Investment invitations
The fourth tranche of the government’s economic package seems aimed at reshaping a set of industries for the long-term, rather than generating quick jobs or providing succour to ailing businesses.
The fourth tranche of the government’s financial package unveiled on Saturday focuses on structural reforms in eight sectors. The broad aim is to reduce government controls and attract greater private participation in these. Private miners are to get wider access to coal fields for commercial use, for instance. Power distribution companies in union territories will be privatized, and the country’s space facilities are set to be opened up for the use of private entities. Tech startups will be able to create services on the basis of satellite feeds.
The sector that could lure the most money is defence equipment, where the cap on foreign direct investment has been raised to 74% from 49%. Though the limit was raised to 49% not too long ago, foreign investors didn’t really rush in, as hoped. Now that majority control of businesses here is being offered to global investors, they might possibly take another look. India is a large market but remains import dependent. If joint ventures between foreign and Indian firms do get off the ground, the country may be able to develop a local industry for a portion of its needs. Certain weapon systems, according to finance minister Nirmala Sitharaman, will now only be domestically sourced. As an allied measure, the government plans to incorporate its ordnance facilities and list their shares on stock markets.
Reforms have been announced in some other sectors as well. In aviation, six airports are to be put up for redevelopment bids under public-private partnerships. The use of air space is also to be “rationalized" for efficiency, so that flying time may be reduced. Air carriers that were expecting bailout funds would be disappointed with this. On the whole, Saturday’s announcements seem aimed at reshaping a set of industries for the long-term, rather than generating quick jobs or providing succour to ailing businesses.
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