The AES proposal for a wholly owned subsidiary, envisaging an FDI inflow of $370 million, attracted the provisions of Press Note No. 1 requiring no-objection certification of the existing JV partner.
NEW DELHI: US-based AES Corp’s proposal for a wholly owned subsidiary to set up a 1000 mw greenfield power project with captive coal mining in Chhatisgarh at a cost of $1.22 billion is finally through the government’s foreign direct investment (FDI) approval process.
The Union Cabinet on Thursday endorsed the recommendation of the Foreign Investment Promotion Board (FIPB) for allowing AES to establish a wholly owned subsidiary in India despite the US company already having a joint venture power project with the Orissa government.
The AES proposal for a wholly owned subsidiary, envisaging an FDI inflow of $370 million, attracted the provisions of Press Note No. 1 requiring no-objection certification of the existing JV partner.
But the FIPB had recommended the AES proposal to the Cabinet after hearing the company and the Orissa government.
Also, in a fillip to the power sector, the Cabinet waived the existing limit of Rs 1,000 crore on equity investment on NTPC so that the thermal power major can go ahead and take up two of the seven ultra mega power projects currently being proposed.
The ultra mega power projects would each cost at lease Rs 4,000 crore. The cabinet, therefore, took the view that NTPC should be freed from the Rs 1,000-crore ceiling imposed on equity investments, finance minister P Chidambaram told reporters.
NTPC can now invest in equity up to 15% of its networth in any one of the ultra mega power projects and its total equity participation in all such projects would not exceed 30% of its networth.
The finance minister was also able to convince the Cabinet on the ministry’s long-standing demand to strengthen the manpower in the income-tax department which has been severely depleted because of the 2001 norm allowing only one recruitment for three vacancies that arose. The cabinet decided that as many as 7,051 posts will be filled in over the next three years at different levels in the department to cope with the additional work load. This, Chidambaram said, would impose a burden of Rs 150 crore a year, but despite that the cost of tax collection in India would continue to be the lowest in the world. It cost between 62 paise and 65 paise to collect Rs 100 in tax in India.
The cabinet had last year cleared hiring of over 3,000 personnel for the income-tax department, but these hiring have not yet been made. The fresh clearance for 7,051 posts includes the earlier sanction.
Chidambaram said the ministry hopes that the Staff Selection Commission, which now has a new chairman, would be able to give a firm time-table for recruitment of these staff for the income-tax department. Alternatively, the ministry could also explore the possibility of getting the Banking Service Recruitment Board to take up the recruitment process.
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