India is blessed with abundant mineral deposits and the country’s mining sector forms an important segment of the economy contributing around 2.6% to the country’s GVA (FY 2015- 16(PE).1 India produces 90 different types of minerals (fuel, atomic, metallic and non-metallic minerals). India is also the third largest coal producer, third largest steel producer, fourth largest Iron-ore producer globally and has the fifth largest Bauxite reserves in the world. With barely 20% of reserves mined, India presents a major opportunity for investors.
During the last two years, the sector has witnessed major policy interventions to promote exploration and enhance private sector participation that has aided in sector’s growth. The mineral production witnessed a 9% growth in FY 2015-16. It recorded 7.23% growth in FY 2016-17 (Apr –Sep) driven primarily due to increase in production of Iron ore (25.85% growth) and Chromite (25.9% growth). The year also witnessed a significant increase in exports of Iron ore and ores & concentrates of copper and chrome along with a significant decrease in imports of Iron ore and ores & concentrates of aluminium, copper, chrome and manganese.
Policy Initiatives & Investments
The MMDR Amendment Act, 2015
Effective from January 12, 2015, the amended Act has replaced the ‘first-cum first serve’ mechanism of mineral blocks allotment with a transparent and competitive auction process in place.2
Until November 2016, 17 mineral blocks across 7 States namely Andhra Pradesh, Karnataka, Jharkhand, MP, Rajasthan, Odisha and Chhattisgarh have been auctioned resulting in additional revenues of INR 47,551 crores and total revenue of INR 59,639 crores over the lease period.
Salient features of the Act
– Mining Lease (ML): ML to be awarded only through auction. The old Prospecting Licence (PL) holders would be given ML directly.
– Reconnaissance Permits (RP): The amended MMDR Act has removed the earlier provision of RP and provides for Non-Exclusive Reconnaissance Permit (NERP).
– Prospecting Licence (PL): New NERP holder to submit the exploration data and bid for composite license (PL- cum -ML). The old Reconnaissance Permits (RP) holders will be given PL directly.
– Uniform lease period of 50 years; no renewals; auction at the end of lease period.
– Ambit of atomic minerals have been widened to include minerals which are found necessarily associated with the existing atomic minerals i.e. beach sand minerals.
– In order to implement the amended MMDR Act, relevant rules such as Mineral (Evidence of Mineral Contents) Rules, 2015, Mineral (Auction) Rules, 2015, Mineral (Non-exclusive Reconnaissance Permits) Rules, 2015, Mineral (Mining by Government Company) Rules, 2015 and Atomic Minerals Concession Rules, 2016 have been framed and notified by the
Under NMET (till May, 2016), around INR 201 crores have been deposited.13 mineral exploration projects in States of MP, Odisha, Maharashtra, Chhattisgarh, Karnataka and Jharkhand, have been approved for implementation.
MMDR Amendment Act, 2016 has allowed transfer of mining lease, which has been granted other than through auction and where minerals from such mining leases are being used for captive purpose. This move is expected to revive the mining economy, lead to mergers & acquisitions and help in liquidation of stressed assets.
National Mineral Exploration Policy (NMEP, 2016) encourages private sector participation through its revenue sharing model. It also emphasizes on generation and dissemination of baseline geo-scientific data by the Government as public good and creation of a National Geoscience Data Repository to promote exploration activities. Implementation of this policy will promote the growth of the sector as currently India lags in base line geophysical and geochemical data creation.
Major Investments & FDI Inflows
FDI equity Inflows: FDI equity inflows in the sector increased by 1606% to USD 1.2 billion during Apr 2014 – Mar 2016 compared to USD 70.62 million during Apr 2012 – Mar 2014.3
Details of major FDI equity inflow in the sector are provided in the Annexure.4
Ease of Doing Business
Innovation & Technology
The Government has been proactively using technology to deter illegal mining. An MoU was signed between Indian Bureau of Mines (IBM) and National Remote Sensing Centre (NRSC), ISRO in January 2016 to undertake a pilot project on “monitoring of mining activities using satellite imagery.”
In October 2016, the Government launched Mining Surveillance System (MSS) to check illegal mining through automatic remote-sensing detection technology. The system is designed to check 500 meters around the existing mining lease boundary to search for any unusual activity relating to illegal mining and any discrepancy is flagged off
Star Rating Scheme has been launched to track the implementation of Sustainable Development Framework (SDF) in the mining leases. This scheme will help in recognizing good performers in the sector and will encourage all mining lease holders to strive for excellence. A web portal has also been launched for online filing up of the star rating template.
The rate revision will benefit the States receiving royalty and it is expected that it may lead to more than 45% increase in revenue in some States.
Major FDI equity inflow in the sector (March 2014 – September 2016)
|Foreign Collaborator||Country||Indian Company||FDI inflows (USD Millions)|
|Twinstar Holdings||Mauritius||Sesa Sterlite Ltd.||616.04|
|Surya Abha Investment Pte. Ltd.||Singapore||Essel Mining & Industries Ltd.||482.82|
|Rio Tinto Minerals Development Ltd.||United Kingdom||Rio Tinto Exploration India Ltd.||44.30|
|Thiess(Mauritius & Australia) Pty Ltd.||Mauritius||Thiess Minecs India Pvt Ltd.||20.90|
Department of Industrial Policy and Promotion,
Ministry of Commerce and Industry,
Udyog Bhawan, Rafi Ahmed Kidwai Marg,
Rajpath Road Area, Central Secretariat,
New Delhi, Delhi 110011
Ministry of Mines
Shastri Bhawan, Dr. Rajendra Prasad Road,
New Delhi, Delhi 110001
Knowledge Partner : KPMG
Building No. 10, 8th Floor, Tower B & C,
DLF Cyber City, Phase II,
Gurgaon, Haryana 122 002