India announced major reforms for its coal sector in its efforts to attract more investments to boost domestic production at a time when the country is a net importer of coal despite having the world’s fourth-largest deposits.
Finance Minister Nirmala Sitharaman told reporters that there was an urgent need to reduce import of substitutable coal and increase self- reliance in coal production.
The changes announced were the fourth part of a $266 billion stimulus package from the government to manage the economic fallout of a national lockdown triggered by the coronavirus pandemic.
The minister said the government will introduce competition, transparency and larger private sector participation in the coal sector through a revenue sharing mechanism instead of fixed pricing.
Under the new rules, any party can bid for a coal block and sell it in the open market. Earlier, only captive consumers with end-use ownership could bid. No distinction between captive and non-captive mines will allow transfer of mining leases.
The minister said entry rules will be liberalised and nearly 50 blocks will be offered for bidding immediately. There will be no eligibility conditions, only upfront payment with a ceiling. India imports around 235 million tonnes of coal, of which around 135 million tonnes could have been met from domestic reserves, coal and mines.
The other measures for the mineral sector include promotion of coal gasification through rebate in revenue share, auction of 500 mineral blocks and a large investment to create transportation infrastructure for evacuating 1 billion tonnes of coal from mines belonging to the state-run Coal India Ltd.
Under the proposed changes, even partially explored coal blocks can be auctioned to the private sector against the earlier norms that allowed auction of only fully explored mines.
The government had earlier introduced changes in laws to allow coal mining by any company present in sectors other than steel and power, and did away with the captive end-use criteria.
The mineral sector
Sitharaman said th government also planned to introduce a seamless composite -cum-mining-cum-production regime as part of its structural reforms to boost growth, employment and bring state-of-the-art technology into mining.
She said 500 mining blocks would be offered through an open and transparent auction process, and the government will introduce joint auction of bauxite and coal mineral blocks to enhance the aluminum industry’s competitiveness.
The distinction between captive and non-captive mines will also be removed to allow transfer of mining leases and sale of surplus unused minerals, leading to better efficiency in mining and production.