The
real test of the Mines and Minerals (Development and Regulation) Amendment Act,
2026 will not be how much faster India can extract its mineral wealth, but
whether, even as we dig deeper into the earth, we can prevent a deeper fault
line from emerging between the Union and the States, writes Dr. Jayajit Dash
INDIA’S latest mining
reform is being sold as a story about minerals. It is, in fact, a story about
something much more valuable: who gets to decide how the wealth beneath a
State’s soil is taxed, shared and ultimately governed.
The
Mines and Minerals (Development and Regulation) Amendment Act, 2026 has been
passed by Parliament with a stated objective that is difficult to quarrel
with—uniformity, predictability and investment in a sector that feeds steel,
cement, power, infrastructure, defence and the clean-energy economy. The
government says nearly 90% of mining-sector revenue still accrues to States and
that the States’ share reached ₹1.145 lakh crore in
2025-26. Since 2014, State mineral revenues have risen 354%, with more than ₹7
lakh crore accruing to States, including coal.
There
is, therefore, a compelling economic argument for reform. But economics is only
half the excavation. The deeper layer is constitutional federalism.
The
flashpoint is new Section 9D. It restricts States from imposing taxes, cesses
or other levies on mineral rights or mineral-bearing land except under
conditions prescribed by the Centre. It also declares certain unpaid or
unrecovered past levies invalid.
That
provision becomes particularly consequential because it arrives barely two years
after the Supreme Court’s historic 8:1 judgment in Mineral Area Development Authority v. Steel
Authority of India. In July 2024, the nine-judge Constitution Bench
held that States possess constitutional authority to tax mineral rights and
mineral-bearing land, and clarified that royalty is not a tax. The Court
subsequently allowed recovery of certain past dues from April 1, 2005, with
payment staggered over 12 years and interest and penalty waived for the period
before July 25, 2024.
Now
Parliament has legislated into precisely that terrain.
This
is where the debate must rise above party politics. The question is not whether
Odisha, Jharkhand or any other mineral-rich State deserves revenue. Of course
it does. Nor is the question whether mining taxation should become so
unpredictable that investment becomes commercially irrational. It should not.
The
real question is simpler and more uncomfortable: how much fiscal space should a
State retain over a resource that lies within its territory but fuels the
economic ambitions of the entire Union?
Consider
Odisha. The government says the State operationalised 35 of its 79 auctioned
mineral blocks and earned about ₹87,000 crore in
auction premiums between 2020-21 and 2025-26. Since 2015, States collectively
have received ₹2.32 lakh crore in royalty from
1,200 working mines and ₹96,000 crore in auction
premiums from 100 auctioned mines.
These
are not accounting footnotes. They are schools, roads, hospitals, livelihoods
and political capital expressed in rupees.
But
there is another side. India auctioned 723 major mineral blocks across 17
States after the 2015 reforms; 212 blocks were auctioned in FY2025-26 and 36
operationalised. Major mineral production value rose 26.8% that year, iron ore
output touched a record 313 million tonnes and limestone 484 million tonnes. A
fragmented or unpredictable tax regime can plainly undermine this momentum.
The
government’s argument that excessive levies ultimately become a tax on
consumers also deserves attention. Minerals are not consumed only by mining
companies. They are embedded in bridges, homes, trucks, power plants and
factories. A rupee added at the mine mouth can travel surprisingly far before
reaching a household.
Yet
uniformity should not become another word for centralisation.
India’s
federal compact was never designed like a corporate head office issuing
instructions to regional branches. The Constitution deliberately distributes
powers because economic efficiency and democratic accountability do not always
sit at the same table. The Supreme Court’s 2024 ruling reaffirmed that
principle in unusually emphatic terms.
The
MMDR amendment therefore needs something more than political messaging from
either side. It needs institutional reassurance. If States are expected to
surrender a newly affirmed taxing avenue, the Centre must demonstrate,
transparently and predictably, that their legitimate fiscal interests will not
be hollowed out. That means clear rules, meaningful consultation, credible
revenue projections and perhaps a robust intergovernmental mechanism for resolving
disputes.
There
is an irony here. India wants to become a manufacturing powerhouse, a
clean-energy leader and a developed economy by 2047. That ambition will require
more minerals, not fewer. But the minerals beneath Keonjhar, Sundargarh or
Jharkhand do not become “national” merely because the factories consuming them
may be elsewhere.
A
mine is a hole in the earth. A mining policy becomes a hole in the
constitutional compact if it forgets who bears the political consequences.
The
Centre is right to seek certainty. The States are right to guard fiscal
autonomy. India will need both.
The
real test of the 2026 Amendment, therefore, will not be how much faster India
digs. It will be whether, while digging deeper into the earth, we can avoid
digging a deeper fault line between the Union and the States.
India
does need mineral security; critical-minerals self-reliance is not a slogan but
a supply-chain emergency. Yet a republic is not governed well by choosing
between the geologist’s map and the Constitution’s map. The ore, ultimately,
will keep coming out of the ground. The trust, once mined out, does not.
The
author – a Corporate Communications Leader, Award winning Author and Blogger –
leads the Corporate Communication Department of CSM Technologies Pvt. Ltd
