States don’t lose from new changes to the mining law

One of the biggest challenges before our mineral sector is not the absence of resources, but the gap between available technology and its large-scale deployment

The Mines and Minerals (Development and Regulation) Amendment Act of 2026 should be seen not merely as a fiscal or regulatory amendment, but as an important step towards preparing India for the future of the mining industry. At a time when minerals — particularly critical and strategic minerals — are becoming central to energy security, advanced manufacturing and economic resilience, India needs a mining framework that is predictable, competitive and capable of attracting long-term investment.

India holds over 1,500 mineral blocks identified for auction and development, yet only a fraction are currently operational, indicating a large untapped potential for production expansion and value creation. ([Photo credit: Reuters])

One of the biggest challenges before our mineral sector today is not the absence of resources or talent, but the gap between available technology and its large-scale deployment in mines. Artificial Intelligence, automation, digital exploration, advanced mineral processing, resource recovery, and responsible mining will require substantial investment and stronger collaboration among industry, academia, and research institutions. Such investments come when the policy provides confidence and long-term visibility.

In this context, the scale of opportunity is significant. India holds over 1,500 mineral blocks identified for auction and development, yet only a fraction are currently operational, indicating a large untapped potential for production expansion and value creation. The mining sector already contributes over 2% to India’s GDP. With faster operationalisation of blocks, this share can grow substantially while also strengthening downstream industries such as steel, cement, batteries, and electronics.

India’s dependence on imports further highlights the urgency of accelerating domestic mineral production. In FY 2025–26, India imported minerals worth ₹10.12 crore, underscoring the strategic importance of strengthening indigenous supply chains and reducing external vulnerability in critical minerals.

The reform is also timely from a revenue and investment perspective. India’s mineral auction regime has already generated tens of thousands of crores in committed revenues for states through premiums, royalties, and statutory contributions such as the District Mineral Fund and via the National Mineral Exploration Trust, demonstrating that a structured auction system can be both transparent and fiscally strong. Importantly, of the total payments made by mining companies, nearly 96% of the revenue — including auction premium, royalty, DMF, and other statutory levies — accrues directly to state governments. This revenue-sharing structure will remain unchanged even after the MMDR Amendment Act, 2026. In fact, over the past 12 years, the total revenue accrued to major mineral states has grown at a compounded annual growth rate (CAGR) of 16.20%, reflecting the strengthening fiscal base of mineral-bearing states. During 2020–21 to 2025–26, major mining states collected more than ₹96,000 crore as auction premium from just 100 auctioned mines, in addition to other revenue streams such as royalty, DMF, and GST. This clearly demonstrates that the larger opportunity for states lies in auctioning and operationalising more mineral blocks, thereby expanding production and revenues, rather than increasing the number of taxes on minerals.

A more uniform and predictable fiscal framework can further improve investor confidence and make Indian mineral assets more attractive to serious domestic and global players. Equally important is the need to bring mineral blocks to auction and subsequently into production much faster. Currently, the time lag between resource identification and operational mining can extend to several years. Reducing this cycle even by 30-40% through better data systems, digital approvals, and institutional capacity can significantly increase mineral output and investment inflows. This is where technology-enabled governance becomes a critical enabler of reform.

For mineral-bearing states, the amendment Act should not be viewed as a loss of opportunity. On the contrary, more viable mines, more operational blocks, and greater investment ultimately mean a larger and more sustainable economic base for the states themselves. States continue to receive the majority of mining revenues, and faster production cycles directly translate into higher royalty inflows, job creation, and regional industrial development. The accompanying assessment also makes clear that the amendment is intended to preserve the existing revenue architecture of States while preventing an unpredictable additional fiscal burden that can make mining uneconomic.

This is, therefore, a futuristic and enabling reform — one that can help move India from simply allocating mineral resources to building a technologically advanced, investment-ready, and globally competitive mining ecosystem. The direction being provided by the Union government is particularly significant because it looks beyond the immediate question of revenue and towards the larger national objective of mineral security, industrial competitiveness, and the vision of Viksit Bharat 2047.

Dheeraj Kumar is Director TEXMiN (TTRP, DST, GoI) & Professor(HAG), Indian Institute of Technology (Indian School of Mines), Dhanbad. The views expressed are personal