Ordinance promulgated to amend coal mining laws

On January 11, 2020, the Government of India promulgated ordinance to amend coal mining laws in order to ease auction of coal mines.

Highlights

The GoI has promulgated ordinance to amend MMDR act (Mines and Minerals Development and Regulation act), 1957 and Coal Mines (Special Provisions) act [CMSP], 2015.

Objectives of the amendment

  • It will enhance ease of doing business
  • The amendment will democratize the coal sector. This will open the coal sector for anyone to invest.
  • It will promote FDI (Foreign Direct Investment). The amendment will remove eligibility criteria and restrictions in order to achieve this.

Amendments

  • The amendment has clarified the purpose of allocation. Previously, there was lack of clarity in interpretation of eligibility conditions in the auctions. The amendment clarifies that any company winning the auction shall carry on own consumption, sale or other purposes. This also allows 100% FDI participation
  • The Schedule II and Schedule III of the CMSP act had clauses that allowed only companies that are engaged in specific end use of coal to participate in the auction. These clauses are now removed.
  • So far, the CMSP act had been silent on reallocation of a coal upon terminations of an allocated mine. With the amendment, it is now possible to allocate the mine to the next successful bidder.
  • The amendment allows the coal mines to appoint a custodian for production.

Coal Targets of GoI

India is the second largest importer of coal in the world. The amendments will help to increase domestic production of India. It will also help India achieve its targets set. The GoI plans to increase coal production to 1 billion tonnes by 2024.

For the financial year 2019-20, the target set is 660 million tonnes.

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