From UPSC perspective, the following things are important :
Prelims level : FDI
Mains level : Implication of FDI in coal sector
The Union Cabinet has approved an ordinance to amend two laws to ease mining rules, enabling foreign direct investment in coal mining.
About the Ordinance
- At a Cabinet meeting chaired by PM the ordinance to amend the Mines and Minerals (Development and Regulation) Act, 1957 and the Coal Mines (Special Provisions) Act, 2015 was approved.
Benefits of the proposed FDI
- The decision would boost the ease of doing business and increase the growth avenues.
- The Coal India would be strengthened and the government was aiming at achieving production of one billion tonnes by 2023-2024.
- The “end-use restrictions” had been done away with allowing “anyone to participate in the auction of coal blocks”.
- The ordinance would strengthen the auction process of those mines whose leases were expiring on March 31, 2020. Seamless transfer of clearances would also be facilitated.
Foreign Direct Investment (FDI)
- A FDI is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.
- It is thus distinguished from a foreign portfolio investment by a notion of direct control.
- FDI are commonly made in open economies that offer a skilled workforce and above-average growth prospects for the investor, as opposed to tightly regulated economies.
- FDI frequently involves more than just a capital investment. It may include provisions of management or technology as well.