In December 2020, the Indian government is new Australia’s economic strategy.. This identifies METS in Australia as a valuable partner in the ongoing liberalization of India’s mining sector. With 1,500 mines operating in India, new developments create new opportunities for Australian companies.
- A new mine operation model designed to promote private sector involvement
- National coal mine auction
- New regulations aimed at expanding overseas investment.
This insight outlines some of the key opportunities and challenges facing future METS suppliers in India. Suggest ways to approach state-owned mining companies and identify Australian METS opportunities in skills training and development.
Please contact us for more information Varun Kukuleti, Austrade Business Development Manager, Kolkata.
Private sector establishes position in Indian mining
India offers great potential for Australia’s METS, where demand for energy and resources is skyrocketing. The Government of India wants to gather foreign expertise and capital to support the development of India’s abundant natural resources. India’s goal is to improve the self-sufficiency of minerals and resources, especially coal.
A huge program of modernization is underway. The state-owned mining industry is gradually opening its doors to private companies through mining auctions and other means. The government has also relaxed many restrictions and amended its policies to encourage private companies to enter the Indian mining industry.
Private sector activities are currently strengthening partnerships with METS providers. We are widely convinced that METS companies, including overseas METS, will help transform productivity, safety and profitability.
Major new developments create new perspectives
Australian METS companies need to be aware of three new initiatives that will drive increased demand for their products and services.
- New mine operating model. The government’s new mine development and operation model allows private companies to develop and operate mines. Private companies can also supply owners, including government customers, with mineral output at a fixed rate calculated per ton. This will allow mine owners to rethink the scope of new technologies in mine operations.
- Coal mine auction. Indian government Started auction of coal mine assets in November 2020.. A total of 19 were sold, with a 50% success rate for the first tranche. The new privatized mine has an estimated revenue of A $ 1.2 billion and employs 69,000 people at full capacity.
- Policy reform to increase foreign direct investment (FDI). In 2020, the government will renew the Mining and Mineral Development and Regulation Act (MMDR) Mineral Law (Revised) Law.. The law aims to open the mining sector to larger commercial activities. This is done in two ways. Use new means to make your business easier. By allowing up to 100% FDI investment in coal and lignite mines.
Procurement in the public and private sector
Increased participation of private sector parties will bring about a fundamental change in the way METS is procured in India.
Government-affiliated companies can only purchase products and services through bidding. This tends to delay procurement. In the mining sector, procurement has also become “bureaucratic”.
In contrast, the Indian private sector can purchase METS services as they please. This is streamlining METS procurement as private sector occupies a larger share of mining activity.
Similarly, the wider and faster procurement of METS will increase awareness of the value that METS in Australia can offer.
Training and skill opportunities
The mining industry is open to executive and workforce training. Opportunities can increase rapidly as individual owners strive to reach globally recognized safety standards. This trend offers great opportunities for METS in Australia.
- Domestic training must meet local standards. This includes offering courses in the local language and minimizing the number of participants from a particular local community.
- State-owned mining companies release a request for proposal (RFP) that training providers can answer.
- Private mining companies may accept a direct approach or advertise opportunities.
The Australian Trade Promotion Agency recommends that Australian training providers partner with Indian training providers to provide joint answers to these requests.Austrade Prepared Indians Cross-border Educational Opportunity Report.. It corresponds to the various market entry strategies that Australian training providers can adopt to enter the Indian market.
Austrade India also facilitates connections between Australian training providers and Indian partners and organizations.
New product approval
Mine developers and operators are required to obtain a safety certificate from the Directorate General of Mining Safety (DGMS) for new products used in the mine. This can take 6 months to 4 years, depending on the value and complexity of the equipment.
Cooperation with state-owned enterprises
The majority of India’s prominent mining companies are still state-owned. This is especially true for coal mining companies. These agencies have fixed purchasing rules, and the number of approvals required increases with the value of the product or service you purchase.
Purchases are made primarily through bidding and require technical and financial bidding.
Committees with technical, financial, and research and development (R & D) expertise typically meet bimonthly or quarterly to determine procurement specifications and progress.
This often means that it can take a long time for a new project or new device or service to be approved. This increases the risk of selling to the public sector.
Cooperation with private companies
Collaboration with private companies is relatively easy. However, certification from DGMS is required to approve new equipment. Since India is a very price sensitive market, suppliers need to include import duties in their bids. This means that some value-added products can be difficult to sell.
Joint ventures with trusted private sector distributors are an effective way to mitigate risk, understand market processes, and negotiate delivery dates and prices. Distributors can also provide ongoing market development support, including after-sales service.
Understanding the differences in Indian business culture helps Australian METS organizations manage risk.
- delay.. It is normal to expect some delay during negotiations with government agencies, state agencies and businesses. This is because the final agreement requires the approval of multiple stakeholders. In addition, the winning bidder often asks for changes in prices and terms and conditions after reaching a final agreement.
- Almost 81% of India’s workforce works in the “informal” sector.. They are tax exempt and many workers are employed at mining sites without proper contracts. This adds to the complexity of employment and operational risk management at the mine site.
- India has 22 official languages and countless dialects. Culture varies greatly from one region of India to another. Local agents are essential to fill communication gaps, speed up the sales process and provide market support to Indian customers.
- Resolve the dispute. Has a reputation 40 million proceedings pending in Indian judicial system.. Arbitration is the preferred dispute resolution mechanism, but there is no arbitration body to oversee. Alternatives to international arbitration are emerging, such as the Singapore International Arbitration Center, which has a marketing office in Mumbai.
The Austrade has offices in six major hubs: Delhi, Mumbai, Chennai, Kolkata, Hyderabad and Bangalore.
You can help Australian METS providers by:
- Market entry strategy
- Introducing potential partners
- Business advice.
For more information, please email us Varun Kukuleti, Business Development Manager in Kolkata.