“The decision for e-auction of mines will support growth of the coal mining industry”

March 25, 2015 11:23 am0 commentsViews: 55

SivasubramanianSays Sivasubramanian Natarajan, Managing Director, ThyssenKrupp Industries India Pvt Ltd, in conversation with R Srinivasan.

What are your expectations from the Budget?
The Budget session of Parliament is critical for a number of reasons. It is expected that the government will pass the ordinances it issued last month on coal block auctions, mining regulations, land acquisition and higher FDI in the insurance sector to prevent them from lapsing. Keeping in mind the GST implementation date of April 2016, the government would consider making adequate budgetary provisions for up-gradation of tax infrastructure.

What policy changes would be most welcome for betterment of the power sector?
Reliable power supply is critical for Indian economic development and efficient improvement of manufacturing. The recent decision of the government to go for an e-auction of mines has attracted investors and will reduce fuel availability risks. This will support the growth of the coal mining industry and provide a fillip to mechanisation of mines. The most critical requirement in the coal mining industry is to improve productivity, reduce the environmental impact and substantially reduce the cost of the mined coal at the power station.
The government has to provide security to investors to ensure that their investments are safe and needs to be more transparent and implement long term policies for land acquisition, faster environment clearance and allocation of natural resources in order to augment infrastructure development.
The government must ensure stricter qualification requirement in selecting the bidder so that only companies with long term interest are able to qualify. The tax system must be made more transparent and not subject to any interpretation. A high quality road and rail infrastructure will help in ensuring that logistic costs are minimised.

What provision/s were left unattended by the last Budget which the current one should incorporate?
Currently, investment allowance can be claimed if the taxpayer acquires and installs the plant and machinery in the year of the claim. These twin conditions are difficult to fulfil, especially in the case of large projects. To address this, a clarification as to construction WIP capitalised during the period to be eligible for investment allowance should also be provided. Indian manufacturers are also expecting the government to simplify export import (EXIM) policies and its related documentation so as to facilitate access to low cost finance for exporters. The budget should address the concern of domestic manufacturers against state supported Chinese competition.

How will the sector fare this year?
With the new government expecting to roll out the much needed reforms in the power sector, we will see revival of the sector. Due to a large gap between the supply and the demand in the power industry, there is an immediate need to rapidly augment the quality of power supply. This opens up a huge opportunity for setting up new power plants besides the need for modernisation of the existing power plants. The opportunity for manufacturers like us is in the area of ramping up power generation with the domestically available fuel at the lowest Capex and Opex while ensuring least emissions and least usage of resources like water.

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