Indian government has allowed 100% Foreign Direct Investment (FDI) in commercial coal mining and allied activities to build-up a competitive coal market.
Till now, FDI was only allowed for coal and lignite mining for captive consumption by power projects, iron & steel and cement units and other eligible activities permitted under and subject to applicable laws and regulations.
The new policy would permit 100% FDI under automatic route for sale of coal and ‘associated processing infrastructure’ involving coal mining activities, subjected to provisions of Coal Mines (special provisions) Act, 2015 and the Mines and Minerals (development and regulation) Act, 1957.
‘Associated Processing Infrastructure’ would include coal washery, crushing, coal handling, and separation (magnetic and non-magnetic).
Meanwhile, FDI under automatic route permitted for setting up coal processing plants like washeries are subjected to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market.
Instead, they should be supplying the washed or sized coal to those parties who are providing raw coal to coal processing plants for washing or sizing.
FDI is a major driver of economic growth and a source of non-debt finance for the economic development of the country. Amendments made in the policy for coal sector is likely to attract international players to create an efficient and competitive market in India.
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