By Sunil Garodia
First publised on 2020-01-12 15:44:07
Indian has the fourth-largest reserves of coal. Yet, due to unnecessary restrictions on mining, it imports a large part of its requirement. Part of this import is coal that is not available in India but most of it is because the country is unable to produce in sufficient quantities. Further, the restrictions have led to corruption in the form of granting licenses to favoured parties and bending of rules. They have also ensured that mining in India is primitive and the quality of coal is very poor. Hence, the decision to open up coal mining license for everyone is welcome.
Till now, coal mining license was given only to companies in the power, iron and steel and coal washery sectors. In addition, these companies needed to have prior experience in mining. There were severe end-use restrictions in place too. But now, anyone with the necessary financing can bid for a mine or mines and sell to anyone without any restrictions. New miners can sell the coal in the local market, export it, transform it through beneficiation or other value addition processes.
Environmental clearances for mines have also been rationalized and it is expected that henceforth, firms will not have to run from pillar to post to get such clearances. But one lacuna remains: the clearance will still be issued to the firm. Ideally, it should be issued for the mine as in an open market, mines will change hands frequently and if the new owner has to apply afresh for environmental clearance, it will hamper production and add to his woes. The government will now have to ensure that the licensing procedures are eased and the process for licensing is made faster.
Since foreign investors can apply for licenses through the automatic route with 100% foreign direct investment, it will mean that mining giants like BHP and Rio Tinto will now take a serious look at India. That would mean that the latest mining technology will be employed and underground mines in India, the scenes of many devastating accidents in the past, will be modernized. That will benefit the workers too as more jobs will be created and the workplace will become safer. It will also benefit ancillary industries like those making mining equipment, earthmoving machinery and heavy commercial vehicles. Most importantly, it will do away with the scams and corruption in the coal sector and make the country self-sufficient.
India imported 235 million tonnes of coal worth Rs 1,71,000 crore last year. Of this, 100 million tonnes was of a grade that is not available in India. The rest could have been sourced locally if production was optimized or there were more players selling local products. But the monopoly of Coal India, which cannot produce fast enough to meet demand, and strict licensing norms have ensured that coal puts a huge strain on India's current accounts position every year. Hopefully, this will change now. The change process is expected to start with the 46 mines whose license will come up for renewal in March.
As for Coal India, it is a Navratna PSU and employs more than 3 lakh persons. It has held licenses for the most lucrative mines in the country but has not optimized production due to various reasons. If the government wishes to retain control over it, then it will have to be modernized as it will now have to compete with international mining giants. Otherwise, it should be privatized. In no case should it be allowed to become a cash-draining liability after the opening up of the sector, like BSNL became when telecom was opened up for private players.