Govt to decide on 100 percent FDI in captive coal mining

NEW DELHI: An expert committee of secretaries will look into allowing 100 percent FDI in captive coal mining for the iron, steel and cement sector, a paper has reported.

At present, 74 percent FDI is allowed in the sector, of which up to 50 percent is under the automatic route. Power companies, which mine coal for captive consumption, are allowed 100 percent foreign equity participation, provided the coal produced is used only to generate power for them, the Economic Times reported.

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The proposal to raise the ceiling is being pursued after legal advice that it did not require any statutory changes. The panel of secretaries is looking into the issues under the direction from the Energy Co-ordinating Committee headed by PM Manmohan Singh.

Singh, who also holds the coal portfolio, has asked the panel to come up with recommendations by the month-end to address the coal crisis. Development of coal mines takes time and it is expected that the 86 blocks allotted would reach their peak-rated capacity from ’10 onwards. “While they are expected to yield 150 million ton of coal per annum, it is imperative to bring in new technologies and superior management techniques to tap the potential of captive mining,” the paper said quoting the sources.

Hence, the attempt to liberalize FDI in JVs. It is felt that with coal consumer companies seeking to acquire equity in coal mines abroad to improve India’s energy security, a liberal FDI policy in captive mining will improve the country’s access to rich coal reserves in the world, the paper said.