The Narendra Modi government on Thursday approved a number of development projects in areas like health, power, metro rail, roads and bridges. It also cleared up to Rs 25,000 crore FDI by Vodafone Idea by way of a rights issue and the setting up of Air India Assets Holding Ltd (AIAHL) — a special purpose vehicle (SPV) housing national carrier’s Rs 29,464 crore working capital debt.
Further, two policies have been cleared — one aimed at increasing the size of the country’s now nascent software products industry to $70 billion by 2025 and creation of new employment of 55 lakh and another to promote investments in mining of
non-coal minerals with a slew of incentives, including the first right of refusal for exploration firms in the mines they had explored.
Besides, the Cabinet also approved the second phase of the Faster Adoption and Manufacturing of Hybrid & Electric Vehicles (FAME-2) scheme with a Rs 10,000-crore outlay for three years.
Further, it approved “asset monetisation policy” as a new tool to boost disinvestment receipts from sale of PSU assets such as gas pipelines, power transmission lines, telecom towers of PSUs as well as enemy properties.
Another decision was to offer limited subsidised loans to sugar mills to help them clear cane arrears that have exceeded as much as Rs 20,000 crore so far. The subsidy will allow mills to get loans at just around 7-8%.
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Among the development projects, the Cabinet approved Kanpur metro rail project at an estimated cost of Rs 11,076 crore, which will be completed in five years. Similarly, another metro rail project for Agra has been given the nod, which will cost Rs 8,380 crore. Another decision was to infuse a share capital of Rs 1,450 crore into National Housing Bank.
As reported by FE earlier, FAME-2 will have greater focus on taxis and buses used for public transport and under this, up to 18% of the price of the electric taxis will be borne by the government compared with under 10% now. Buses run on electricity will likely get a higher quantum of government support than taxis and two-wheelers.
Under the Fame-2 scheme, support will be provided to 10 lakh two-wheelers, 5 lakh three-wheelers, 55,000 four-wheelers and 7,000 buses. The benefits will be extended to only those vehicles which are fitted with lithium-ion batteries and other new technology batteries. Apart from electric vehicles, the incentive will also cover construction of charging infrastructure, whereby about 2,700 charging stations will be established in metros and 1 million other cities, including hilly states so that there will be availability of at least one charging station in a grid of 9 kilo metre.
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According to sources, AIAHL will contain four Air India (AI) subsidiaries – Air India Air Transport Services Ltd (AIATSL), Airline Allied Services Ltd (AASL), Air India Engineering Services Ltd (AIESL) and Hotel Corporation of India (HCIL) apart from non-core assets like land, buildings, paintings and artefacts. The working capital debt will be served by selling these assets as per the new turnaround plan for cash-strapped airline.
In November 2018, Vodafone Idea said its board of directors has established a committee to evaluate a potential capital raise of up to Rs 25,000 crore. Of this, the promoter shareholders, Vodafone Group and Aditya Birla Group have indicated that they would contribute up to Rs 18,250 crore – Vodafone Rs 11,000 crore and AV Birla Rs 7,250 crore. It had indicated at that time that any capital raise, if approved, was expected to be completed in Q4 FY2019.
Under the National Policy on Software Products, 2019, an initial outlay of Rs 1,500 crore will be involved to implement programmes for a period of 7 years. This amount will be divided into Software Product Development Fund and Research & Innovation Fund.
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The National Mineral Policy, 2019 aims at couraging private participation in the non-coal and non-fuel mineral exploration space. India’s mining exploration sector has been largely untapped with only 10% of the 8 lakh square km potentially resource-bearing area explored so far. Mining takes place on just 1% of the explored area. Apart from a couple of state-owned companies, private sector participation in the sector are almost negligible. The extant National Mineral Exploration Policy 2016, which rewards successful exploration with royalty share for the entire lease period of 50 years or a lumpsum amount to be paid by the developer, has made little difference to the sector.
The Cabinet also gave ‘in principle’ approval for strategic disinvestment of the Centre’s 100% equity in Kamarajar Port to Chennai Port Trust in a single process through strategic sale.
The government has also decided to promulgate an Ordinancefortheamendment to the Special Economic Zones (SEZ) Act, 2005.The proposed changes to the Act will enable the setting up of an in an SEZ bya trust,which is not allowed underthe extant regulation.