Parliament Passes MMDR Amendment to Stabilise Mineral Sector
The MMDR Amendment Bill 2026, passed by Parliament, seeks predictable mining taxation to attract investment and reduce import dependence.
The Mines and Minerals (Development and Regulation) Amendment Bill, 2026, cleared by both Houses of Parliament on August 13, is designed to create a more predictable fiscal environment for India's major minerals sector. The Ministry of Mines has clarified that the amendment does not diminish states' authority over land, minerals, or their taxation powers.
Currently, around 90 per cent of taxes and statutory payments from mining flow to state governments, a distribution that remains unchanged under the new framework. States also retain full control over regulating and taxing minor minerals.
The government argues that a stable fiscal regime is essential to attract investment in domestic mining, aligning with the broader goals of Aatmanirbhar Bharat and Viksit Bharat 2047. The ministry emphasised that minerals are critical for infrastructure, manufacturing, and energy security, and that excessive or uneven taxation could make domestic minerals uncompetitive.
India imported minerals worth Rs 10.12 lakh crore in FY26. The government believes that steep taxation could push industries toward imports, increasing the burden on the exchequer despite the availability of domestic resources.
States currently levy around 14 different types of taxes and charges on mining operations, including royalty, auction premium, dead rent, District Mineral Foundation contributions, GST, and transit fees. Between FY16 and FY26, major mining states received over Rs 5 lakh crore from mining activities, while the Centre's revenue stood at Rs 82,000 crore.
Auction premiums, introduced in 2015, have emerged as a significant revenue source for states. From FY21 to FY26, major mining states collected more than Rs 96,000 crore in auction premiums, on top of royalty, DMF, and GST revenues.
Given that mineral resources are finite and concentrated in a limited number of states, the ministry stressed the need for a cohesive national approach. Uneven state-level taxation, it said, can raise domestic costs and weaken the competitiveness of locally available minerals, encouraging imports despite domestic availability.