Cabinet approves mineral mining reforms, collapses distinction between captive/non-captive mines

• The move is aimed at increasing the production of minerals in India and attracting private investments into the sector

• The new reforms approved by the Cabinet allow transfer of mining leases and reallocation of non-producing blocks awarded to public sector companies

New Delhi: The Union Cabinet has approved a slew of reforms for the mineral mining sector on Wednesday, making it one of the most important announcements for the sector in the year 2021. The new reforms collapse the distinction between captive and non-captive mines and propose amending some sections of the Mines and Minerals (Development and Regulation) (MMDR) Act in order to make more mines available for auction. The move is aimed at increasing the production of minerals in India, which is critical since India imports minerals worth Rs 2,50,000 crore every year, and attracting private investments into the sector.

The Cabinet decision is in line with the announcements made by Finance Minister Nirmala Sitharaman earlier in May 2020 under Atmanirbhar Bharat package. Sitharaman had then said that the government planned to offer 500 mineral blocks for auction under the package.

2021 Mining reforms: What has changed?

The new reforms approved by the Cabinet allow transfer of mining leases and reallocation of non-producing blocks awarded to public sector companies, remove charges on transfer of mineral concessions for non-auctioned captive mines, rationalise stamp duty, and include the development of a National Mineral Index (NMI). As an incentive for expediting mineral mining, the government plans to offer a 50 percent rebate in the quoted revenue share for the quantum of mineral produced and dispatched earlier than the scheduled production date.

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Some of the other mining reforms approved by the Cabinet include the provision of a comprehensive license for exploration and production, clarity in illegal mining, and joint auctions of bauxite and coal mines for the aluminium sector.

The backdrop

In December 2020, Minister for Mines Pralhad Joshi had asked five states — Gujarat, Odisha, Karnataka, Madhya Pradesh and Rajasthan — to identify five mineral blocks with pre-embedded clearances for auction. Joshi had also said that many reforms were in the pipeline for the mining sector and will be out shortly. He had emphasised that the reforms will bring a major change in the mining sector and will result in the growth of economy and job creation.

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