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NEW DELHI, Aug 18: Parliament has passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, marking a significant change in the way mineral-related taxes and levies can be imposed by states.
The legislation seeks to create a more predictable framework for the mining industry by restricting new state taxes, cesses and other levies on mineral rights and mineral-bearing land, except within conditions set by the Centre.
The government says the move is aimed at addressing a growing problem of different and sometimes unpredictable charges across states. Multiple levies can increase the cost of extracting minerals and, in turn, raise the cost of raw materials used by industries such as steel, cement, construction, power and manufacturing.
The reform is particularly important as India seeks to reduce its dependence on imported raw materials and strengthen domestic supplies of minerals needed for infrastructure, clean energy, defence and advanced manufacturing.
A major objective of the legislation is to make mining investments easier to plan. Mining projects require large amounts of capital and often take years to develop. Greater certainty over taxation could give companies more confidence to invest in exploration, new mines, technology and infrastructure.
The Bill also gives the Centre a larger role in regulating mineral-bearing land. This provision, along with restrictions on state-level levies, represents a significant shift in the balance between central regulation and state taxation powers.
The reform follows the 2024 Supreme Court judgment that held that royalty is not a tax and recognised the power of states to tax mineral rights, subject to Parliament’s constitutional authority to impose limitations. The new legislation seeks to establish such restrictions through the MMDR framework.
For the mining industry, the proposed changes could bring greater uniformity in costs across states and reduce the risk of unexpected tax demands. A more consistent cost structure could also improve the competitiveness of Indian minerals and support domestic manufacturing.
The government has linked the reform to India’s broader Atmanirbhar Bharat objective. A stronger domestic mineral base is considered important for sectors ranging from steel and automobiles to renewable energy, electronics and defence.
However, the legislation has also raised concerns among some mineral-producing states, which argue that restricting their taxation powers could affect their revenues and fiscal autonomy. Kerala, for example, has sought a review of provisions affecting state powers over mineral-bearing land and taxation.
The debate therefore extends beyond mining costs. It also involves the larger question of how mineral wealth should be governed and how revenues should be shared between the Centre and states.
The success of the reform will ultimately depend on how the new framework is implemented and whether it can balance lower and more predictable costs for industry with the revenue interests of mineral-rich states and the needs of communities dependent on mining.
For India, the broader goal is clear: build a mining sector capable of supplying the country’s growing industrial economy while creating a regulatory environment that encourages investment and strengthens long-term mineral security.
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