Saturday / May 25.


inNEW DELHI: Through a quick series of notifications, the Union environment ministry has eased rules for mining, roads, power and irrigation projects and other industrial sectors. It has diluted a host of regulations related to environment, forest and tribal rights. Besides, sources in the ministry say, more changes in regulations are in the pipeline.


Environment Minister Prakash Javadekar had earlier done away with the requirement of public hearing for coal mines below 16 million tonnes per annum (mtpa) wishing to expand output by up to 50 per cent. This has now been extended to mines above 16 mtpa, permitting them to mine up to five mtpa more without consulting affected people. Public hearings, the only occasion when affected people are consulted for clearances, have in the past turned violent at times, or seen protests leading to litigation.


Union Power & Coal Minister Piyush Goyal had approached the environment ministry in May requesting similar rules for expansion of coal output in big and small mines. The environment ministry had on May 30 exempted public hearing if the increased mine output was up to four mtpa. The Centre, on the request of the coal ministry, had in June also decided to consider group clearances for Coal India Ltd mines that were in close proximity, rather than individual project proposals.


The need for consent from gram sabhas for prospecting in forests has also been done away with. This dilutes the Forest Rights Act, which requires the consent of tribals before forest land is diverted to industrial activity. Alongside, inspection of mining projects by ministry officials for plots less than 100 hectares has been removed. The ministry has also set aside the requirement of compensatory afforestation for prospectors.


The government recently laid down that instead of tribal village councils certifying their rights had been settled and they had consented to projects, the district administrations would be empowered to do so in 60 days, regardless of the number of villages affected by the projects. Settling of rights is a lengthy process and in many parts of the country it is far from complete.


Besides these, the government has also amended the environment impact assessment notification of 2006, letting several industries up to a certain size go to state governments for clearance, instead of approaching the Centre. Industry has usually found it easier to get clearance from state governments.


The National Democratic Alliance (NDA) has also permitted mid-sized polluting industries to operate within five km of national parks and sanctuaries with state clearances, compared with the 10-km limit imposed by the Supreme Court. This has been done by changing the pollution-related classification of industries.


Also, the amended environment impact assessment notification allows coal tar processing units to get clearances from state governments.Mineral beneficiation projects up to 0.5 mtpa will also be cleared by state governments. Earlier, only those up to 0.1 mtpa capacity were allowed to approach the states.


Irrigation projects below 2,000 hectares need not apply for clearances anymore and those between 2,000 and 10,000 hectares can be cleared by state governments. By also separating power from irrigation projects, developers can now take projects piecemeal to different agencies for clearance.


Business Standard had previously reported that the NDA government had suspended a pollution index-based moratorium on new industries in critically polluted areas like Singrauli and Vapi. Instead, it has asked its experts to revise the index.


The government has also taken the teeth out of the National Board of Wildlife. The board’s standing committee, now without independent wildlife and ecology experts, is slated to clear several dozen projects at its meeting on August 12.


A host of other changes in norms for environment and forest clearance are also being discussed within the environment ministry and the Prime Minister’s Office, alongside a review of the powers of the National Green Tribunal.

(Source: Business Standard, August 7, 2014)




NEW DELHI: The Union Cabinet on Wednesday cleared the proposal to set the composite cap for foreign investment in the defence sector at 49 per cent, compared with the current 26 per cent foreign direct investment (FDI) ceiling. But the management control of companies receiving these investments must remain in the hands of Indians. Also, some railway operations and projects were allowed to receive up to 100 per cent FDI.


The decisions came barely two weeks after the Cabinet approved a similar proposal to set the composite foreign investment cap for private insurance firms at 49 per cent, provided ‘control’ remained with Indians.


According to officials in the know of the developments, all proposals for FDI in the defence sector, even those for less than 26 per cent, will require approval from the Foreign Investment Promotion Board (FIPB); these clearances will be given on a case-to-case basis. This is believed to have been done keeping in mind “national security concerns, as it (defence) is a highly sensitive sector”.


