FM Sitharaman announces major structural reforms in Defence, Aviation & Coal sectors

FM Nirmala Sitharaman (file image)

Rolling out the fourth tranche of announcements related to the Self-reliant India Mission, Union Finance Minister Nirmala Sitharaman today announced “structural reforms” in the sectors of coal, minerals, defence production, airspace management, airports, MRO, power distribution companies in UTs, space, and atomic energy.

Here are the major reforms announced by the Finance Minister:

• Defence:
FDI limit in Defence manufacturing under automatic route will be raised from 49% to 74%. A time-bound defence procurement process and faster decision making will be ushered in by setting up of a project management unit to support contract management, by a realistic setting of General Staff Qualitative Requirements (GSQRs) of weapons/platforms and by overhauling trial and testing procedures.

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Further, in a bid to enhancing self reliance in defence production, the government will notify a list of weapons/platforms for ban on import with year wise timelines. There will also be an indigenization of imported spare and a separate budget provisioning for domestic capital procurement. All of this is expected to reduce the defence import bill.

• Civil Aviation:
With only about 60% of Indian airspace freely available, airlines usually fly longer routes. In a bid to rationalise this, the FM has announced an easing of restrictions on utilisation of Indian air space which will make civilian flying more efficient. The Government hopes to get a benefit of Rs 1,000 crore annually via this move.

• Coal:
Government will now introduce commercial mining in coal sector. There will be a exploration-cum-production regime for partially explored blocks. As against earlier provision of auction of fully explored coal blocks, now even partially explored coal blocks will be auctioned. Private sector participation will be allowed in exploration. Production earlier than scheduled will be incentivized through rebate in revenue-share. The govt will offer nearly 50 blocks immediately with no eligibility conditions, but only upfront payment with a ceiling.
• Space:
The private sector will be allowed to use ISRO facilities and other relevant assets to improve their capabilities. Also, future projects for planetary exploration and outer space travel will be opened to private sector. Private participation in space activities will be encouraged by providing level-playing field for private companies in satellites, launches and space-based services. The government also plan to provide predictable policy and regulatory environment to private players

• Atomic Energy:
The government will establish a research reactor in PPP mode for production of medical isotopes to promote welfare of humanity through affordable treatment for cancer and other diseases.The government will also establish facilities to use irradiation technology for food preservations, again in PPE mode. This technology will compliment agricultural reforms and assist farmers. The government will also link India’s robust start-up ecosystem to the nuclear sector to foster a synergy between research facilities and tech-entrepreneurs.

• Social Infrastructure Projects:
The government will revamp the Viability Gap Funding Scheme to boost private sector investments in social-infrastructure projects, like hospitals.The total outlay for this has been pegged at Rs 8,100 crore. Projects will be proposed by Central Ministries/State governments and statutory entities.

The last tranche of Economic Package announcement by Finance Minister Nirmala Sitharaman will be held at 11 am tomorrow.

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