FM announces 4th tranche of measures for “Aatmanirbhar Bharat Abhiyan”

Union Finance Minister Nirmala Sitharaman has announced the details of the 4th tranche of Economic Relief Package for “Aatmanirbhar Bharat Abhiyan” amid COVID-19 pandemic. This 4th tranche is the part of economic package of Rs 20 lakh crore has been announced with the prime objective of making India self-reliant.

The fourth tranche of Economic Relief Package for “Aatmanirbhar Bharat Abhiyan” is dedicated to structural reforms in 8 sectors namely: Coal, Minerals, Defence Production, Civil Aviation (air space management, airports, Maintenance Repair & Overhaul), Power Distribution Companies in the Union Territories, Social Infrastructure Projects, Space, Atomic Energy.

Highlights of measures announced in 4th tranche, as part of Economic Relief Package for “Aatmanirbhar Bharat Abhiyan”:

1. Coal Sector:

The Government of India has decided to bring in Commercial Mining in the coal sector in order to introduce competition, transparency and private sector participation in this sector.

• This would be done by introducing revenue sharing mechanism instead of regime of fixed Rupee/tonne. After its implementation, any party would be able to bid for a coal block and sell in the open market.
• Entry norms will be normalized and nearly 50 blocks will be offered immediately without any eligibility conditions. This would be done with only an upfront payment with a ceiling.
• Exploration-cum-production regime for partially explored blocks by auctioning partially explored blocks.
• Entry of private sector will be allowed in the participation of exploration of coal blocks.
• Production completed before the scheduled time will be incentivized by the government through rebate in revenue share.
• Coal Gasification/Liquefication will be incentivised via rebate in revenue share, resulting in significantly lower environment impact. It will also aid India in switching to a gas based economy.
• Government of India will spend about Rs 50,000 crore for the development of infrastructure. It will also include Rs 18,000 crore investment in mechanized transfer of coal (conveyor belts) from mines to railway sidings.
• Coal Bed Methane (CBM) extraction rights to be auctioned from Coal India Limited’s (CIL) coal mines.
• Ease of doing business measures like Mining Plan simplification will be taken and therefore, allow for automatic 40% increase in annual production.
• Concessions will be provided in commercial terms given to CIL’s consumers (relief worth Rs 5000 cr will be offered).
• Reserve price in auctions for non-power consumers will be reduced, credit terms will be eased, and lifting period will be enhanced.

2. Minerals Sector:

Private Investments will be increased in the Minerals Sector to boost growth, employment and bring state-of-the-art technology especially in exploration. This will be achieved by:

• Introducing a seamless composite exploration-cum-mining-cum-production regime.
• By offering 500 mining blocks through an open and transparent auction process.
• By introducing joint auction of Bauxite and Coal mineral blocks to improve competitiveness in the Aluminum Industry. This will also help in reducing the electricity costs in the aluminium industry.
• Distinction between the captive and non-captive mines will be removed to enable transfer of mining leases and sale of surplus unused minerals, leading to better efficiency in mining and production.
• Ministry of Mines will develop Mineral Index for different minerals.
• There will be rationalisation of stamp duty that is payable at the time of award of mining leases.

3. Defence Production:

• ‘Make in India’ will be introduced for Self-Reliance in the Defence Production. For this, a list of weapons/platforms which shall be not allowed for import, will be notified with year wise timelines.
• Indigenisation of imported spares will be done along with a separate budget provisioning for domestic capital procurement. This will help in reducing the huge Defence import bill.
• Corporatisation of the Ordnance Factory Board will be done to improve the autonomy, accountability and efficiency in Ordnance Supplies.
• FDI limit will be raised in the defence manufacturing under automatic route from 49% to 74%.
• Time-bound defence procurement process including faster decision making will be initiated by setting up 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.

4. Civil Aviation:

i) Airspace Management

• Restrictions on utilisation of the Indian Air Space will be eased to make civilian flying more efficient.
• Government of India will bring a total benefit of about Rs 1000 crores per year for the aviation sector.
• Will ensure optimal utilization of airspace as well as reduction in fuel use & time, hence creating a positive impact on the environment.

ii) World-class Airports through PPP

• 6 more airports will be auctioned by the Airports Authority of India on Public-Private Partnership (PPP) basis.
• AAI will also get a down payment of Rs 2300 crores.
• Additional Investment will be made by private players in 12 airports in 1st and 2nd rounds expecting to get around Rs 13,000 crores.

iii) Making India a Maintenance, Repair and Overhaul (MRO) Hub

• Tax regime for MRO ecosystem has been rationalized by the government to make India a Maintenance, Repair and Overhaul (MRO) Hub.
• Aircraft component repairs and airframe maintenance to increase from Rs 800 crores to Rs 2000 crores in next three years.
• In the coming years, engine repair facilities would be set up in India by the major engine manufacturers of the world.
• Convergence will be established between the defence sector and the civil MROs in order to create economies of scale.
• This will led to reductions in maintenance cost for airlines.

5. Power distribution companies in the Union Territories:

Power distribution companies in the Union Territories will be privatised in the line of Tariff Policy Reforms which will be announced shortly. This Tariff Policy will be will be released with three pillars i.e.

i) Consumer Rights:

• The inefficiencies of DISCOMs will no more be a burden on the consumers.
• There will be standards of service as well as associated penalties for the DISCOMs.
• DISCOMs will have to ensure adequate power and the load-shedding will be penalized.

ii) Promote Industry

• Progressive reduction in cross subsidies
• Time bound grant of open access
• Generation and transmission project developers to be selected competitively

iii) Sustainability of Sector

• No Regulatory Assets
• Timely payment of Gencos
• DBT for subsidy & Smart prepaid meters

In line with the above Tariff Policy Reforms, Power distribution companies in the Union Territories will be privatised and hence, will lead to better service to consumers and, improvement in operational and financial efficiency in Distribution.

6. Social Infrastructure Projects

• For the creation of Social Infrastructure Projects, government has made the provision of Rs 8100 crores which will go in the form of Viability Gap Funding Scheme.
• For the creation of Social Infrastructure Projects, Government will enhance the quantum of Viability Gap Funding upto 30% each of Total Project Cost as VGF by Centre and State/Statutory Bodies. While for other sectors, VGF support of 20% each from GoI and States/Statutory Bodies shall continue.
• These projects will be proposed by the Central Ministries/ State Government/ Statutory entities.

7. Space Sector:

• In order to provide level playing field to the private entities in the Space sector i.e. in satellites, launches and space-based services, government has made the provision to allow private players to use ISRO facilities and other relevant assets to improve their capacities.
• Government of India has announced to provide predictable policy and regulatory environment to the private players.
• Government has also made it open for the private sector to participate in future projects for planetary exploration, outer space travel etc.
• Liberal geo-spatial data policy for providing remote-sensing data to tech-entrepreneurs.

8. Atomic Energy:

• Government of India has announced to establish research reactor in PPP mode for production of medical isotopes in order to promote welfare of humanity through affordable treatment for cancer and other diseases.
• Government will also establish facilities in PPP mode to use irradiation technology for food preservation such as increasing the shelf life of onion; and also to compliment agricultural reforms and assist farmers.
• Will link India’s robust start-up ecosystem to nuclear sector.
• Technology Development cum Incubation Centres will be set up for fostering synergy between research facilities and tech-entrepreneurs.

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