MMDR Amendment Bill 2026: Unlocking mineral potential, empowering states

This article is authored by Amit Bhagat, former partner, indirect taxes, PwC India and senior director, EY India.

A predictable mining regime can strengthen mineral security, attract investment, protect state revenues and help India move from import dependence to industrial strength

Governance

India’s next phase of economic growth will depend not only on how much it builds, but also on whether it can secure the raw materials needed to build it. Minerals are the foundation of steel, aluminium, energy, infrastructure, defence, electronics and emerging technologies. Yet India continues to depend substantially on imports for several mineral resources. Mineral imports were worth around ₹10.12 lakh crore in Financial Year (FY) 2025-26, highlighting the scale of the challenge.

Against this backdrop, the Mines and Minerals (Development and Regulation) Amendment Bill, 2026 is an important step towards creating a more predictable and competitive mining ecosystem. Its significance extends well beyond the mining sector. At its core, the reform is about strengthening India's mineral security and creating the conditions for greater domestic production.

Predictability is essential for long-term investment

Mining is a capital-intensive, long-gestation business. Projects require substantial investment in exploration, mine development, equipment, infrastructure and environmental compliance, often with returns realised over decades.

For such investments, stability in the fiscal and regulatory framework is critical. Multiple, overlapping or unpredictable levies can increase the cost of domestic mineral production and make projects less competitive. A clearer framework allows investors to evaluate projects on their underlying economics, rather than continually pricing in regulatory uncertainty.

Greater predictability can encourage exploration, unlock resources that may otherwise remain commercially unviable and accelerate the development of new mines.

This is ultimately not just about ease of doing business. It is also about making Indian minerals competitive enough to be produced domestically rather than substituted by imports.

A larger mining ecosystem can strengthen state revenues

There is, however, an important distinction between increasing the fiscal burden on individual mining projects and maximising the broader economic value generated by a growing mining sector. If additional or unpredictable levies affect the viability of projects, they can have wider consequences for investment, production, employment and downstream industries. A competitive mining ecosystem, on the other hand, can expand production and the overall economic base. More mines operating at scale mean greater economic activity and continued flows through established revenue channels such as royalty, auction premium, District Mineral Foundation contributions and GST-related revenues.

The objective, therefore, is to create a larger and more sustainable mineral economy rather than simply increase the fiscal burden on individual projects.

The policy framework maintains the established position of states in areas such as land rights and the regulation of minor minerals. Nearly 50 minor minerals - including sand, gravel, clay, silica, granite, marble, gypsum and laterite--remain completely under state government control. The Bill does not touch this category at all; regulation of minor minerals continues to sit entirely with the states, as it always has. Land, taxation rights and states ~90% share of revenue remain exactly as before.

The Bill simply distinguishes between land rights and the taxation framework relating to mineral rights and mineral-bearing lands. This is an important distinction. The reform is focused on creating greater clarity and predictability in the taxation framework for mineral development, while leaving existing land rights and the established role of state governments intact.

Greater clarity can instead reduce uncertainty and disputes while allowing states and investors to operate within a more consistent framework.

The larger economic case for the reform lies in what happens beyond the mine.

India cannot aspire to become a global manufacturing hub while remaining excessively dependent on imported raw materials. A domestic mineral ecosystem supports far more than extraction. It creates demand for mining equipment, engineering, transport, power and services, while supporting processing, refining and downstream manufacturing.

Recent global disruptions have demonstrated how geopolitical tensions, trade restrictions and concentrated supply chains can affect access to critical raw materials. Building domestic mineral capacity is therefore not merely about reducing an import bill. It is about ensuring reliable supplies for strategic industries and protecting India's long-term economic interests.

Mining sits at the base of a long value chain - feeding steel, cement and power, which in turn build every road, home and school. High and unpredictable mining costs cascade through this chain, ultimately raising costs for citizens. A more stable, predictable mining-taxation regime is intended to help arrest that cascade, supporting affordability across the broader economy even as it strengthens the sector's ability to attract investment and compete globally.

Stronger domestic minerals can mean stronger industry. Stronger industry can mean greater economic resilience. And greater mineral security can be one of the foundations of a stronger India.

(The views expressed are personal)

This article is authored by Amit Bhagat, former partner, indirect taxes, PwC India and senior director, EY India.