Assocham calls for 100% FDI for exploration of diamonds

New Delhi, July 4 (UNI) Industry chamber Assocham today called for 100 per cent Foreign Direct Investments (FDIs) for exploration of diamonds and precious stones in the domestic sector, to make it realise its true potential through automatic route.

As per the current stipulations, foreign equity is permitted up to 74 per cent for exploration of diamonds and precious stones under the automatic route.

The foreign equity above 74 per cent in diamonds and precious stones is cleared through the Foreign Investment Promotion Board (FIPB) as per existing provisions of the Indian statute.

The current pace of liberalisation seeks 100 per cent FDIs in diamonds and precious stones as this will bring in technologies and develop huge resources of this sector with higher value additions for still higher foreign earnings.

In a paper on 'Indian Diamonds, Precious Stones and Mining and Metal Sector', the chamber has suggested that the Finance Ministry and the Ministry of Commerce and Industry, in consultation with the RBI, should come out with guidelines to make it feasible.

In view of Assocham, FIPB takes longer to grant permissions and licences for precious stones and diamonds exploration which involve cumbersome procedures and discourage exploration activities in these two areas in which the potential is so huge yet it does not yield the required dividend in terms of FDIs.

In the paper, submitted to the Ministry of Mines, Finance, Commerce and Industry, Assocham President Anil K Agarwal has urged the government ''to create Exclusive Economic Zones (EEZs) for the domestic mining sector in a bid to make it more lucrative to attract capital in the form of investments and FDIs.'' In order to address the safety environment issues relating to mining, EEZs are necessary, he said. These zones should be accorded with tax incentive facilities with infrastructure status to lure investors in the mining sector.

The paper points out that the performance of mining sector has been extremely dismal so far as the FIPB had already given 73 approvals for FDIs in it without any concrete results.

These proposals involve investment to the tune of Rs 4,044 crore in sectors like like diamond, gold, silver, the platinum group of metals, non-ferrous minerals such as copper ore, zinc and lead ore, strategic minerals/ores such as nickel and tungsten.

The major stumbling blocks that come in this sector completely plugging the scope of FDIs comprise multiple agencies approval.

The chamber has therefore, suggested a single window clearing system to clear FDIs approvals. It will not only save time, but effort and money as well.

Moreover, the demand of transparency in the system should also be adequately addressed.

UNI PV CS BD1553