INDIA BUSINESS WORLD - March 1st - March 15th - 2008
MINERAL POLICY GETS CABINET NOD, CHANGES IN ACTS SOON
In a move aimed at attracting FDI into the mining sector, the Union Cabinet gave its in-principle approval to the new national mineral policy that allows more flexibility for private sector participation in this sector. The liberalisation is expected to bring in FDI of $250 million per year in the sector. The Cabinet also gave approval for an independent dispute resolution setup, Mining Administrative Appellate Tribunal (MAAT), that will be made fully operational within six months.
The new mineral policy will provide seamless movement to companies undertaking initial exploratory process for a mining block to move from reconnaissance permit to prospecting licence to mining lease. The policy will also encourage states to undertake auctioning of mineral blocks rather than allocating leases on the basis of applications. This proposal had drawn objections from some states, including Orissa, Jharkhand and Chhattisgarh, that want to retain their control on allocating mineral leases. The policy is, however, expected to give a free hand to states to offer mineral blocks only for value addition once it comes up for renewal.
The states were also against the government continuing with iron ore exports. Issues on iron ore export restrictions and provision of unhindered powers to states to give preference to companies which undertake value-addition within a state for grant of mining leases will be spelt out soon.
An amendment Bill will be introduced during the Budget session for changes in the Mines and Mineral Development and Regulation Act, 1957, the MCR Rules, 1960, and the MCDR, 1988.
The Cabinet also formalised unconditional duty-free access to 8 million pieces of garments from Sri Lanka and Bangladesh. This is expected to correct to some extent the trade imbalance with Bangladesh and Sri Lanka. However, the textile industry, reeling under impact of rupee appreciation, may feel the heat of increased import competition. According to an earlier Cabinet decision, raw material sourcing was needed for 6 million pieces from Sri Lanka and 2 million pieces from Bangladesh.
The Cabinet also decided to increase the authorised capital of the Food Corporation of India form Rs 2,500 crore to Rs 3,500 crore for construction of godowns in newly emerging procuring states, and gave its approval for for double taxation avoidance agreement and prevention of fiscal evasion with Tajikistan. Further, in a bid to infuse more transparency in selections of PSU managers, the Cabinet gave its approval to amend the resolution constituting the PESB by specifying that the relevant candidates from state PSEs and private sector will also be considered as non-internal candidates with others candidates of PSEs.
The Cabinet Committee on Economic Affairs (CCEA) gave its approval to SKIL Infrastructure, Mumbai to accept $50 million from Ashoka Investment Holdings, Mauritius and Ambadevi Mauritius Holding, together referred as AIG Funds constituting up to 5% of the fully-diluted share capital of company.
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