Mines and Minerals (Development and Regulation) Amendment Act, 2026 and States’ Opposition to it

Source: The post “Mines and Minerals (Development and Regulation) Amendment Act, 2026 and States’ Opposition to it” has been created based on “Mines and Minerals (Development and Regulation) Amendment Act, 2026 and States’ Opposition to it” published in “Indian Express” on 26th September 2026.

UPSC Syllabus: GS-3- Economy

Context: Mining is an important source of revenue for several mineral-rich states. The Mines and Minerals (Development and Regulation) Amendment Act, 2026 seeks to restrict specified state levies on mineral rights and mineral-bearing land and establish greater uniformity in the fiscal burden on mining. The issue has created a debate over state revenues, mining-sector costs and fiscal federalism.

Provisions of the new law

1. The law seeks to restrict states from imposing specified levies on mineral rights and mineral-bearing land.
2. It seeks to establish a uniform national framework for major mineral-related taxation.
3. The law will extinguish unpaid or unrecovered dues arising from such levies imposed before it comes into force.
4. The government argues that excessive state-level levies can increase the cost of key minerals, thereby increasing inflation and infrastructure costs.
5. The Mines Ministry has stated that around 14 levies in the mineral sector will continue, but their combined burden should not exceed a certain percentage.
6. The percentage will be decided after consultation with the states.

Reasons behind states opposing the law

1. The amendments override key financial aspects of the Supreme Court’s July 25, 2024 ruling, which upheld states’ exclusive power to tax mineral rights and mineral-bearing lands.
   1. The 2024 judgment had also allowed states to stagger payment of dues over 12 years from April 1, 2026, after waiving interest and penalties for the period before July 25, 2024.
2. Mineral-rich states fear a significant reduction in their own-source revenue, particularly because mining contributes substantially to their non-tax receipts.
   1. In 2024-25, mineral and petroleum receipts constituted about 23% of Odisha’s revenue receipts, 13% of Jharkhand’s and 5% of Chhattisgarh’s, according to the figures cited in the article.
3. Odisha’s Opposition has alleged that the law could result in annual revenue losses of around ₹12,000 crore and arrears of about ₹1 lakh crore.
4. Jharkhand has also expressed concern because mineral-bearing land cess is an important source of its revenue.
5. States have also raised a broader concern about fiscal federalism, as taxation powers are an important component of their financial autonomy.

Centre’s rationale

1. The Centre argues that multiple and excessive levies can increase the fiscal burden on mining companies.
2. A more predictable taxation framework could provide greater certainty for mining investment.
3. The government also argues that controlling the cumulative burden of levies can prevent an excessive increase in the prices of essential minerals.
4. Industry representatives have similarly argued that greater certainty regarding the fiscal burden could help the mining sector and investment climate.

Federalism dimension

1. The issue reflects the constitutional balance between Union regulation of mines and minerals and the financial powers of states.
2. The Supreme Court’s 2024 judgment dealt specifically with the distribution of legislative powers concerning taxation of mineral rights, including Entry 50 of the State List.
3. Restricting state levies can affect the fiscal autonomy of mineral-rich states.
4. At the same time, excessive and fragmented levies can increase costs for industries and create uncertainty in the mining sector.
5. Therefore, the issue requires a balance between national economic interests, investment certainty and states’ fiscal autonomy.

Way Forward

1. The Centre should undertake extensive consultation with mineral-rich states before determining the overall ceiling on mineral-sector levies.
2. A transparent mechanism should be developed to address the revenue concerns of affected states.
3. The framework should maintain a balance between reasonable taxation and the competitiveness of the mining sector.
4. Any changes affecting states’ taxation powers should be implemented with due regard to the constitutional scheme of fiscal federalism.

Conclusion: The mining law represents a conflict between two legitimate objectives: ensuring a predictable and cost-efficient mining regime and protecting the revenue autonomy of states. A cooperative approach involving the Centre, states and the mining sector can help reconcile these objectives while strengthening India’s federal fiscal framework.

Question: The Mines and Minerals (Development and Regulation) Amendment Act, 2026, has triggered concerns among mineral-rich states. Discuss the provisions of the law, reasons for opposition by states and its implications for Indian federalism.

Source: Indian Express