Context: Union Finance Minister announced the 4th Tranche of Comprehensive Economic package under Atma Nirbhar Bharat Abhiyan, that includes structural reforms across eight sectors.
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- The Finance Minister announced following policy reforms in an effort towards Atma Nirbhar Bharat:
- There will be a fast track of investment clearance through the Empowered Group of Secretaries.
- Project Development Cell will be constituted in each Ministry to prepare investable projects, coordinate with investors and Central/State Governments.
- There will be a ranking of States on investment attractiveness to compete for new investment.
- 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 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 the Industrial Information System (IIS) with GIS mapping.
- The recent package is a part of the Special economic and comprehensive package of Rs 20 lakh crore - equivalent to 10% of India’s GDP, announced recently amid COVID-19 pandemic.
- Atma Nirbhar Bharat or Self-Reliant India Movement having five pillars - Economy, Infrastructure, System, Vibrant Demography and Demand, is what this special economic and comprehensive package called.
Structural reforms announced:
The reforms have been announced in the eight sectors of Coal, Minerals, Defence production, Civil Aviation, Power Sector, Social Infrastructure, Space and Atomic energy. The details are as follows:
- Introduction of Commercial Mining in Coal Sector: The Government will introduce competition, transparency and private sector participation in the Coal Sector through:
- A revenue sharing mechanism: Instead of a regime of fixed Rupee/tonne. Any party can bid for a coal block and sell in the open market.
- Entry norms will be liberalised: There will not be any eligibility conditions, only upfront payment with a ceiling will be provided.
- Exploration-cum-production regime for partially explored blocks against earlier provision of auction of fully explored coal blocks. This will allow private sector participation in exploration.
- Diversified Opportunities in Coal Sector
- Coal Gasification / Liquefication will be incentivised through rebate in revenue share. This will result in significantly lower environment impact and also assist India in switching to a gas-based economy.
- Infrastructure development of Rs. 50,000 crore will be done for evacuation of enhanced Coal India Limited’s (CIL) target of 1 billion tons coal production by 2023-24 plus coal production from private blocks.
This measure will also help reduce environmental impact.
- The Government of India’s big plan to push coal gasification to replace natural gas in the fertiliser sector would help square energy and food security objectives.
- However, ammonia produced from coal gasification has a carbon footprint that is 1.8 times higher than that produced from the conventional process using natural gas.
- This could potentially offset the emissions intensity reductions achieved through investments in renewables.
- Liberalised Regime in Coal Sector
- Coal Bed Methane (CBM) extraction rights will be auctioned from Coal India Limited’s (CIL) coal mines.
- Ease of Doing Business measures, such as Mining Plan simplification, will be taken. This will allow for automatic 40% increase in annual production.
- Enhancing Private Investments in the Mineral Sector: There will be structural reforms to boost growth, employment and bring state-of-the-art technology especially in exploration through:
- Introduction of a seamless composite exploration-cum-mining-cum-production regime.
- 500 mining blocks would be offered through an open and transparent auction process.
- Joint Auction of Bauxite and Coal mineral blocks to enhance Aluminum Industry’s competitiveness will be introduced to help Aluminum industry reduce electricity costs.
- Policy reforms in the Mineral Sector:
- 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 shall be removed. The elimination of this distinction will ensure a level playing field for players in the integrated metals space.
- The Ministry of Mines is in the process of developing a Mineral Index for different minerals.
- Enhancing 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 the huge Defence import bill.
- Improve autonomy, accountability and efficiency in Ordnance Supplies by Corporatisation of Ordnance Factory Board.
- Policy Reforms in Defence Production:
- FDI limit in the Defence manufacturing under automatic route will be raised from 49% to 74%.
- There will be time-bound defence procurement process and faster decision making will be ushered in by setting up of a Project Management Unit (PMU) to support contract management; Realistic setting of General Staff Qualitative Requirements (GSQRs) of weapons/platforms and overhauling Trial and Testing procedures.
CIVIL AVIATION SECTOR
- Efficient Airspace Management for Civil Aviation:
- Restrictions on utilisation of the Indian Air Space will be eased so that civilian flying becomes more efficient.
- This will bring a total benefit of about Rs 1,000 crore per year for the aviation sector.
