Coal sector gets nod for 100% FDI: This move to fully open up coal mining to foreign players to help get latest technologies

Introduction

According to Piyush Goyal, Commerce and Railways Minister – there is a little slowing down of FDI worldwide therefore, 100% FDI for coal mining and all related processing activities will be allowed under the automatic route.

Global companies such as BHP, Peabody Energy and Glencore can now own coal mines and carry out related operations in India, with the cabinet approving 100% foreign direct investment under the automatic route in mining, processing and sale.

This move to fully open up coal mining to foreign players could help get latest technologies, reduce fuel shortages that have crippled the power sector, and boost economic growth by attracting fresh investment. It follows an earlier decision allowing commercial coal mining by private operators, ending Coal India’s monopoly.

The FDI has been allowed for coal mining activities including associated processing infrastructure subject to provisions of Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957 as amended from time to time, and other relevant acts on the subject. Associated processing infrastructure would include washery and facilities for crushing and coal handling.

Impact

• The decision would lead to increased opportunities for foreign companies to invest in coal mining in India and offset demand which is being met as of now through imports.
• Competition will result in additional supplies in the market and it is assumed that prices should stabilize once these players start producing in India.
• Power companies are really the beneficiaries of this, as they can now attract larger global operators with lower cost of capital to undertake end-to-end coal mining of their allocated blocks to reduce the fuel costs.

Source: The Economic Times | Coal sector gets nod for 100% FDI | Aug 29, 2019