MMDR Amendment Bill 2026: Mining Reforms and Federalism

Overview

The Mines and Minerals (Development and Regulation) Amendment Bill, 2026 was passed by Parliament to establish a uniform and predictable mineral taxation framework. The Bill restricts State taxes and levies on mineral rights and mineral-bearing lands, aiming to reduce fiscal uncertainty and encourage domestic mineral production and investment.

Key Features of the Amendment

1. Union Control over Mineral-Bearing Lands

• Amends Section 2 of the principal MMDR Act, 1957
• Explicitly brings "mineral-bearing lands" under Union government regulatory control

2. Capping State Levies (New Section 9D)

• States cannot impose tax, cess or other levies on:
• Mineral rights
• Mineral-bearing lands
• Whether based on mineral quantity, value, or royalty
• Exception: Unless permitted under conditions prescribed by the Centre

3. Invalidation of Past Dues (Retrospective Relief)

• Unpaid or unrecovered levies before the amendment will be invalid
• Amounts already paid will NOT be refunded

4. Rule-Making Power

• Amends Section 13 to empower the Central Government
• Central Government can frame rules specifying parameters for State levies

Constitutional and Legal Framework

Legislative Entries Governing Minerals

Key Supreme Court Judgment (2024)

• Case: Mineral Area Development Authority v. Steel Authority of India
• Bench: 9-judge Constitution Bench (8:1 majority)
• Ruling:
• States have legislative competence to tax mineral rights under Entry 50
• States can tax mineral-bearing lands under Entry 49
• States can recover past tax dues retrospectively from 1st April 2005
• Royalty under MMDR is a contractual payment, not a tax

Significance of the Amendment

Benefits

• Tax Certainty: Addresses high, multiple, and unpredictable levies
• Uniformity: Promotes uniform taxation across States, reducing compliance costs
• Investment Climate: Reduces uncertainty and mining costs
• Domestic Production: Encourages domestic mineral production
• Critical Mineral Security: Supports National Critical Mineral Mission objectives

Concerns Raised

1. Federalism Issues

• Restricts State taxation powers under Entry 49 and 50
• Questions about Parliament's power to restrict taxation of land (Entry 49)
• Reduces fiscal autonomy of mineral-rich States

1. Conflict with Supreme Court 2024 Judgment

• Bill seeks to invalidate certain unpaid past levies
• Alters legal consequences of the Supreme Court's ruling
• Raises concerns over separation of powers

1. Article 14 Concerns (Equal Protection)

• Invalidates unpaid past levies but does not refund already paid amounts
• Unequal treatment between companies that paid vs. those that didn't

1. Excessive Delegation

• Leaves conditions for State taxation to executive (Central Government)
• Critics argue Parliament should lay down clearer principles

1. Impact on State Revenues

• Reduces revenue base of mineral-rich States
• Raises balance issues between national governance and State financial interests

Evolution of MMDR Act

Original Act (1957)

• Enacted under Entry 54 of Union List
• Central legislative control over mines and minerals

2015 Amendment

• Mandatory auction for mineral concessions (replaced discretionary grants)
• Established District Mineral Foundation (DMF) for welfare of mining-affected areas
• Created National Mineral Exploration Trust (NMET)
• Introduced stringent penalties for illegal mining

2016 Amendment

• Defined "leased area"
• Permitted transfer of captive mining leases (subject to conditions)
• Facilitated mergers, acquisitions, resolution of stressed assets

2020 Amendment

• Allowed companies without prior coal-mining experience to participate in auctions
• Promoted wider participation and FDI in coal sector

2021 Amendment

• Removed distinction between Captive and Merchant mines
• Captive mines permitted to sell up to 50% production in open market
• Reinforced auction-based allocation

2023 Amendment

• Removed 6 critical minerals from atomic minerals list (Lithium, Titanium, Beryllium, Niobium, Tantalum, Zirconium)
• Opened critical minerals to private and foreign investment
• Introduced Exploration Licences
• Empowered Centre to exclusively auction critical mineral concessions
• Aligned with net-zero emissions by 2070 commitment

2025 Amendment

• Introduced Mineral Exchange concept
• Established registered electronic marketplaces for transparent trading
• Aimed at reducing market opacity, cartelisation, price manipulation
• Removed 50% sale cap on captive mines

Key Institutions

District Mineral Foundation (DMF)

• Established under 2015 Amendment
• Purpose: Fund welfare of mining-affected areas and persons
• Focus: Health, education, livelihoods, local infrastructure
• Source of funds: Contributions from mining lease holders

National Mineral Exploration Trust (NMET)

• Established under 2015 Amendment
• Purpose: Accelerate mineral exploration
• Funding: Contribution from holders of mining leases and prospection licences

National Critical Mineral Mission (NCMM)

• Aims to strengthen India's critical mineral security
• Components:
• Domestic exploration
• Overseas mineral acquisition
• Recycling
• Processing, Beneficiation, Refining
• Securing entire critical-mineral value chain

Mineral Exchange

• Introduced in 2025 Amendment
• Registered electronic marketplace
• For transparent trading of minerals, concentrates, processed metals

Way Forward: Recommendations

1. Strengthen Centre-State Coordination

• Create permanent mechanism for mineral governance
• Coordinate taxation, leases, auctions, production, development

1. Improve DMF Outcomes

• Transparent, outcome-based utilization of funds
• Measurable benefits for health, education, livelihoods, infrastructure

1. Leverage Deep Ocean Mission

• Explore polymetallic nodules and sulphides in Indian Ocean
• Minerals: Nickel, Cobalt, Copper, Manganese
• Develop indigenous deep-sea mining technologies
• Ensure stringent environmental safeguards

1. Strengthen NCMM

• Expand domestic exploration
• Acquire critical mineral assets abroad
• Build capabilities in processing and refining

1. Strengthen Mine Closure Provisions

• Progressive mine closure
• Land reclamation
• Ecological restoration throughout mining lifecycle

1. Curb Illegal Mining

• Satellite-based monitoring
• Drone surveillance
• GPS-based mineral tracking
• E-permits system

Conclusion

The MMDR Amendment Bill, 2026 attempts to reconcile two competing objectives: fiscal certainty for the mining sector and constitutional fiscal autonomy of States. While uniformity in mineral taxation can support domestic production and critical-mineral security, its implementation must:

• Preserve federal balance
• Provide predictable revenues to mineral-rich States
• Remain consistent with constitutional limits on Parliament's legislative power
• Align with Supreme Court's 2024 judgment