MMDR Amendment Act, 2026: Towards a Uniform Mineral Taxation Framework

Why in News?

The Mines and Minerals (Development and Regulation) Amendment Act, 2026 has amended the MMDR Act, 1957 to establish a more uniform and predictable fiscal framework for mining.Under the amendment, State governments cannot impose fresh taxes, cesses or other levies on mineral rights and mineral-bearing land except according to the conditions or restrictions prescribed by the Central Government.

Regulation of Mining in India

Mining in India is primarily regulated by the Mines and Minerals (Development and Regulation) Act, 1957.

The Act provides the legal framework for:

• granting mineral concessions;
• regulating mining leases;
• collection of royalty;
• mineral exploration;
• auction of mineral blocks; and
• conservation and development of minerals.

The 2026 amendment mainly addresses the growing differences in taxes and charges imposed by States on mineral extraction and mineral-bearing land.

Why Are Minerals Strategically Important?

Minerals form the basic inputs for:

• steel and cement;
• electricity generation;
• transport and construction;
• electronics and telecommunications;
• defence manufacturing;
• renewable-energy systems; and
• housing and public infrastructure.

Therefore, the availability and cost of minerals influence industrial competitiveness, national security, employment and household expenditure.

Why Was the Amendment Needed?

1. Multiplicity of Levies

Mining operations are subject to several taxes, charges and statutory payments, including:

• royalty;
• auction premium;
• dead rent;
• District Mineral Foundation contributions;
• Goods and Services Tax;
• transit fees; and
• State-level taxes on mineral-bearing land.
• Around 14 different taxes, charges and fees may apply to mining activities. In some cases, additional State levies on mineral-bearing land have reportedly reached 20%.
• The cumulative burden can make domestic mining commercially unviable.

2. Variation across States

• Minerals are concentrated in a limited number of States, but their output supports industries throughout the country.
• Different State-level taxes result in different prices for the same mineral. This disrupts supply chains, increases logistics costs and fragments the national mineral market.

3. Critical and Strategic Mineral Security

High levies can make the extraction of critical and atomic minerals, including graphite and uranium, uneconomical.

These minerals are important for:

• clean-energy technologies;
• electronics;
• strategic industries;
• nuclear energy; and
• defence production.

A stable tax framework is therefore connected with economic and national security.

4. Import Dependence

• India imported minerals worth approximately ₹10.12 lakh crore in 2025–26. If domestically produced minerals become more expensive than imports, industries such as steel may prefer foreign raw materials.
• At the same time, high domestic costs can reduce export competitiveness. For example, iron ore exports earned approximately ₹15,136 crore in 2025–26.

5. Impact on Consumers

Mining-stage taxes become part of the final price of minerals. These costs are transmitted through:

• steel;
• cement;
• electricity;
• transport;
• construction; and
• housing.

Thus, excessive mineral taxation may ultimately increase expenditure for ordinary households.

6. Employment Concerns

Mining supports a large workforce, especially in mineral-rich and tribal regions.

• Coal mining supports more than 5 lakh direct and indirect jobs.
• The non-coal mineral sector supports more than one crore workers.

Small and medium miners are particularly vulnerable because they operate with limited financial margins.

7. Need for Long-Term Investment

Mining projects require large investments in exploration, machinery, processing, transport and environmental management. Sudden or unpredictable levies can discourage such investments and delay the opening of new mines.

Major Provisions of the MMDR Amendment Act, 2026

New Section 9D: Restrictions on State Levies

The amendment inserts Section 9D into the MMDR Act.

It provides that a State government cannot impose any tax, cess or other levy on:

• mineral rights; or
• mineral-bearing land.

The restriction applies regardless of whether the levy is calculated according to:

• mineral quantity;
• mineral value;
• royalty; or
• any other basis.

States may impose such levies only according to the conditions or restrictions prescribed by the Central Government.

Treatment of Earlier Levies

The amendment makes a distinction between unpaid demands and amounts already collected.

• A levy that had not been paid or collected before the commencement of the amendment will be treated as invalid.
• Money already deposited or recovered before commencement will not be refunded.

This limits pending retrospective liabilities while protecting completed collections.

Amendment to Section 13

Section 13 has been amended to empower the Central Government to frame rules prescribing the conditions under which States may impose levies on mineral rights or mineral-bearing land.

Fiscal Framework: Before and After the Amendment

Will the Amendment Reduce State Revenue?

The amendment restricts fresh State levies on mineral rights and mineral-bearing land. However, it does not remove the established revenue streams available to mineral-producing States.

Major Revenue Sources Continue

States will continue to receive revenue through:

• royalty;
• auction premium;
• dead rent;
• District Mineral Foundation contributions;
• other permissible mining payments; and
• revenue from minor minerals.

Nearly 90% of mining-sector revenue presently accrues to State governments.

Growth in State Revenue

• Since 2014, revenue accruing to States from mineral production has reportedly increased by 354%. States have received more than ₹7 lakh crore, including revenue from coal.
• Their mineral revenue reached approximately ₹1.14 lakh crore in 2025–26.

Over the same period, the States’ share in coal revenue increased substantially, while the Centre’s share declined.

Auction Premium

The auction system introduced in 2015 created an additional revenue stream for States.

Since its introduction:

• approximately ₹2.32 lakh crore has been collected as royalty from 1,200 operating mines; and
• about ₹96,000 crore has been collected as auction premium from 100 auctioned mines.

Odisha alone earned around ₹87,000 crore as auction premium from operationalised blocks between 2020–21 and 2025–26.

