FDI in commercial mining: Government nod needed for companies from nations sharing border with India

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The Centre on August 3 clarified that any foreign direct investment (FDI) in commercial coal mining from an entity of a country that shares land border with India will be allowed only after government approval. "

This is with reference to the ongoing auction process of coal mines for commercial coal mining...It is further clarified that any FDI (foreign direct investment) in the commercial coal mining is subject to applicable laws including the Press Note 3 of 2020 issued by the Central Government....," the coal ministry said in a statement.

According to the Press Note 3 of 2020, 'an entity of a country, which shares land border with India or where the beneficial owner of an investment into India is situated in or is a citizen of any such country, can invest only under the Government route', it added.

Further, a citizen of Pakistan or an entity incorporated in Pakistan can invest only under the government route in sectors/activities other than defence, space, atomic energy and sectors/activities prohibited for foreign investment, the statement said.

A corrigendum to the tender document has also been issued in this regard, it added.

Foreign Direct Investment Policy, 2017 was amended vide the Press Note 4 of 2019, issued by the central government, to permit 100 per cent FDI under automatic route in coal mining activities, including associated processing infrastructure, for sale of coal, subject to the provisions of Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957 and other relevant Acts on the subject.

Accordingly, it was stated in the tender document that “The Press Note 4 of 2019, issued by the Central Government, amended FDI Policy 2017, to permit 100 per cent FDI under automatic route in coal mining activities, including associated processing infrastructure subject to the act and other applicable Laws, for sale of coal."

It is further clarified that any FDI in the commercial coal mining is subject to applicable laws, including the Press Note 3 of 2020, the statement said.

Prime Minister Narendra Modi launched the auction process of coal blocks for commercial mining in June.