STEPS TO BOOST FDI IN COAL AND MINING
SECTOR
In order to attract
Foreign Direct Investment in coal sector the Government have decided
that the private Indian companies setting up or operating power
projects as well as coal or lignite mines for captive consumption
in such projects may be allowed foreign equity upto 100% provided
that the coal or lignite produced by them is meant entirely for
captive consumption in power generation.
100 per cent
foreign investment in the equity of an Indian subsidiary of a
foreign company or in the equity of an Indian company for setting
up of coal processing plants in India may be allowed subject to
the conditions that such an Indian subsidiary or the Indian company
(a) shall not do coal mining and (b) shall not sell the washed
coal or sized coal from their Coal Processing Plants in the open
market and shall supply the washed coal or sized coal from their
Coal Processing Plants to the respective parties sending raw coal
to such Coal Processing Plants for washing or sizing.
The other private
Indian companies engaged in exploration or mining of coal and
lignite for captive consumption for production or iron and steel
and production of cement may be allowed foreign equity upto 74
per cent.
The Government
has liberalized its Foreign Direct Investment (FDI) policy in
the mining sector which allows foreign equity holding upto 100
per cent, on the automatic route for all non fuel and non atomic
minerals except diamonds and precious stones. This covers exploration,
mining, mineral processing and metallurgy. In the case of diamonds
and precious stones, foreign equity upto 74 per cent is allowed
on the automatic route for both exploration and mining operations.
However, proposals seeking higher than 74 per cent foreign equity
for diamonds & precious stones are considered by the Foreign
Investment Promotion Board (FIPB). The Mines & Minerals (Development
& Regulation) Act, 1957 has also been suitably amended to
make it more investor friendly.
Keeping in view
the recommendations of the Committee on Integrated Coal Policy
(Chari Committee), the Central Government decided in February,
1997, among other things, to set up an Independent Body to perform
the functions of monitoring and processing the proposals for exploration
of coal and lignite in the country and allotment of new coal and
lignite blocks to Indian Companies, in public and private sector,
on the basis of competitive bidding. Proposal was conceived in
the context of the amendment to the Coal Mines (Nationalisation)
Act, 1973 to allow non-captive coal mining by the private sector.
Necessary action in the matter may be taken after the Coal Mines
(Nationalisation) Bill, 2000 is enacted by the Parliament.
This information
was given by the Minister of State for Coal, Shri Prahlad Singh
Patel, in a written reply to a question in the Rajya Sabha today.
