With an eye to increase employment and reduce import dependency in the mining sector, the government in May this year announced to bring mining reforms. The ministry has now extended the timeline to submit comments by the stakeholders to September, 24th, 2020.
The government is looking to rationalise stamp duty, remove the distinction between captive and non-captive mines, also bring an amendment to the Mines and Mineral Development Regulations (MMDR) Act of 2015 to free up mineral mines for auction, and bring clarification on the definition of illegal mining amongst other reforms.
Some states like Karnataka and Jharkhand are strongly against any rationalisation of stamp duty levied on mining activities. States like Goa, Odisha have raised the concern on revenue impact to states while Andhra Pradesh has highlighted that the interest of the state must be safeguarded so that revenue realisation on account of stamp duty is equivalent to or higher compared to current levels.
Most states have agreed on the Mines Ministry's proposal to amend the 10A(2)(c) and 10A(2)(b) clause under the MMDR Act, which will help free up over 500 mineral mines for auction. Meanwhile, the state government of Karnataka has agreed to the amendment but it is against termination of leases which are at advanced stages. The MMDR Act clause 10A (2c) allowed pre-auction mines to get EC & FC clearances by 2017 and clause 10A (2b) does not have a sunset clause on pre-auction mines for starting operations.
The government think tank NITI Aayog is against any amendment in MMDR Act on the said clauses, it has written to the mines ministry highlighting that it will defeat the purpose without deciding pending cases and lead to severe litigation and also impact investor confidence in the mining sector. Incidentally, Vice Chairman of NITI Aayog, Rajiv Kumar headed the High-Level Committee (HLC) on mining sector reforms and recommended a focus on production maximisation instead of revenue maximisation. NITI Aayog in its comment on mining sector reforms also warned that non-implementation of HLC recommendations will seriously undermine the growth of the mineral sector.
Many mining intensive states have agreed to the removal of the distinction between captive and non-captive mining in future auctions. The proposal to bring clarification on the definition of illegal mining which in the past caused big legal and penalty issues to mining companies is now being solely opposed by the state of Jharkhand.
The Mines Ministry will soon move a note on the proposed mining reforms for cabinet approval.