By comparison, the decision for the insurance industry was that FIPB’s clearance would be required in proposals for more than 26 per cent FDI. Also unlike the insurance decision, the approval for defence FDI is an executive decision and will not require Parliament’s clearance. The government has not been able to table the insurance amendment Bill in the Rajya Sabha due to persistent demand from Opposition parties that the legislation be referred to a select committee.


The government is believed to be optimistic that Wednesday’s decision will attract foreign companies interested in setting up manufacturing facilities here. But experts do not appear impressed.


Dev Raj Singh, executive director (tax & regulatory services), EY, says the decision will boost sentiment but might not lead to a big increase in investments. He argues defence FDI beyond 26 per cent was allowed earlier ass well, but it required the Cabinet Committee on Security’s clearance.


According to Vivek Vikram Singh, director, Grant Thornton India, the Cabinet’s move is not transformational enough to kickstart the creation of an independent local defence manufacturing ecosystem. “Sure, there will be a few joint venture formations where tenders are already in the pipeline, such as the MMRCA deal, the SAR (sea planes), etc. These will have a knock-on effect on medium-sized suppliers to these JVs, as well as players who benefit from the offset opportunity,” he says, but adds that these benefits would have accrued even if the FDI limit was 26 per cent, so little will change for the industry.


The Cabinet also permitted foreign investment in rail operations like dedicated freight lines, high-speed trains and mining & port connectivity, besides allowing FDI in some projects like construction of new lines, gauge conversion, doubling of lines and maintenance projects under the public-private partnership model. For joint venture in the area of projects, up to 74 per cent FDI will be allowed.


These FDI proposals will be allowed under the automatic route, so these will not require FIPB approval. This decision, too, is an executive one and need not go to Parliament.


The Railways Policy of 2012 had also allowed foreign players in rail projects, but this could not become a reality as the Industries Act, 1951, and the consolidated FDI policy of 2013 did not have enabling provisions. Wednesday’s decisions will remove this anomaly.


It is believed that companies will have to float special-purpose vehicles to bring in FDI in the areas of rail operations to provide last-mile connectivity to ports and mines. However, there is no clarity on this in the Cabinet decision.

(Source: Business Standard, August 7, 2014)




MUMBAI: The Reserve Bank of India (RBI) plans to crack down on errant borrowers with stricter guidelines on wilful defaulters ensuring they are not allowed to access funds from other sources like the capital markets, governor Raghuram Rajan said on Wednesday.


To this end the RBI will work closely with the capital market regulator. It will also gradually tighten prudential lending norms for banks to individual companies and corporate groups to minimise systemic risk.


Speaking to the media a day after the central bank’s monetary policy announcement, Rajan said the ceiling for foreign investments into the bond markets would be eased over a period of time, adding that the recent changes in the rules were aimed at attracting longer-term money.


“We are trying to ensure that wilful defaulters are prevented from accessing all kinds of funds,” Rajan said, adding that the central bank would also be revisiting the definition of non-cooperative defaulters. The idea is to ensure promoters do not hold up payments once the law suggests they should pay. The RBI, which has put in place a mechanism to alert banks on potential bad loans, is coaxing them to perfect their systems and collate the data so that they are able to spot trouble early on.


A borrower is a wilful defaulter if he has not met repayment obligations even when he has the capacity to do so or has not utilised the money from the lender for the specific purposes for which finance was availed of but has diverted the funds for other purposes. Banks must report cases of wilful defaults to the RBI where the loan outstanding is R25 lakh and above.


Noting that the current account deficit was in control, the governor said there was no room for complacency in the event of a turn in the interest rate cycle overseas, which would result in some volatility. Reiterating the need to tame inflation, the governor noted that a repo rate cut cut by the RBI would not necessarily result in banks lowering their lending rates meaningfully since they would be reluctant to drop deposit rates given that inflation remained elevated.


Moreover, high inflation resulted in the currency depreciating, with the weakening not always balanced and tempered.


The governor said inflation-indexed bonds would be relaunched, possibly with changes that would make the product more attractive. He said investors might prefer regular interest rate payments and coupons that were more attractive.

