Mumbai: Clarity on mining regulations and auction of mineral resources, besides tackling fuel security are top priorities of the Modi government, global banking and financial services company Barclays said in a report Wednesday.
The main focus area of the new government is tackling fuel security, clarity on mining regulations and auction of mineral resources, Barclays said in its India Materials report here.
"It is time that India put its mining sector house in order. The sector's GDP contribution has dropped from 4 percent in 1994 to 2 percent in FY'14 and the sector's current account deficit has increased to USD 26 billion. Two landmark Supreme Court judgments are expected soon," Barclays Capital's director, equity research Chirag Shah said.
There is not much that the central government can do on the iron ore mining front, but clarity on mining regulations could significantly improve investment confidence in the sector, the report said.
"We revise our steel demand estimate to 7.4 percent in FY'16 as against 6 percent earlier. Regulatory clarity on allocation or auction of key raw materials would bode well for steel and aluminum players," the report said.
Barclays said India is at a unique juncture as the Supreme Court is expected to pronounce its judgement in the coal block allocation case. The first coal blocks have been put up for auction with bidding likely to begin this month.
"Coal block auctioning could be a step forward in the right direction and set a precedent for allocation of other mineral blocks in the country in coming times," the report said.
Barclays also revised its cement demand estimate to 8 percent for FY16 as against 4.8 percent earlier. Cement companies should also benefit from increasing consolidation in the space, it said.
