MINES AND MINERALS (DEVELOPMENT AND REGULATION) AMENDMENT BILL 2026

Why In News?

Parliament passes the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, restricting State taxes on mineral rights and mineral-bearing lands.

Highlights of the MMDR Amendment Bill 2026

Section 9D: States cannot impose tax, cess or levy on mineral rights/mineral-bearing land except within conditions prescribed by the Centre.

Mineral-Bearing Land: The Bill expands Union regulatory control from mineral development to land containing minerals meeting centrally prescribed parameters.

Tax Uniformity: The Union argues that multiple state levies create higher mining costs, unpredictable taxation and non-uniform rates, potentially making extraction commercially unviable.

Investment Certainty: Standardised levies seek to reduce retrospective and post-commencement taxation, improving predictability for long-term mining investment.

Past Dues: Unpaid or unrecovered pre-commencement state levies would become invalid, while amounts already paid/recovered would not be refunded.

Critical Minerals: The reform comes amid wider MMDR changes aimed at increasing exploration and domestic production of critical minerals for strategic and energy-transition needs.

Why Are States Opposing the Move?

Revenue Autonomy: States fear losing an independent mineral-tax instrument precisely when mining revenues have become important for resource-rich state finances.

Constitutional Tension: Mineral Area Development Authority vs SAIL (2024) held that states possess power to tax mineral rights, while Parliament may restrict this under Entry 50; the Bill tests the limits of that power.

Land-Tax Issue: Constitutional concern over Entry 49, because the Supreme Court held that Parliament cannot use its mineral-development power to restrict state taxation of mineral-bearing land.

Retrospective Liability: The Bill would invalidate some previously accrued but unrecovered state dues, potentially creating a dispute over legislative competence and judicial finality.

Article 14 Concern: Entities that already paid mineral-related dues would receive no refund, while those that had not paid could receive relief, raising a possible equal-protection/arbitrariness issue.

Excessive Delegation: Section 9D leaves the Centre to prescribe the conditions governing state levies, while the Bill provides limited legislative guidance on those conditions.

Federal Balance: The issue is not simply taxation; it concerns who controls resource wealth and who bears mining’s environmental and social costs.

State Resistance: Kerala has opposed the measure, while Jharkhand has also raised concerns over its effect on state fiscal powers.

What Are the Arguments in Favour of the Amendment?

Uniform mineral taxation removes the "patchwork" of differing state tax regimes that inflate compliance costs for mining companies.

Reduced regulatory uncertainty — a predictable, centrally-conditioned levy structure is meant to reassure long-term investors.

Prevention of market fragmentation — uniform rules across states support a genuinely national market for minerals.

Lower cost of mineral production — the government argues removing cascading state levies directly lowers extraction costs.

Greater investment predictability — eliminating retrospective levies is projected to boost investor confidence in the mining sector.

Strengthening domestic mineral supply — the reform is explicitly linked to reducing import dependence on critical minerals and strengthening self-reliant mineral security.

What Are the Concerns?

Fiscal Federalism: Jharkhand estimates its Mineral Bearing Land Cess could yield about ₹7,110 crore annually, highlighting the potential fiscal impact on mineral-rich states.

Constitutional Balance: Entry 50, State List gives states power to tax mineral rights, but Mineral Area Development Authority vs SAIL (2024) held that Parliament can impose limitations through a law relating to mineral development.

Union-State Tension: The 2026 amendment empowers the Union to prescribe conditions governing new state levies on mineral rights, shifting the regulatory balance towards national uniformity.

Subsidiarity: Uniform national taxation can reduce state-level flexibility, even though mining impacts such as displacement, pollution and infrastructure stress are predominantly localised.

Resource Sharing: DMFs had accumulated ₹82,370.79 crore, with ₹45,150.21 crore utilised by August 2023, showing the importance of retaining local benefit-sharing mechanisms.

Asymmetric Impact: Mineral-producing states such as Odisha, Jharkhand, Chhattisgarh and Karnataka bear concentrated environmental and social costs, while downstream industries across India benefit from lower and more predictable mineral costs.

Market Efficiency: The Union argues that divergent state levies can increase mineral costs and fragment the national market, creating a genuine tension between fiscal autonomy and economic efficiency.

Way Forward

Cooperative Federalism: Create a structured Centre-State consultation mechanism for mineral taxation, drawing on the GST Council model while retaining Parliament’s constitutional power under Entry 50.

Revenue Protection: Establish transparent transition arrangements so mineral-rich states do not face abrupt revenue shocks while uniform taxation is introduced.

Constitutional Clarity: Frame Union limitations narrowly around mineral development, consistent with the Supreme Court’s 2024 interpretation of Entry 50.

DMF Strengthening: Ring-fence District Mineral Foundation resources for affected communities; DMF collections had already crossed ₹82,000 crore by August 2023.

Local Development: Link mining revenues with health, drinking water, education, livelihoods and rehabilitation, ensuring communities receive a visible share of resource wealth.

Environmental Safeguards: Make investment predictability conditional on stronger mine-closure plans, ecological restoration and pollution monitoring, preventing fiscal competition from weakening environmental standards.

National Mineral Security: Preserve uniform national standards where fragmented taxation genuinely threatens critical-mineral supply chains, investment and domestic manufacturing.

Balanced Federalism: The objective should be “national standards + state fiscal space + local benefit sharing”, rather than choosing either complete centralisation or unrestricted state taxation.

Conclusion

The MMDR Amendment Bill, 2026 trades away a slice of state fiscal autonomy for national mineral-taxation uniformity, reigniting a federalism dispute that the Supreme Court's 2024 ruling had settled in the states' favour.

Source: INDIANEXPRESS