India is considering passing emergency executive orders to ease land-acquisition rules and auction minerals such as iron ore to kickstart hundreds of billions of dollars in stalled projects, though investments are unlikely to flow in immediately.
Restrictions on buying land, under a law championed by the last Congress government, are among barriers holding up projects worth almost $300 billion in sectors such as rail, steel, mining and roads.
Several states have asked Prime Minister Narendra Modi's government to overhaul the law, which company executives have blamed for stalling land deals and stifling industrial expansion.
They want the government to remove a requirement to get landholders' consent in the case of public-private partnership projects, or at least bring the approval threshold down to 50 percent of affected landowners from 80 percent.
India's cabinet will meet later on Monday to discuss the executive orders, called ordinance, government officials said.
An ordinance is an urgent measure that has to be passed by the next parliamentary session. Modi has already resorted to using it three times in his six months in the office due to a lack of majority in the upper house of parliament.
After the last parliament session ended in a legislative logjam on Dec. 23, Modi passed two orders to let foreign firms raise their stakes in insurance ventures and allow commercial mining of coal.
The parliament, which reconvenes in February, did not ratify the November ordinance on coal, forcing Modi to pass another ordinance to let the government auction coal mines and allow private companies to mine and sell the fuel.
But analysts said reform through ordinances has its risks.
"While ordinances can be reissued once they lapse, they may not be perceived as a stable solution by investors wanting secure property rights," HSBC Securities analysts wrote in a note. "We, however, believe it is an important step to signal the government is serious on reforms."
Modi's government is also considering changes to the Mines and Minerals Development and Regulation Act to auction minerals.
India was once the world's third-largest exporter of iron ore but is importing heavily now due to court restrictions on illegal mining. India's top court has eased some of the curbs, but state bureaucrats have dithered over renewing mining licenses, fearing charges of corruption.
The government hopes an auction will reduce chances of any wrongdoing and bring the mining industry back on track. But it is unlikely to lead to a sudden surge in iron ore output at a time when there is a global glut and prices have crashed.
Copyright Thomson Reuters. All rights reserved.
Get the Most Popular Lawyerherald Stories in a Weekly Newsletter
Join the Discussion
Related Articles
