she said.

She also proposed easing of restrictions on Indian airspace, of which only 60% is freely available for commercial use, to reduce travel time and save fuel. The easing of airspace translates to benefits of about Rs 1,000 crore a year for the aviation sector, the minister said and gave details of six airports to be auctioned to private players.

Aviation experts, however, questioned her move, wondering who would invest when the future of airlines was uncertain in these times. Prominent carriers also demanded a stimulus package for grounded airlines to start flying.

Seeking to end the monopoly of Coal India, the minister said mining of coal will be commercialised and nearly 50 blocks will be offered immediately. Any party could bid for coal blocks and sell in the open market as opposed to the prevailing norm where only captive consumers with end-use ownership can bid. She also announced an investment of Rs 50,000 crore for developing infrastructure to evacuate mined coal.

In order to encourage private participation in space exploration and related activities, the minister said Indian private sector will be a co-traveller in India’s space sector journey.

The private sector will be allowed to use Isro's facilities and other relevant assets to improve their capacities. The future projects for planetary exploration, outer space travel will be open for private sector.

To boost growth and job prospects, the government will enhance private investments in the mineral sector. It will also introduce joint auction of bauxite and coal mineral blocks to enhance the aluminum industry’s competitiveness. The move will help the aluminium industry reduce electricity costs.

Sitharaman said the structural reforms announced on Saturday will impact those sectors which are new horizons of growth, unleashing new investment, boosting production and creating jobs.