Thursday, October 6, 2022

Mining sector contribution to GDP slips from 3% to 2.2% in 5 years

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New Delhi: The contribution  of the mining sector to the country’s GDP has come down from 3 percent to 2.2 percent in the last five years, the Confederation of Indian Industry (CII) said in a report on Saturday. In 2017- 18, the value of domestic production of all major minerals (excluding coal, lignite and minor minerals) was Rs 58,638 crores, while the import value of vital minerals and metals, at Rs 4.34 trillion, almost seven times higher than domestic production, aggravated the current account deficit.

IIP of mining sector has slipped from 5.8% to 3.2%

Mining sector is one of the core sectors of the Indian economy and is a lifeline for many industries, which thrive on raw materials. The Index of Industrial Production (IIP) of the mining sector has slipped to 3.2 percent from 5.8 percent in May 2018.

The mining sector is encountering pressing issues such as depleted output, squeezed margins, high taxation, lack of green clearances, and poor investment in fresh exploration. The sector is also besieged with other issues such as delays in operationalising mines. It needs to widen the exploration basket through increased reconnaissance and prospecting operations and requires an infusion of funds to achieve this. Thriving competitiveness and growth in the Indian mining sector is an imperative for the survival and success of not only this industry but the economy as a whole.
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Boosting India’s mining sector

Boosting India’s mining sector requires the government to boost exploration and address auction-related issues. A high powered inter-ministerial body must be created for addressing the initial teething problems of asset allottees on a single-window basis and seamless transition from Reconnaissance Permit/Prospecting Licences to Mining Leases, CII said.

The government should permit sale of license at any stage (likely to be at the RP/ PL to ML stage), introduce an escalating scale of dead rent to deter the ‘hoarding of mine-able land,’ identify ‘no-go areas’ and create exclusive mining zones with prior in-principle statutory clearances for auction, the report said.

Transparency and flexibility of choice

“Create and share the entire geological and mineral database (digital) of the country in the public domain. Encourage junior miners and explorers to invest in mineral blocks of their choice. Adopt a cluster approach for small deposits which, individually, may be unviable (i.e. grant a single lease for multiple such deposits),” CII said.

Immediate action on mining leases expiring in 2020

The report called for time-bound execution of exploration by December 2019 through accelerated utilisation of the NMET fund and completion of the auction process by March 2020. It also urged the Centre to consider the auction of larger mineral blocks for optimised mining. “Provide automatic environment clearance (EC) and forest clearance (FC), if all the parameters remain the same. Declare upfront the restrictions applicable on the areas under concession. Reduce duplication in stages between EC and FC. Enhance the effectiveness of PAMCAF,” the report said.

Ambiguity in regulations

“Constitute a high-level committee to effectively review and recommend substantial simplification of EC and FC processes by eliminating non-value adding stages, specifying the time limit for each stage and drastic simplification for diversion of open forests, preferably with provision for ‘deemed approval’ at the end of 180 days,” CII said.

Rationalisation of levies

The report asked the government to set benchmark mineral royalties/ cess across countries, reduce financial levies to bring them in line with international standards and provide incentives for processing by applying a lower rate or charging royalty on the cost of extraction before processing.

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