The FM announced strategic reforms in eight sectors - coal, minerals, defence production, airspace management, airports, power distribution companies in Union Territories, space and atomic energy. She spoke about building coal evacuation infrastructure spending Rs 50,000 crore. The government also wants to auction six more airports to private companies and wants to build another 12 in public-private partnerships. In fact, many of these projects are time consuming and it will not help the country in coming out of the coronavirus crisis immediately.
Private companies like Adani Power, Tata Power, JSW Energy and Reliance Power will lock horns in the bid for thermal coal blocks that will be auctioned as part of the package. They are expected to auction some of the coking coal mines also for steel companies. All together, the plan envisages auction of 50 mines. The government wants to club the auctioning of bauxite and thermal coal mines so that aluminium makers can bid for them together. This will help companies like Hindalco and Vedanta Aluminium. About 500 minerals mining blocks will also be offered as part of the package.
The government also plans to remove the distinction between captive and non-captive mines. It means existing capitve users like Tata Power, Reliance Power and Tata Steel will have to bid at regular intervals to retain the coal mining license with them.
Adani Enterprises Ltd had earlier emerged as the highest bidder for all six airports that had been put up for privatisation - Ahmedabad, Thiruvananthapuram, Lucknow, Mangaluru, Guwahati and Jaipur. The group is also expected to bid in the new auctions planned by the government. Anil Ambani's Reliance Infrastructure won Rs 648-crore contract for Rajkot airport last year. GMR and GVK are established players in the segment with global scale.
Foreign Direct Investment (FDI) in defence production has been increased to 74 per cent from 49 per cent by the government. Indian companies had earlier formed many joint ventures with foreign defence manufacturers, but most failed to take up big projects as the foreign partner wanted majority stake because of their intellectual capital involved in the projects. Adani and Anil Ambani group companies had earlier signed a slew of foreign partnerships to seize the opportunity. Pune-based Kalyani group also has strong defence business, including arms and ammunition manufacturing.
In power distribution, the government wants to privatise their business in union territories. Adani and Tata Power are the major players in the segment. Adani bought the Mumbai distribution business of Reliance Infrastructure in 2017 and has been ramping up the market share. Last week, Anil Ambani group put its Delhi power distribution business up for sale.
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