On Minerals And Mines, Strike Federal Balance, Pg15

Key Highlights:

• Parliament recently passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026.
• The Bill restricts states' powers to impose levies on mineral rights and mineral-bearing lands.
• The Centre's primary objective is to enhance predictability, attract investment, and prevent high levies from increasing infrastructure costs in the mining sector.
• States have expressed significant concerns regarding potential revenue losses and the implications for fiscal federalism.
• This amendment follows a Supreme Court ruling that had affirmed the states' right to impose such taxes and recover arrears.

Detailed Insights:

• The Mines and Minerals (Development and Regulation) Act, 1957 is the foundational central law governing the regulation and development of minerals in India.
• The amendment aims to standardize mineral prices and rationalize taxes and royalties to boost investor interest in the sector.
• India's effective tax rate in the mining sector is reportedly over 50% of revenues, higher than the 35-40% in other countries.
• Mineral-rich states like Odisha, Jharkhand, and Chhattisgarh depend heavily on mineral revenue as a significant portion of their non-tax income.
• The Centre maintains that states will continue to receive the majority share of mining revenue, including royalties and auction premiums.
• The Bill invalidates unrecovered state levies on mineral rights or lands from before its commencement, though already collected amounts will not be refunded.
• The Centre has launched the National Critical Mineral Mission to secure the supply chain of essential minerals and reduce import dependency.
• The amendment specifically targets major minerals, while states retain regulatory authority over minor minerals.
• The Bill also introduces provisions for greater flexibility for mining lease holders to include additional minerals and removes the 50% cap on selling minerals from captive mines.

Key Concepts Involved:

• Mines and Minerals (Development and Regulation) Act, 1957: The principal central legislation that governs the development and regulation of mines and minerals in India.
• Fiscal Federalism: The system of financial relations between the central government and state governments in a federal structure.
• Royalty: A payment made to the government by a mining entity for the right to extract minerals from a specific area.
• National Critical Mineral Mission: An Indian government initiative focused on ensuring a stable and secure supply of critical minerals vital for economic growth and technological advancement.