THEBUSINESSBYTES BUREAU

NEW DELHI, AUGUST 19, 2026

The Mines and Minerals (Development and Regulation) Amendment Act, 2026 seeks to overhaul the fiscal framework governing the mining sector by providing greater tax certainty, encouraging investment and production, and reducing India’s dependence on imported minerals, while retaining the States’ dominant share in mining revenues, according to a government FAQ released on Wednesday.

The Centre said the amendment would not result in any reduction in revenue accruing to mineral-rich States, which currently receive around 90 per cent of the revenue generated from mineral production. It also maintained that the reform would improve the economic viability of mining projects and create conditions for higher production and more sustainable revenue for State governments.

At present, States collect around 14 types of taxes, charges, fees and other levies from mining, including royalty, auction premium, dead rent, District Mineral Foundation (DMF) payments, GST and transit fees. Some States have also imposed taxes on mineral-bearing lands, adding to the financial burden on government companies, with such taxes in certain cases reaching as high as 20 per cent.

The government said the amendment is intended to establish a stable and rational tax structure that can support both domestic and regional economic growth as well as national strategic interests. Such fiscal predictability, it said, would help attract investment, boost production of critical minerals and reduce dependence on imports.

The mining sector has undergone significant reforms since 2015, when amendments to the MMDR Act ended discretionary allocation of mineral concessions and introduced competitive e-auctions. Since then, 723 major mineral blocks have been auctioned across 17 States, with Rajasthan, Madhya Pradesh and Odisha accounting for 140, 127 and 76 blocks respectively. Fiscal 2025-26 saw a record 212 blocks auctioned, of which 36 were operationalised. In the coal sector, 141 mines have been auctioned and 23 operationalised.

The government said the reforms have also translated into higher mineral production. The value of major mineral production increased 26.8 per cent in FY 2025-26, while iron ore output touched a record 313 million tonnes and limestone production reached 484 million tonnes. Coal production has crossed one billion tonnes in each of the last two years, while non-coal mineral production has nearly tripled since 2014.

India currently ranks second globally in limestone, third in zinc, fourth in iron ore and fifth in bauxite production, according to the government.

The reform push has also focused on critical minerals, an area viewed as strategically important amid rising demand for clean-energy technologies and advanced manufacturing. The National Critical Mineral Mission, approved in January 2025 with an outlay of ₹16,300 crore, including ₹2,600 crore in budgetary support up to FY 2030-31, aims to strengthen domestic exploration and supply chains. The Geological Survey of India and National Mineral Exploration and Development Trust are working towards 1,200 critical mineral projects, while Khanij Bidesh India Limited has secured exclusive lithium exploration rights in Argentina.

The government has also stepped up support for mineral recycling, processing and research. A ₹1,500-crore incentive scheme for critical mineral recycling launched in October 2025 has attracted commitments from 58 entities for 850 thousand tonnes per annum of capacity against a target of 270Kt. Critical Mineral Processing Parks are being supported in Andhra Pradesh, Gujarat, Odisha and Maharashtra with ₹500 crore, while nine institutes have been designated Centres of Excellence under the MAHA mission with ₹210 crore.

Exploration activity has expanded sharply, with the government saying it has grown nearly 200 times since 2014. The number of notified private exploration agencies has risen to 51, while the contribution to NMEDT has been raised to 3 per cent and half of direct exploration costs are reimbursed, subject to specified ceilings.

The reforms have also introduced operational and digital changes, including one-time area extensions for mining leases of up to 10 per cent and for composite licences of up to 30 per cent. The cap on mineral sales from captive mines has been removed, while the Unified Mining Portal tracks the lifecycle of mineral blocks from auction to operationalisation.

A key feature of the post-2015 framework has been the creation of District Mineral Foundations to share the benefits of mining with communities affected by mining activities. The government said 656 DMFs have been established, including 106 in aspirational districts, with funds being used for local development projects covering roads, hospitals, schools, drinking water and other essential services.

On concerns over the impact of the amendment on State finances, the government reiterated that States will continue to receive royalty, auction premium, DMF collections and their share of GST. Since the auction regime began in 2015, States have received more than ₹7 lakh crore from the mining sector, including coal. The government said State mineral revenue has risen by approximately 354 per cent over the last decade to around ₹82,366 crore in 2025-26.

The government has argued that rationalising mineral taxation will also have a wider economic impact. Since minerals are essential inputs for steel, power, cement and infrastructure, heavy taxation at the extraction stage can create a cascading effect, increasing manufacturing costs and eventually raising the cost of infrastructure and other goods and services for consumers.

Rejecting the view that the amendment is designed to benefit a handful of corporations, the government said mineral blocks are now allocated through transparent competitive e-auctions rather than discretionary processes. It said the auction system provides equal opportunity to PSUs, MSMEs, startups, Indian companies and global firms, with around 300 unique bidders participating in the auction of major mineral blocks.

The government further said the legislation does not transfer money from State treasuries to corporations or waive outstanding dues. Instead, it seeks to establish a clear legal framework for levies that can affect the mining sector and the wider economy, with the stated objectives of reducing litigation, providing policy certainty and maintaining a stable and competitive mining sector.

The amendment, however, does not cover minor minerals that are exclusively regulated by State governments. Nearly 50 minerals, including sand, gravel, clay, silica, granite, marble, gypsum and laterite, remain outside its ambit, with the existing regulatory and fiscal powers of States over these minerals continuing unchanged.

The government said the overarching objective of the 2026 amendment is to provide long-term fiscal certainty in a sector that requires massive upfront investment and extended project timelines, while supporting higher mineral production, attracting domestic and foreign investment and advancing the broader goal of building a Viksit Bharat by 2047.