GOVERNMENT PLANS TO INCREASE PRIVATE SECTOR PARTICIPATION IN CRUCIAL SECTORS OF THE ECONOMY

Recently, the Minister of Finance, Smt. Nirmala Sitharaman, announced certain #Government reforms and #EconomicReliefPackages under #AtmaNirbharBharatAbhiyaan (the Self-Reliance Movement), on 16-05-2020. This Movement aims to achieve #economic #selfreliance by promoting #indigenous manufacture, production, and distribution of goods and services.

Under the Atma Nirbhar Bharat Abhiyaan (i.e. the Self-Reliance Movement), the Government plans to take the following measures:

1- To introduce fast track #investment clearances through Empowered Group of Secretaries (EGoS).

2- To set up a Project Development Cell in each Ministry to prepare a list of investible projects, and to coordinate with investors and Central/ State Governments.

3- To rank all States based on investment attractiveness.

The highlights of the Economic Relief Packages as announced by the Minister of Finance are as follows:

SECTORDETAILS OF THE ECONOMIC RELIEF PACKAGE  
1. Solar Photovoltaic  TechnologiesThe Government plans to introduce incentive schemes to encourage investments in manufacturing of Solar Photovoltaic (PV) technologies. This is a technology that converts sunlight or solar radiation into electricity by using semiconductors.   
2. CoalThe Government plans to encourage private sector participation in coal production, exploration of coal blocks, mechanised transfer of coal from mines to railway sidings, etc.  
3. Minerals  i) The Government would introduce improved exploration-cum-mining-cum-production regime in the mineral sector.  

ii) The Government would, further, remove distinction between captive and non-captive mines. These mines would be allowed to transfer mining leases and to sell surplus unused minerals.  

Captive mines are those mines that produce coal or mineral for use by the same company.
4. Defencei) The Government plans to increase self-reliance in defence production through indigenisation of defence products, ban on import of certain weapons, improve in supply of ordnances, etc.  

ii) The Government plans to raise the foreign direct investment (FDI) limit in defence manufacturing sector, from 49% to 74%, under automatic route.  
5. AirspaceThe Government would soon ease the restrictions on use of Indian airspace by civil aircrafts. Thus, more air space availability would reduce the travel time, which would bring down the cost of fuel and the cost of travel.  
6. Airportsi) The Government plans to provide increased investment opportunities to private players in the airport sector under Public-Private Partnership (PPP) basis.  

ii) Also, global engine manufacturers would be encouraged to set up engine repair facilities in India.  

iii) Further, the Government plans to converge the maintenance, repair and overhaul (MRO) facilities of both defence and civil aviation sectors. This would reduce the burden on the defence sector and provide increased employment opportunities in MRO facility.  
7. PowerThe Government plans to privatise power distribution departments in Union Territories. This would lead to better services to consumers and improvement in efficiency of power distribution.  
8. Social Infrastructure  The Government plans to increase the quantum of Viability Gap Funding (VGF), in social infrastructure projects, up to 30% each of Total Project Cost as VGF by Centre and State/Statutory Bodies.  

Social infrastructure generally involves construction and maintenance of facilities that support social services, such as construction of hospitals for healthcare services, schools for educational services, etc.  

VGF is a grant to support projects that are economically justified, but fall short of finance.  
9. Spacei) The Government plans to increase private sector participation in the space sector, i.e. in satellites, launches and space-based services, planetary exploration, outer space travel etc.  

ii) Further, the Government would soon allow private players to use Indian Space Research Organisation (ISRO) facilities to improve their capacities in space sector.  
10. Nuclear SectorThe Government plans to link the start-up ecosystem to the nuclear sector by setting up Technology Development cum Incubation Centres. These Centres would connect the research facilities of the nuclear sector and the tech-entrepreneurs.  

Under the Atma Nirbhar Bharat Abhiyaan (i.e. the Self-Reliance Movement), the Project Development Cell in each Ministry would guide investors about the projects available for investments. This would enable the investors to choose their preferred area and sector of investment. Thus, these Government measures may lead to increased private sector involvement and revival of economic growth.

Harini Daliparthy

Senior Legal Associate

The Indian Lawyer

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