MMDR Amendment Bill, 2026

Both Houses of Parliament have passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, amending the MMDR Act, 1957. The Bill aims to bring long-term stability and predictability in the fiscal and regulatory regime for major minerals, encourage private investment in exploration, and reduce India’s import dependence on critical and strategic minerals.pib+1

In 2025–26, India imported minerals worth about ₹10.12 lakh crore, including large quantities of copper, iron ore, manganese and other industrial raw materials. The government expects the amendment to strengthen domestic supply chains for manufacturing, infrastructure and the clean-energy transition.facebook+1

Key Features of the Amendment

1. Union control over mineral-bearing lands

• The amendment extends the Union’s regulatory control to mineral-bearing lands in addition to mines and mineral development.
• Such lands will be identified as per parameters prescribed by the Central Government under the MMDR Act.
• This is in addition to the existing provision that the Union regulates mines and development of minerals.pib+1

2. New Section 9D — Limits on State levies

• A new Section 9D prohibits State Governments from imposing any tax, cess or other levy on:
  • Mineral rights, or
  • Mineral-bearing lands,
    whether based on mineral quantity, value, royalty or any other basis.
• Such levies may be imposed only in accordance with conditions or restrictions prescribed by the Central Government.
• The objective is to prevent multiple, unpredictable State-level mineral taxes and create a uniform fiscal regime.pib+1

3. Treatment of past levies

• Any levy that had not been paid or recovered by the State before the amendment takes effect will be treated as invalid.
• However, amounts already deposited or recovered before the commencement of the amendment will not be refunded.
• This provision seeks to end long-pending disputes over past State mineral levies while protecting amounts already collected.pib+1

4. Rule-making power under Section 13

• Section 13 of the MMDR Act is amended to empower the Central Government to make rules prescribing:
  • Conditions or restrictions for imposition of State levies on mineral rights and mineral-bearing lands.
  • Parameters for identifying mineral-bearing lands.
• This gives the Centre the authority to frame detailed executive rules governing State taxation in this domain.pib+1

5. Continuity of State revenue share

• The Ministry of Mines has clarified that the amendment does not dilute States’ rights over land and mineral resources.
• Under the existing framework, about 90% of all statutory mining levies, royalties and payments accrue directly to the States.
• This revenue distribution is intended to remain unchanged.
• States’ powers over minor minerals remain unaffected.pib+1

Major vs Minor Minerals

Major minerals

• Regulated by the Central Government under the MMDR Act.
• Examples: coal, iron ore, limestone, copper, manganese, bauxite, chromite, gold, silver, lithium, nickel, cobalt, graphite and other critical and strategic minerals.policycircle+1
• Royalty rates for major minerals are fixed by the Centre and collected by States.

Minor minerals

• Regulated by State Governments.
• Examples: building stones, gravel, ordinary sand, ordinary clay and other minerals declared as minor minerals by the Centre.bignewsnetwork
• States have full authority to regulate extraction, levy royalties and impose taxes on minor minerals.
• The 2026 amendment does not alter this arrangement.pib+1

Rationale for the Amendment

1. High import dependence

• India imported minerals worth about ₹10.12 lakh crore in 2025–26.
• For some critical minerals, import dependence exceeds 95%.
• This creates vulnerability in supply chains for:
  • Steel and metals
  • Electronics and batteries
  • Defence equipment
  • Renewable energy technologies
  • Infrastructure projectsinstagram+1

2. Need for investment in exploration

• Private investment in mineral exploration has been constrained by:
  • Uncertainty over fiscal regime.
  • Multiple State-level levies.
  • Litigation over past dues.
  • Inconsistent taxation across States.
• The amendment seeks to provide:
  • Long-term predictability.
  • Uniform taxation framework.
  • Clear rules for investors.pib+1

3. Support for Atmanirbhar Bharat and Viksit Bharat 2047

• Strengthening domestic mineral production is essential for:
  • Self-reliance in critical raw materials.
  • Reducing external dependence.
  • Enhancing competitiveness of Indian manufacturing.
  • Supporting the clean-energy transition.
• The amendment is aligned with the broader vision of Viksit Bharat 2047.pib+1

Federalism Concerns

Centralisation of mineral taxation

• The amendment restricts States’ power to impose new taxes on mineral rights and mineral-bearing lands.
• States can levy such taxes only as per conditions prescribed by the Centre.
• This has revived debates on fiscal federalism and the balance of power between the Union and States.insightsonindia+1

Constitutional background

• Under the Constitution, Parliament has the power to regulate mines and mineral development.
• Royalty is levied under the MMDR Act but collected by States because mineral rights are a State subject in certain respects.
• The amendment strengthens the Union’s role in prescribing the framework for mineral-related taxation.insightsonindia+1

States’ perspective

• States argue that:
  • They bear the environmental and social costs of mining.
  • They should have flexibility to levy taxes for local development.
  • Uniform central rules may not account for regional disparities.
• The Centre maintains that:
  • Uniformity is needed to prevent cross-State economic disparities.
  • Multiple levies deter investment and increase costs.
  • About 90% of mining revenue already accrues to States.pib+1

Significance

For the economy

• May attract private investment in exploration and mining.
• Can reduce delays and litigation over State levies.
• May lower the cost of major minerals by rationalising taxation.
• Can strengthen supply chains for manufacturing and infrastructure.

