Narendra Modi government on Saturday announced that eight sectors will undergo structural reforms, which include coal, minerals, defence production, airspace managements & airports, MRO, power distribution companies in UTs, space and atomic energy.
Announcing third tranche of economic package, union finance minister Nirmala Sitharaman said, "Prime Minister Narendra Modi has said that in order to build a self-reliant India, we should prepare ourselves for a tough competition and be ready to face the challenges of global value chain and to integrate."
Listing various reforms measures undertaken by the government recently, finance minister recalled past reforms including DBT, GST, which she said brought one nation, one market, IBC and several steps taken for ease of doing business and reform of public sector banks.
Upgradation of Industrial Infrastructure
"Attempts have already started for upgradation of industrial infrastructure. Need to talk about this afresh. Industrial land banks, clusters been identified long back. Now using tech, we are ensuring these land parcels are identified," minister said.
The government has allowed commercial mining of coal and this will be done based on 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.
"India has the third largest valued coal availability in its untapped mines, and yet we still import coal and emerging sectors suffer because raw material is not available. Regulations are required when there is a shortage. But this country has abundant coal. Coal bed methane will also be auctioned. Rs 50,000 crore for evacuation infrastructure is being provided," she said.
To boost the commercial mining of coal, the government is offering 500 mining blocks through an open and transparent auction process, "The sectoral reform we want to bring in here to give boost to the sector is to now have a seamless composite exploration-cum-mining-cum-production regime."
"We will introduce joint auction of bauxite and coal mineral blocks to enhance aluminium industry's competitiveness. Remove 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," the finance minister said.
The foreign direct investment (FDI) limit in defence manufacturing under automatic route is being raised from 49 percent to 74 percent. To enhance self-reliance in defence production, the government shall notify a list of weapons/platforms for ban on import with year wise timeline. There will be separate budget provisioning for domestic capital procurement.
Indignenisation of spares will also be taken up on a priority basis as it will help reduce huge defence import bill. To improve autonomy, accountability and efficiency in ordnance supplies, the government has decided to corporatise ordnance factory boards.
Coming to aviation sector, six more airports have been identified in second round bid and AAI has awarded 3 airports out of 6 for operation and maintenance on PPP basis, the finance minister said. Due to nationwide lockdown, civil aviation has suffered Rs 1,000 crore flying cost.
There will be a efficient airspace management for civil aviation as only 60 percent of the Indian airspace is freely available. Restrictions on utilisation of the India airspace will be eased so that civilian flying becomes more efficient, minister added.
Talking about Maintenance, Repair and Overhaul (MRO), she said the government has rationalised tax regime for MRO ecosystem and the maintenance costs for airlines will come down. "India has the capacity, manpower and skills, and it can be a hub for many flights heading to South-East Asia and westwards. Convergence between defence sector and the civil MROs will be established to create economies of scale."
Privatisation of power distribution cos in UTs
The power distribution companies in union territories will be privatised, "Consumer rights, promotion of industries and sustainability of sector will be the major salient points of the new tariff policy."
Viability Gap Funding
To boost private sector investment in social infrastructure projects, the government announced revamped viability gap funding (VGF) scheme of Rs 8,100 crore. The government will enhance the quantum of viability gap funding up to 30 percent each of total project cost as VGF by Centre and state.
Speaking about the reforms in the space sector, the finance minister announced future projects for planetary exploration, outer space travel etc to be opened for private sector. The government will provide predictable policy, regulatory environment and liberal geo-spacial data policy for providing remote-sensing data to tech entrepreneurs and private players. Private sector will be allowed to use ISRO facilities and other relevant assets to improve their capacities.
The government has allowed research reactor in PPP model and it will be set up for production of medical isotopes to promote affordable cancer treatment. Also, facilities in PPP model to use radiation technology to be set up in food preservation and robust start-up sector to be synergised with nuclear sector.