(Source: The Financial Express, August 7, 2014)




NEW DELHI: Among its initiatives to make doing business in the country easier, the labour ministry will on September 1 launch a scheme to liberalise the way inspection for compliance with labour-related laws is done. In what could be a move to crack down on the so-called inspector raj, the new inspection scheme will take away inspectors’ discretionary powers.


The next such initiative will be a unified portal, to be launched on October 2, that will serve as the common platform for employers to file their annual returns and compliance & inspection reports.


“These steps will bring a paradigm shift in the way the country is viewed and help boost India’s ranking in ease of doing business,” said a senior labour ministry official asking not to be named.


The new inspection system will initially cover 16 of the 44 Acts administered by the Union labour ministry, including the Industrial Disputes Act, 1947. It will have three kinds of inspections – the areas where inspection is mandatory, those where it is optional and the instances where it is based on compliance.


All inspections for the Employees Provident Fund Organisation (EPFO) and the Employees State Insurance Corporation (ESIC), besides those in the ambit of the Chief Labour Commissioner and the Directorate General of Mines Safety (DGMS) will be covered under the new scheme.


Under this system, mandatory inspections will be done only in extreme cases. For instance, if a fatal or serious accident has taken place, or in the cases of continuous strikes or lockouts.


Optional inspections will be automatically generated through a system on the basis of the priorities of the organisation concerned.


For the inspections based on compliance, a Central Analysis and Intelligence Unit (CAIU) will be set up to analyse and collect field data; the cases will be referred to this unit for evidence-based approval for inspection.


An inspector will then have to file his or her report within three days of going to the field. “The inspectors sometimes use their powers to harass both employees and employers. The new system will make them more accountable and take away their discretionary powers. The inspectors cannot go to inspect of their own accord. And their reports will not be considered valid if those are not uploaded within three days of inspection; action will be taken against them in the event of delay,” said the official.


The unified web portal will make the compliance process easier for industry and initially cover 16 central laws. Through this portal, the companies could file their annual returns and inspection reports and the format for these would be simpler from those in force at present. This integrated portal will operate through a unique labour identification number for each employer or establishment. The employers will be allotted labour identification number (LIN) after registration on the web portal.


“This will provide easier returns for designated Acts, simpler format for annual returns and a window for inspection reports,” the ministry official said.


The annual return has been reduced from an 80-page long format to a five-page document. Similarly, the inspection reports have also been reduced considerably.


“These steps will curb manual interference and encourage the use of technology, so that industry can engage in a better manner with the labour department,” the official added.


EPFO, DGMS and ESIC have begun the initial work to put the new systems in place by August 31.

(Source: Business Standard, August 7, 2014)




NEW DELHI: The government will bring a Bill, amending the Central Electricity Act, in winter session of Parliament to improve the tariff policy and regulations in the power sector. The power ministry is working out different tariff structure for different times of the day for easy availability of power for maximum hours in electricity deficit areas. It will soon consult states over the issue as the tariff matter comes under the states’ domain.


Besides, the government has decided to promote domestic power companies to help increase solar power generation in the country. Announcing these decisions in Rajya Sabha, power minister Piyush Goyal said the government will allow only 100% indigenous domestic companies to participate in the tendering process for 1000 MW solar power plants for defence sector. The measure would be implemented from this year itself, he added.


Replying to a discussion on functioning of his ministry, Goyal said he will seek the support of House in getting amendments to the Electricity Act of 2003 passed as it needs a relook and it should be more contemporary. “We need to have transformational changes. Our government is committed to transformational changes and not incremental changes.”


Announcing other measures to enhance power production in the country, Goyal said his ministry was working out with states to sort out pending issues due to which power projects have been held up.


Giving the break-up, he said power plants with installed capacity of 69,842 MW were held up for various reasons of which 45,634 MW were due to non-availability of coal.


Goyal, who also holds the coal portfolio, said while the power plant capacity has increased by 60% in the last few years, coal production has gone up by 7-8%.


He said the government has now decided that all power plants over 25 years’ old will get automatic exemption from clearances and automatic coal linkage for setting up plants with higher capacity.

(Source: The Times of India, August 7, 2014)

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