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Indian Mining Regulatory Regime

Introduction

India is one of the top producers of valuable minerals like chromite, iron ore, coal, and bauxite on a global scale. In the quarter from 2019 to 2020, mining contributed 2% to the nation’s gross value added (GVA). This industry supplies the fundamental raw materials used by the majority of the nation’s infrastructure and manufacturing sectors. In India, the mining industry is heavily regulated, and in the last five years, the legal system has undergone significant modifications that have made the system more effective and transparent.

The Legal System

According to the Seventh Schedule of the Indian Constitution, the central government and the individual State governments are each assigned a portion of the regulatory authority over the country’s mines and minerals industry, which is governed under a federal system. For the governance of the mining industry in India, both the federal government and the state governments are accountable.

To the extent that such control is deemed by the Parliament to be in the public interest, the central government has the authority to regulate mines and mineral development under entry 54 of the Union List. Under entry 23 of the State List, the State government has the authority to control mines and mineral development in conformity with the authority of the Central Government.

The primary law controlling the mineral sector in India (aside from petroleum and natural gas) was created by the central government in 1957 and is known as the Mines & Minerals (Development and Regulation) Act (MMDR Act). The MMDR Act establishes the legal framework for the development of all minerals and the control of mines. Minor minerals and significant minerals are the two categories of minerals. Building stones, common clay, common sand, gravel, and other minerals designated as minor minerals by the federal government are included in the category of minor minerals. Major minerals include coal, manganese ore, iron ore, other minerals utilized in industry, and minerals that cannot be classified as minor minerals.

Significant reforms were made to ensure a transparent and non-discretionary environment for the grant of mineral concessions with the introduction of the Mines and Minerals (Development and Regulation) Amendment Act 2015. The Act was changed further, mining leases that are issued in other ways than through auction and are utilized for captive consumption were able to be transferred as of the 2016 amendment. In order to maintain mining operations, the 2020 Amendment permitted the transfer of licenses, approvals, and clearances (including environmental and forestry clearances) from the previous licensee to the new licensee for a two-year term following the issuance of the new lease.

Regulatory bodies

  • State governments: In accordance with the MMDR Act’s requirements, each State government has the authority to grant mineral concessions and to levy royalties, dead rent, and taxes on behalf of its residents.
  • Mines Ministry (MoM): It is a division of the Indian government and serves as the main administrative body for the mining industry. It is responsible for the MMDR Act’s administration, the exploration and mining of all minerals (apart from coal, natural gas, and petroleum), and the metallurgy and mining of non-ferrous metals.
  • The mission of the Indian Bureau of Mines (IBM), a division of the Ministry of Mines, is to advance the methodical and scientific use of India’s natural resources while maintaining environmental protection.
  • The Ministry of Coal (MoC) is in charge of overseeing coal exploration in India and is responsible for carrying out the activities in a sustainable manner. Additionally, it seeks to build the infrastructure needed for reliable coal supplies to satisfy the demands of other industries.
  • The Petroleum and Natural Gas Regulatory Board Act of 2006 created the Ministry of Petroleum and Natural Gas (MoPN) to oversee the exploration and utilization of petroleum resources, including natural gas. Additionally, it plans, guarantees the growth and control of, and supports all industries connected to the MoPN.

Changes proposed

In August 2020, the MoM released a notice outlining a few changes that will be made to the MMDR Act. The “Atmanirbhar Bharat” initiative, which aims to increase private investment, create jobs, and introduce cutting-edge technology into the mining sector, is the entire strategy that underpins the proposed shift. By allowing the private sector to engage in exploratory activities in addition to the general exploration and survey work carried out by government agencies, it seeks to increase exploration activity.

The suggested changes consist of:

  • To increase the number of mineral blocks up for auction, a seamless exploration, mining, and production system will be implemented.
  • By overcoming old problems, to transition to an auction-only system for allocating mineral resources.
  • To eliminate the disparity between captive and non-captive mines, sell excess or unused minerals, and transfer mining leases with permission to improve mining and production efficiency.
  • For various minerals, a clear national mineral index will be created.
  • The regulations should be streamlined to calculate stamp duty on mining leases.

Conclusion

The Government has taken a stride toward achieving mineral security in India with the reforms. The former 1957 Act’s restrictive practices were repealed by the new legal system, which also addressed other mining-related concerns such as auctions, the transfer of statutory clearances, the operation of District Mineral Foundation (DMF) Trusts, etc. The change is made to generate jobs, raise the mining industry’s GDP contribution, and lure both domestic and foreign investment. However, it will be interesting to see how the new legal system will do under judicial scrutiny and time.

However, without efficient application of regulations, the current revisions in mining regulations are insufficient. India’s government is required by international law to defend its citizens’ human rights against violations by mining companies and other businesses. There are laws in India that are intended to accomplish this, but some of them are so shoddily constructed that it seems as though they were created to fail. Others have lost their effectiveness because of poor implementation, enforcement, or corruption on the part of elected authorities or government employees. As a result, significant government watchdogs watch as out-of-control mining operations jeopardize the landscapes, livelihoods, and health of entire people.

In other instances, public institutions have also been defrauded of substantial sums of money that may have gone toward bolstering governments’ shoddy delivery of vital services like health and education. Experience has taught us that without strong government control, not all businesses in India and around the world will act ethically. Despite their best efforts, some businesses will fail if there is insufficient government regulation. Therefore, proper execution of the regulation is necessary with the introduction of new regulations and changes to current regulations.

References

  1. Mines and Minerals Laws, iPleaders, September 23, 2017, https://blog.ipleaders.in/mines-and-minerals-laws/
  2. Aqa Raza, Mukesh Dwivedi, Regulatory Framework of Minerals and Mining Industry in India in Relation to Environmental Concerns: A Critical Analysis, July 9, 2019, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3415706.
  3. TLCJ, September 24, 2021, https://journal.thelawcommunicants.com/indian-mining-regulatory-regime/.

This article is written by Kanika Arora from Delhi Metropolitan Education (Affiliated to GGSIPU).

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