For strategic security

• Supports domestic production of critical and strategic minerals such as lithium, nickel, cobalt, graphite and rare earth elements.
• Reduces vulnerability to external supply shocks.
• Aligns with India’s critical-minerals strategy and battery-storage ambitions.kotakneo+1

For governance

• Creates a more predictable fiscal regime.
• Reduces scope for arbitrary State-level mineral taxes.
• Enhances the Centre’s role in standardising mineral taxation.
• May improve ease of doing business in the mining sector.

Challenges

• Potential friction with States over reduced fiscal autonomy.
• Risk of one-size-fits-all rules that ignore regional differences.
• Implementation challenges in identifying mineral-bearing lands.
• Need for transparent and consultative rule-making by the Centre.
• Balancing investment promotion with environmental and social safeguards.

Way Forward

• Frame clear, transparent rules under Section 13 after consulting States.
• Ensure that States receive adequate compensation for any loss of fiscal flexibility.
• Strengthen the Geological Survey of India and other agencies for exploration.
• Promote technology-driven, sustainable mining practices.
• Align mineral policy with critical-minerals strategy, industrial policy and climate goals.
• Maintain a balance between Union oversight and cooperative federalism.

Important Terms

• MMDR Act, 1957: Primary legislation governing the regulation of mines and development of minerals in India.
• Major minerals: Minerals regulated by the Central Government under the MMDR Act.
• Minor minerals: Minerals regulated by State Governments; typically building materials and locally used minerals.
• Mineral-bearing lands: Lands containing mineral deposits, now brought under explicit Union regulatory parameters.
• Royalty: Payment made by the lessee to the State for the right to extract minerals; rate fixed by the Centre for major minerals.
• Cess: A tax levied for a specific purpose, often over and above basic tax or royalty.
• Fiscal federalism: Distribution of financial powers and resources between the Union and States.

Prelims Facts

• Bill: Mines and Minerals (Development and Regulation) Amendment Bill, 2026.
• Parent Act: MMDR Act, 1957.
• Objective: Long-term stability and predictability in the major minerals sector.
• New provision: Section 9D limiting State levies on mineral rights and mineral-bearing lands.
• About 90% of statutory mining levies and royalties currently accrue to States.
• States’ powers over minor minerals remain unaffected.
• India imported minerals worth about ₹10.12 lakh crore in 2025–26.
• The Bill awaits Presidential assent and publication in the Official Gazette.pib+2

Prelims Practice

Q1. With reference to the MMDR Amendment Bill, 2026, consider the following statements:

1. The Bill extends the Union’s regulatory control to mineral-bearing lands in addition to mines and mineral development.
2. The Bill prohibits State Governments from imposing any tax, cess or levy on mineral rights or mineral-bearing lands except as per conditions prescribed by the Centre.
3. The amendment reduces the share of States in mining royalties from 90% to 50%.

Which of the statements given above is/are correct?

(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3

Answer: (a)

Explanation: The Bill extends Union control to mineral-bearing lands and restricts State levies through a new Section 9D. It does not reduce the States’ share of mining royalties; about 90% of statutory mining levies and royalties continue to accrue to States.pib+2

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Q2. Consider the following pairs:

Category	Regulating authority
Major minerals	Central Government
Minor minerals	State Governments
Royalty rates for major minerals	Fixed by the Central Government

Which of the pairs given above is/are correctly matched?

(a) 1 only
(b) 1 and 2 only
(c) 2 and 3 only
(d) 1, 2 and 3

Answer: (d)

Explanation: Major minerals are regulated by the Centre, minor minerals by States, and royalty rates for major minerals are fixed by the Central Government and collected by States.upload.indiacode+2

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Q3. The MMDR Amendment Bill, 2026 introduces a new Section 9D primarily to:

(a) Increase royalty rates for critical minerals
(b) Restrict State Governments from imposing arbitrary levies on mineral rights and mineral-bearing lands
(c) Transfer ownership of all mineral-bearing lands to the Union Government
(d) Abolish all State-level taxes on mining activities

Answer: (b)

Explanation: Section 9D prohibits States from imposing taxes, cesses or other levies on mineral rights and mineral-bearing lands except in accordance with conditions or restrictions prescribed by the Centre, aiming to create a uniform fiscal regime.