Minor Minerals Remain under State Control

The amendment does not alter State control over nearly 50 minor minerals, including:

• sand, gravel, clay, silica, granite; , marble, gypsum; and laterite.

State governments will continue to regulate and earn revenue from this category.

Mineral-Sector Reforms since 2014

1. Competitive E-Auction

The 2015 amendment ended the discretionary allocation of major mineral concessions and introduced competitive auctions.

Since then:

• 723 major mineral blocks have been auctioned across 17 States;
• Rajasthan has auctioned 140 blocks;
• Madhya Pradesh has auctioned 127 blocks; and
• Odisha has auctioned 76 blocks.

In 2025–26, a record 212 blocks were auctioned and 36 became operational. In the coal sector, 141 mines have been auctioned and 23 operationalised.

2. Growth in Mineral Production

In 2025–26:

• the value of major mineral production rose by 26.8%;
• iron ore output reached 313 million tonnes;
• limestone production reached 484 million tonnes; and
• coal production remained above one billion tonnes.

Non-coal mineral production has nearly tripled since 2014.

India’s global position includes:

• second in limestone;
• third in zinc;
• fourth in iron ore; and
• fifth in bauxite.

3. National Critical Mineral Mission

• The National Critical Mineral Mission was approved in January 2025 with an outlay of ₹16,300 crore up to 2030–31, including ₹2,600 crore of budgetary support.
• The Geological Survey of India and the National Mineral Exploration and Development Trust are working towards 1,200 critical-mineral exploration projects.
• Of the 777 projects sanctioned by the NMEDT, 255 relate to critical minerals.

4. Overseas Mineral Sourcing

• The exploration framework now allows NMEDT support for overseas projects.
• Khanij Bidesh India Limited has secured exclusive rights for lithium exploration in Argentina. Such overseas partnerships seek to diversify India’s mineral supply sources.

5. Recycling and Processing

A ₹1,500-crore critical-mineral recycling incentive scheme was launched in October 2025.

Critical Mineral Processing Parks are being supported in:

• Andhra Pradesh;
• Gujarat;
• Odisha; and
• Maharashtra.

Customs duties have also been removed on specified critical minerals, lithium-ion battery scrap and processing machinery.

6. Research and Innovation

Nine institutions have been designated as Centres of Excellence with ₹210 crore under the MAHA mission to strengthen critical-mineral research and technological capabilities.

7. Wider Exploration Ecosystem

• Exploration activity has expanded significantly, with 51 private agencies notified for such work.
• The NMEDT contribution has been raised to 3%. The framework also provides partial reimbursement of direct exploration costs, subject to prescribed limits.
• During Field Season 2025–26, the Geological Survey of India completed 457 projects, including 230 relating to critical and strategic minerals.

8. Operational Reforms

Recent reforms allow:

• a one-time extension of a mining lease area by up to 10%;
• extension of composite licence areas by up to 30%;
• wider sale of minerals from captive mines; and
• addition of critical, strategic or deep-seated minerals to existing leases without extra payment.

9. Digital Monitoring

• The Unified Mining Portal, developed with State governments, tracks mineral blocks from auction to operationalisation.
• Proposed coal and mineral exchanges can support transparent transactions and market-based price discovery.

Welfare of Mining-Affected Communities

District Mineral Foundations

A total of 656 District Mineral Foundations, including 106 in aspirational districts, have been established for communities affected by mining.

The entire DMF collection is used for local projects, with district administrations deciding the priorities.

PMKKKY

The Pradhan Mantri Khanij Kshetra Kalyan Yojana guides the use of DMF funds for:

• roads;
• hospitals;
• schools;
• drinking water;
• sanitation; and
• improvement of living conditions.

The 2026 amendment does not alter DMF collections or the operation of PMKKKY.

Significance of the Amendment

1. Predictable Fiscal Environment

A uniform framework can reduce unexpected liabilities and help companies make long-term investment decisions.

2. Integrated National Mineral Market

Reduced variation in State levies can improve interstate movement, supply-chain efficiency and price comparability.

3. Energy and Mineral Security

Commercially viable domestic mining can reduce excessive dependence on imported coal, critical minerals and industrial raw materials.

4. Industrial Competitiveness

Lower input uncertainty can support steel, cement, aluminium, power, transport, defence and renewable-energy industries.

5. Support for Small Miners

Small and medium operators may benefit from a stable framework because they are less capable of absorbing multiple or sudden taxes.

6. Employment and Regional Development

Sustained mining operations can protect employment in mineral-rich and tribal regions, provided environmental and community safeguards are effectively implemented.

Way Forward

Cooperative Federalism

Rules under Sections 9D and 13 should be framed after meaningful consultation with mineral-producing States.

Transparent Fiscal Formula

Permissible levies should be based on clear principles such as mineral value, environmental cost and regional infrastructure needs.

Strengthen DMF Governance

DMF planning should include local communities, particularly Gram Sabhas in tribal areas. Expenditure and project outcomes should be publicly disclosed.

Link Mining with Local Development

Mineral-rich districts should receive better infrastructure, healthcare, education, skill development and livelihood diversification.

Build Complete Mineral Value Chains

Exploration should be connected with domestic processing, recycling, research and manufacturing, particularly for critical minerals.

Periodic Review

The effect of the amendment on State revenue, mineral prices, investment, employment and imports should be independently reviewed.

Conclusion

The MMDR Amendment Act, 2026 seeks to replace fragmented mineral taxation with a stable and uniform framework. It can improve investment, domestic production and critical-mineral security while protecting existing State revenue streams.Its long-term success will depend on balancing national market integration with fiscal federalism, environmental protection and the rights of mining-affected communities.