Exploration, refining, mining get core status

NEW DELHI: In a significant development, mining, exploration and refining sectors have been given core status, enabling firms operating in these areas to bring into the country larger amounts of overseas borrowing.
The three sectors will be added to the list which includes: power, telecom, railways, road, sea port and airport, industrial parks, and urban infrastructure will also be allowed to bring in $500 million in funds borrowed overseas, up from the existing cap of $100 million.
Under the new norms, companies borrowing over $100 million will be able to repay loans only after seven years. In other words, mining exploration and refining companies will be able to borrow for seven years. According to S Harishanker, Head-Infrastructure and Governance of KPMG, the move will give flexibility to borrowers in those sectors looking at long-term funds since interest rates in the country are high.
However, he said, whether this will spark immediate rush of inflows is not known, but good projects and large companies in these sectors should not have a problem in accessing funds even in the current scenario.
PwC leader (infrastructure) Amrit Pandurangi said any sector that comes within the definition of infrastructure is broadly given tax holidays under section 80 IA of Income Tax Act and change in provisioning by banks to give financing advantage.
Apart from the government owned companies such as National Coal Development Corporation of India, Bharat Almunium Company, Hindustan Zinc Ltd and Steel Authority of India, a large number of private companies would also benefit.
In 2006 Union finance ministry had rejected infrastructure status to mining sector. In subsequent year, mining ministry had submitted a proposal to ministry yet again for consideration.