Chinese firms need prior permission to bid in coal auctions

Other neighbours also included in amended FDI policy

The coal ministry has issued a notice regarding foreign direct investment (FDI) in commercial coal auctions. The move, aimed at restricting the entry of Chinese miners, requires foreign investors to take approval from the government before participating.

Earlier, the Centre had permitted 100 per cent FDI under the automatic route for coal mining activity, including associated processing infrastructure.

The ministry issued a press note on Monday, citing the amendment made to the FDI policy formulated in April, which restricts the entry of countries that share a border with India.

“The Press Note 3 of 2020, issued by the central government, further amended the FDI policy to prescribe a requirement to seek prior government approval, if such foreign direct investment is by an entity from a country that shares land borders with India, or where the beneficial owner of such FDI into India is situated i n or is a citizen of any such country,” said the corrigendum issued by the coal ministry for commercial coal auction.

Restricting the entry of Chinese players into the Indian infrastructure space has taken precedence amid heightened tensions between the two countries, following the Galwan Valley stand-off.

Last month, the government had restricted Chinese firms from participating in bids for government procurement without approval from relevant authorities, on grounds of defence and national security.

Chinese mining companies China Shenhua and China Coal Energy are among the top 10 coal miners globally.

The Centre had started the coal mine auction — for commercial mining and sale by private companies — in June.

Bidding terms were liberalised to attract foreign players, nonmining entities and large miners.

In May, it amended the Coal Mines Special Provisions Act, 2015, to simplify the auction process and attract significant investor interest.

Pralhad Joshi, Union coal minister, said in a recent statement: “100 per cent FDI is the biggest reform of our times. The entry of international players will create an efficient and competitive coal market.”

The ministry has started proceedings for commercial coal mining auctions with 41 blocks. These are estimated to cumulatively fetch the mine-bearing states ~20,000 crore in annual revenue, over the life of the mine.

The deadline for sale of the tender document is August 14, and the due date for bid submission is August 18.

However, a notice dated July 30 stated that the ministry was considering the request of investors to extend the deadlines.