Ordinance soon: Cabinet OKs proposal to amend IBC | Economic Times

New Delhi: The cabinet approved a proposal to amend the Insolvency & Bankruptcy Code (IBC) to prevent companies from being forced into resolution proceedings due to loan defaults triggered by the Covid-19 crisis. An ordinance will be issued soon to empower the government to exclude Covid-19-related debt from the definition of “default” under the code for the purpose of triggering insolvency proceedings.The cut-off for such debt could be from March 25, when the lockdown was imposed, to a date to be notified later, said people with knowledge of the matter. The cabinet also approved the constitution of an empowered group of secretaries, to be chaired by the cabinet secretary, to facilitate investment flows into the country as companies look to relocate operations from China to India. It also okayed two ordinances that aim to transform agriculture with more private investment and higher income for farmers.“It (IBC ordinance) was taken up by the cabinet,” a government official said, adding that details would be announced once the executive order was issued. Finance minister Nirmala Sitharaman had said on May 17 that the government will amend the IBC.Minimum Threshold Set to be RaisedThe FM said this would be done to exclude debt taken during the Covid-19 outbreak and suspend any fresh resolution filings as part of the Atmanirbhar Bharat (self-reliant India) Abhiyan.76187122The minimum threshold for initiating insolvency proceedings is also proposed to be raised to Rs 1 crore from Rs 1 lakh, a move aimed at insulating micro, small and medium enterprises (MSMEs).Relief will be provided by amending the relevant provisions of IBC — Sections 7, 9 and 10 — to prevent borrowers from being dragged into insolvency court. The suspension of these provisions could be for up to one year, Sitharaman had said. Section 7 of the IBC allows a financial creditor to file for initiating the corporate insolvency resolution process (CIRP) against a corporate debtor. Section 9 provides for application of insolvency by an operational creditor, while Section 10 is for initiation of insolvency resolution proceedings by a corporate applicant.Empowered GroupThe Niti Aayog CEO and secretaries of revenue, economic affairs, commerce and the Department for Promotion of Industry and Internal Trade (DPIIT) will be permanent members of the empowered group. Secretaries of other relevant government departments or ministries will be co-opted depending on the project.The group will evaluate investments forwarded by the departments on the basis of infrastructure creation and actual investments that accrue. Further, it will lay down completion targets for each stage. It will ensure timely clearances from various departments and ministries, provide investment support and ease the process for global investors. It will also facilitate investments of top investors in a targeted manner, and usher in policy stability and consistency in the overall investment environment, an official statement said.The government is of the view that the pandemic presents India with an opportunity to attract foreign direct investment (FDI), especially from large companies that are seeking to spread into new geographies and mitigate risks. Ramping up output across product lines will help serve big markets in the US, EU, China and elsewhere.“The proposal aims to take advantage of these opportunities from the global economic situation to make India among the largest players in the global value chain,” the government said.AgricultureOne of the agriculture-related ordinances will allow farmers to sign deals with companies, wholesalers and exporters for their harvests, which will insulate them from risks and provide higher income. The other ordinance creates barrier-free agricultural trade in the country. The cabinet also approved amendments to the Essential Commodities Act. The changes had been announced earlier as part of the Atmanirbhar Bharat Abhiyan.The cabinet also decided to remove commodities such as cereals, pulses, oilseeds, edible oils, onion and potatoes from the list of essential commodities. The freedom to produce, hold, move, distribute and supply will lead to economies of scale and attract private sector and foreign direct investment to the agriculture sector, officials said. The government has also safeguarded the interest of consumers with a provision to regulate these commodities in situations such as war, famine, extraordinary price rise and natural calamity.Project Development Cells The cabinet also gave its nod for setting up PDCs in each ministry to be headed by a joint secretary-level officer for the development of investible projects in coordination between the central and state governments. This will ensure higher investable projects are in the pipeline in India and in turn increase FDI inflows.The PDCs will be responsible for conceptualising, strategising, implementing and disseminating details with respect to investible projects. Besides, they will conceive projects with all approvals, make land available for allocation and draw up detailed project reports for adoption/investment by investors. They will identify issues that need to be resolved in order to attract and finalise investments and subsequently put them before the empowered group.“The decision will make India a more investor-friendly destination and give a fillip to the mission of Atmanirbhar Bharat by handholding and further smoothening investment inflows into the country,” the government said.Renaming Kolkata PortThe cabinet also approved the renaming of Kolkata Port as Syama Prasad Mookerjee Port. The country’s first major port is also the only riverine one in the country. Nhava Sheva Port Trust was renamed Jawaharlal Nehru Port Trust in 1989, Tuticorin Port Trust was renamed VO Chidambaranar Port Trust in 2011 and Ennore Port Ltd was renamed Kamarajar Port Ltd. Kandla Port was renamed Deendayal Port in 2017.