Centre links Rs 5,000 crore capital support to state-led mining reforms, sets December deadlines

New Delhi: The Ministry of Mines has tied Rs 5,000 crore in financial assistance to states’ performance on mining sector reforms under the Scheme for Special Assistance to States for Capital Investment (SASCI) for FY 2026-27, in a move aimed at accelerating execution and improving governance.

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“An incentive mechanism on mining sector reforms with Rs 5,000 crore outlay has been incorporated in the Scheme for Special Assistance to States for Capital Investment (SASCI) for FY 2026-27,” the ministry said in a statement issued on Friday.

Describing it as “a significant step to encourage mining sector reforms in states,” the ministry added that the operational guidelines for this component have already been issued.

Focus on operationalisation, production and governance

The scheme is designed to push states to move beyond policy intent and deliver outcomes across mine operationalisation, production and revenue generation. “The objective of this SASCI scheme component is to facilitate and expedite mine operationalisation, increase mineral production, enhance revenue collection by states from the mining sector, and improve overall governance of the mining sector,” the statement said.

Incentives will be available to states and Union Territories with legislatures across three reform areas, each tied to defined milestones and timelines.

Mandatory reforms tied to Rs 100 crore incentive

Under the first category, states must complete a set of five reform actions by December 15, 2026, to qualify for Rs 100 crore. These include integration with the Unified Mining Portal, setting up a pre-auction committee to resolve land-related issues, constituting a state-level coordination committee to monitor mine operationalisation, publishing and adhering to an annual auction calendar, and adopting technology-based measures to detect grade misclassification of mineral ore.

“A State has to undertake all the above five reform actions by 15.12.2026, upon which it will be eligible for incentive money of Rs 100 crore,” the ministry said.

Incentives linked to auctions and production

The second component links financial support directly to auction outcomes and operationalisation of mines. States will receive Rs 20 crore per successfully auctioned major mineral block with pre-embedded clearances — such as forest, environment and land approvals — during FY 2026-27, capped at Rs 200 crore per state.

Additional incentives of up to Rs 250 crore per state will be provided for operationalising at least 10 percent of major mineral blocks auctioned till March 31, 2026, within the current fiscal year.

“Incentivising states for successful auctioning of major mineral blocks with pre-embedded clearances… and operationalisation… during FY 2026-27,” the ministry said, outlining the criteria.

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Ranking-based rewards under SMRI

The third component introduces a competitive framework through the State Mining Readiness Index (SMRI) 2026-27. Top-performing states across categories A, B and C will receive Rs 100 crore, Rs 75 crore and Rs 50 crore for securing first, second and third positions, respectively.

“Rewarding the top three States in each of the three categories… under the State Mining Readiness Index (SMRI) 2026-27,” the ministry said.

Push for time-bound execution

With fixed deadlines and performance-linked payouts, the scheme marks a shift towards enforcing time-bound reforms in the mining sector, particularly around auctions, clearances and mine operationalisation.

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