Indian industries decry lack of foreign investment
KOLKATA (miningweekly.com) - India’s apex industry representative body, the Federation of Indian Chambers of Commerce and Industry (FICCI), said that the mining sector has not witnessed any big investment by global mining giants despite 100% foreign direct investments (FDI) being allowed in the sector.
Citing a report from the Fraser Institute, FICCI said the even though India had improved its ranking in the global ‘Ease of Doing Business’ listing, when it came to the mining sector specifically, the country was ranked ‘poorly’.
FDI in the domestic mining sector has been on a steady decline, falling from a peak of $659-million in 2014/15 to a mere $36-million in 2017/18. Even as a share of total FDI inflow into the country, the mining sector's contribution fell from 2.06% to 0.08% during these years.
According to a presentation made to the government, FICCI said that the Indian mining sector’s contribution to gross domestic product (GDP) was a mere 3% and this would have to be rapidly ramped up, with GDP growth being pushed up to double digits government's ostensible goal.
It even suggested that the newly unveiled National Mineral Policy 2019 needed to be reviewed to achieve long-term sustainable growth of the sector and advocated that financial institutions should offer relaxations to small miners based on a valuation of their mineral assets, and that provisions for raising finance from banks should be exempted from transfer levies.
FICCI pointed out that India has one of the highest effective tax rates levied on the mining sector and investment in exploration is amongst the lowest, contributing markedly to international investors shying away from setting up base in the country.
Since the promulgation of the Mines and Minerals (Development and Regulation) Act 2015, the effective tax rate on mining in India has been pegged at 64% in the case of mines secured earlier through preferential allotment, and the rate in the case of mineral assets bagged through auction has been 60%. This is significantly higher than the prevailing levies in a variety of destinations - 34% in Canada, 39.7% in Australia, 38.1% in Indonesia and 39.7% in South Africa.
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