3 Ways How Coal Industry Will Get Benefit From FDI Ban Eviction

Removing ban from foreign investors in funding coal miners can help Indian Government in economy boost

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Indian government has moved a step higher towards the process of stabilizing the economy by scrapping a cap on foreign investment in commercial coal mining. The proposal has been discussed at a cabinet meeting led by PM Modi. These increasing numbers seek the increase in investment which will bring equilibrium in the business.

Business World

"In the coal sector, for sale of coal, 100 per cent FDI under automatic route for coal mining, activities including associated processing infrastructure will attract international players to create an efficient and competitive coal market" mentioned PIB release.

3 Ways How FDI Ban Removal on Coal Miners Can Augment Economy Figures

Overseas Investments

Decision would allow overseas investors to dive into the industry with the capital inflow. This would encourage the sector to boost up with figures. Foreign companies like BHP Group Ltd and Glencore Plc will get an opportunity to own 100% of mining companies. FDI in India dipped 1% to 44.35 Billion Dollars in 2018-19. This decision to finally approve the plan comes as Modi tries to lure overseas investors to an economy that's growing at the slowest pace in five years.

Rise in Fossil Fuel Demand

In the fast paced era, while various developed nations are turning away from fossil fuel, demand for the same is reaching heights in India. Welcoming coal mining in the nation could tackle fuel shortages and recover growth in Asia's third largest economy. Indian economy expanded at 5.90% in the March which has been considered as the slowest growth since 2014.

Private Sectors Role

Involvement of Private Sectors in the coal mining industry would ramp up swiftly in production of the coal. It would also help Indian economy by curbing down the import dependence. Track record of private captive miners in ramping up domestic coal output has not been very encouraging, with production levels remaining range between 40-60 million tonnes per annum (mtpa) in the last several years, accounting for a paltry 6-10 per cent of the overall domestic production.

According to the experts, only CIL (Coal India Limited) is liable to sell the coal in the country till now. Along with the CIL, public and private sectors were allowed to mine and deal with only 25% of coal selling in the market. With this deregulation, private sectors will also be able to sell and mine coal in the country.