- This will lead to optimal utilization of airspace; reduction in fuel use, time and will have positive environmental impact.
- More World-Class Airports through PPP:
- 6 more airports have been identified for 2nd round bidding for Operation and Maintenance on Public-Private Partnership (PPP) basis.
- Additional Investment by private players in 12 airports is expected to bring around Rs. 13,000 crore.
- India to become a global hub for Aircraft Maintenance, Repair and Overhaul (MRO):
- Tax regime for the MRO ecosystem has been rationalized.
- Aircraft component repairs and airframe maintenance to increase from Rs 800 crore to Rs 2,000 crore in three years.
- It is expected that major engine manufacturers in the world would set up engine repair facilities in India in the coming year.
- Convergence between Defence sector and the civil MROs will be established to create economies of scale. This will lead to maintenance costs for airlines to come down.
- The biggest upside will be its ability to create new jobs and a strong global value chain with the civil-defence business interface, which remains constrained and under-leveraged.
The plans to make India a global MRO hub will ensure savings of precious foreign exchange and enable Indian airlines to get their aircraft serviced locally.
- Tariff Policy Reform: Tariff Policy laying out the following reforms will be released
- Consumer Rights
- DISCOM inefficiencies not to burden consumers
- Standards of Service and associated penalties for DISCOMs
- DISCOMs to ensure adequate power; load-shedding to be penalized
- Promote Industry
- Progressive reduction in cross subsidies
- Time bound grant of open access
- Generation and transmission project developers to be selected competitively
- Sustainability of Sector
- No Regulatory Assets
- Timely payment of Gencos
- DBT for subsidy; Smart prepaid meters
- Privatization of Distribution in UTs:
- This will lead to better service to consumers and improvement in operational and financial efficiency in Distribution and will improve government finances.
- This will also provide a model for emulation by other Utilities across the country.
- Boosting private sector investment through Revamped Viability Gap Funding Scheme - Rs 8,100 crore.
- The Government will enhance the quantum of Viability Gap Funding (VGF) upto 30?ch of Total Project Cost as VGF by the Centre and State/Statutory Bodies.
- For other sectors, VGF existing support of 20?ch from the Government of India and States/Statutory Bodies shall continue.
- Projects shall be proposed by Central Ministries/ State Government/ Statutory entities.
SPACE SECTOR: BOOSTING PRIVATE PARTICIPATION IN SPACE ACTIVITIES
- There shall be a level playing field provided to private companies in satellites, launches and space-based services.
- Predictable policy and regulatory environment to private players will be provided.
- Private sector will be allowed to use ISRO facilities and other relevant assets to improve their capacities.
- Future projects for planetary exploration, outer space travel etc shall also be open for the private sector.
- There will be liberal geo-spatial data policy for providing remote-sensing data to tech-entrepreneurs.
Draft ‘Space Activities’ Bill, 2017
The thrust of the 2017 Bill was to evolve a mechanism by which companies or individuals who wanted to be involved in a wide-range of space development activities - satellite development, GIS, telemetry - could approach the government for a licence.
Purpose of introducing the bill:
- There is a need for national space legislation for supporting the overall growth of the space activities in India.
- This would encourage enhanced participation of non-governmental/private sector agencies in space activities in India, in compliance with international treaty obligations, which is becoming very relevant today.
Criticism of the bill:
- The bill doesn’t have provisions for the creation of an independent space regulator.
- The bill doesn’t differentiate between various kinds of space activities. For instance, different types of commercial space activity - whether remote sensing or deep-space exploration - need specific regulatory clarity.
- The Bill also posits ISRO as the key licensing authority when it itself has monopoly power over space-technology and development.
ATOMIC ENERGY RELATED REFORMS
- Research reactors in PPP mode for production of medical isotopes shall 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 shall also be established.
- India’s robust start-up ecosystem will be linked to the nuclear sector and for this, Technology Development-cum-Incubation Centres will be set up for fostering synergy between research facilities and tech-entrepreneurs.
- These reforms will ensure policy simplification across many sectors, to make it simpler for people to understand what sector can give, participate in activities & bring transparency.
- Once the sectors are decongested, economic growth can be achieved by boosting these sectors.