India's Finance Minister Nirmala Sitharaman on Saturday announced major reforms in the country's strategic sectors and gave access to private players in sectors like coal, defence production, and space, while detailing the fourth set of announcements for the COVID-19 economic stimulus.
The foreign direct investment limit in defence manufacturing under the automatic route has been hiked from 49 percent to 74 percent to boost "Make in India" in defence production, announced Sitharaman. Since 2015, the Indian government has been making efforts to attract foreign investment in the defence sector through various means but data suggest that only $2 million was received last year.
The Indian government has also decided to curb the import bill on defence equipment. Sitharaman said that the government will come out with a list of weapons/platforms for a ban on imports containing timelines. The authorities will additionally release a separate budget provision for domestic capital.
Sitharaman stated that the authorities are going to permit commercial mining in the country's coal sector, giving up the federal government's monopoly in the field. Instead of fixed pricing, the government will incorporate a revenue sharing mechanism to encourage the private sector and ensure transparency.
"India has the 3rd largest valued coal mines, but the country still imports it. Regulation is required when there is a shortage. We have been suffocating the sector by regulating it, and preventing it from producing what is required by industry", said the finance minister.
Coalbed methane will now be auctioned off and Rs. 50,000 crore ($6.6 billion) will be invested by the government to build evacuation facilities once coal is mined.
Privatisation of Space Sector
Appreciating the Indian Space Research Organisation (ISRO)'s work in the space sector, the minister stated that the participation of the private sector is needed for the country’s space journey. Adding, the government will provide a level playing field for private players in satellites, launches and space-based services. They will also be allowed to use ISRO’s facilities and other relevant assets to improve their capabilities.
Future projects for planetary exploration will be open to the private sector as well.