On Wednesday, the Union Cabinet approved an ordinance which is expected to boost FDI (Foreign Direct Investment) in the coal mining sector and improve ease of doing business. The cabinet approved promulgation of Mineral Laws (Amendment) Ordinance 2020 which will amend Mines and Minerals (Development and Regulation) Act 1957 and Coal Mines (Special Provisions) Act 2015.
The ordinance will allow companies, besides those in the steel and power sector, to get into the coal mining business and dispenses away with the captive end-use criteria. The move will improve energy efficiency, accelerate competition and reduce coal imports.
Briefing the press, Coal and Mines Minister Prahlad Joshi said that after the Supreme Court cancelled about 200 coal blocks, only 29 were auctioned due to end-user restrictions. The amendments in the ordinance will remove these restrictions, he said.
He also said that despite having the world's fourth-largest coal reserve, India had imported 235 million tonnes (mt) of coal last year, of which 135 mt could have been met from domestic reserves.
"Under the Ordinance, allocation of coal/lignite blocks for composite prospecting licence cum mining lease has been provided; requirement of previous approval in cases where allocation of blocks was made by Central Govt has been dispensed with. This will speed up the process of implementation of projects, ease of doing business, simplification of procedure and benefit all the parties in areas where minerals are located," tweeted K.S. Dhatwalia, principle spokesperson in PIB.
In 2018, the government allowed private entities into commercial mining by private entities. A mining target of 1.5 billion tonnes by 2020 was also set, of which 1 billion tonnes was to be met from state-owned Coal India Ltd and 500 million tonnes from other entities.
In August 2019, 100 percent foreign direct investment (FDI) was allowed under the automatic route in coal mining for open sale, besides creating associated infrastructure, such as washeries.