Centre proposing parity in mineral taxation, states' rights to remain intact: Union Mines Secretary

Panaji: The proposed amendments to the Mines and Minerals (Development and Regulation) Act, or MMDR Act, seek to bring greater parity in taxation and production costs across states while maintaining their rights to collect taxes and cess, Union Mines Secretary Keshav Chandra said on Thursday.

The senior IAS officer was addressing a conference of mining ministers on reforms in the mining and coal sector in South Goa.

Chandra said India needs to strengthen its domestic capacity to explore and process critical minerals and manufacture products using them to avoid dependence on imports and the resulting disadvantages in the global economy.


Union Mines Minister G Kishan Reddy, Goa Chief Minister Pramod Sawant and Union Minister of State for Mines Satish Chandra Dubey were also present.

According to Chandra, the availability of critical minerals, including rare earth elements, lithium and nickel, along with domestic processing facilities, is crucial for manufacturing permanent magnets and batteries.

"We are taking very important steps towards self-sufficiency," he said, adding that the Centre has announced substantial subsidies for industries coming forward to establish lithium and nickel processing facilities.

Chandra said the government has also launched a scheme with an outlay of Rs 1,500 crore to promote recycling of black mass and electronic waste.

Around 58 recycling entities have registered under the scheme, pledging a combined processing capacity of 850 KTPA (kilo tonnes per annum), against the initially envisaged 270 KTPA, he said.

The Mines Secretary expressed confidence that India would be able to generate sufficient quantities of critical minerals and other essential inputs for manufacturing permanent magnets and batteries over the next three to four years.

Explaining the rationale behind the proposed MMDR Act amendments, Chandra said significant variations in the cost of mineral production and taxation between neighbouring states could adversely affect industries and lead to a shift in economic activity to states offering more favourable conditions. Citing the example of bauxite, he said the situation could create supply-related challenges and even encourage imports despite domestic availability.

"There has to be parity. There has to be economic sense in imposing certain cesses and taxes on all the minerals," he said.

Chandra underlined that the proposed amendments would not undermine the rights of states, asserting that they would continue to retain the authority to collect taxes and cess.

He said 92 to 93 per cent of the revenue generated from mining activities goes to states, while the Centre does not receive any significant revenue apart from GST, which he claimed is also devolved to states.

About three per cent of the royalty-related revenue is utilised for exploration activities, he added.

The Mines Secretary urged states to adopt a broader and more prudent approach towards mining policies, stressing the need for a rational tax structure and an enabling economic environment to facilitate industrial growth.

Emphasising the importance of cooperative federalism, he said the Centre respects the rights of states while also recognising the need to ensure economic growth and competitiveness in the mining sector.