Loading…
A PIB Backgrounder explains the Mines and Minerals (Development and Regulation) Amendment Act, 2026, which amends the MMDR Act, 1957 to create a uniform fiscal framework for minerals by barring State Governments from imposing fresh taxes, cesses or levies on mineral rights and mineral-bearing lands except on conditions prescribed by the Central Government.
The change is made through a new Section 9D. Section 13 is simultaneously amended so that the Central Government can frame the rules laying down those conditions and restrictions.
Levies not paid or collected by a State before the amendment takes effect become invalid, but amounts already deposited or recovered are not refundable.
States are stated to retain nearly 90 percent of mining-sector revenue, which reached about ₹1,14,549.28 crore in 2025-26, and the roughly 50 minor minerals such as sand, gravel, granite and marble stay entirely under State control.
The Backgrounder situates the Act in a decade of mineral-sector reform: auctions since 2015, the National Critical Mineral Mission with a ₹16,300 crore outlay, 656 District Mineral Foundations and a nearly 200-fold rise in exploration activity.
India's principal law regulating major minerals other than petroleum and natural gas; the statute the 2026 Act amends. Minor minerals are left to State rules under it.
Prohibits State taxes, cesses and levies on mineral rights and mineral-bearing lands except on conditions prescribed by the Central Government; invalidates levies not paid or collected before commencement without ordering refunds of what was already collected.
Gives the Central Government power to make rules prescribing the conditions and restrictions under which a State may still impose such a levy.
Empowers Parliament to legislate on regulation of mines and mineral development to the extent declared expedient in the public interest; the source of the MMDR Act itself.
Allows States to tax mineral rights, but subject to limitations imposed by Parliament through a law relating to mineral development — the hook on which Section 9D rests.
Taxes on lands and buildings; a State power the 2024 judgment treated as distinct from Entry 50, which is why levies on mineral-bearing land are the contested edge of the new Act.
Ended discretionary grant of concessions and made auction the route to major mineral blocks; inserted Section 9B creating the District Mineral Foundation and Section 9C creating the National Mineral Exploration Trust.
Created the Exploration Licence for 29 critical, strategic and deep-seated minerals listed in the new Seventh Schedule of the Act, and removed six minerals — including lithium-, titanium-, beryllium-, niobium-, tantalum- and zirconium-bearing minerals — from the list of 12 atomic minerals in Part B of the First Schedule, opening them to private exploration and mining.
Renamed the National Mineral Exploration Trust as the National Mineral Exploration and Development Trust, widened its use of funds to offshore areas and to exploration outside India, and raised the lessee's contribution from 2 percent to 3 percent of royalty payable.
The separate statute governing mineral development in India's offshore areas — territorial waters, continental shelf and exclusive economic zone — as distinct from the MMDR Act, which governs minerals on land.
Secure India's supply of critical minerals across the value chain — exploration, mining, processing, recycling and overseas acquisition.
Key: Approved on 29 January 2025 with an outlay of ₹16,300 crore, including ₹2,600 crore of budgetary support, up to FY 2030-31; GSI and the National Mineral Exploration and Development Trust are working towards 1,200 critical mineral projects.
Channel a share of mining money into welfare in mining-affected districts.
Key: DMFs were made statutory trusts by Section 9B inserted through the 2015 amendment and PMKKKY was launched on 16 September 2015; 656 DMFs now exist, 106 of them in aspirational districts, and the full DMF amount goes to local projects chosen by the district administration.
Build domestic capacity to recover critical minerals from scrap and end-of-life products.
Key: Launched on 2 October 2025 with ₹1,500 crore; 58 entities have pledged 850 thousand tonnes per annum of capacity against a target of 270.
Create shared midstream processing infrastructure so ore does not have to be sent abroad for refining.
Key: Being supported in Andhra Pradesh, Gujarat, Odisha and Maharashtra with ₹500 crore.
Fund and de-risk mineral exploration, including by private agencies and outside India.
Key: Lessee contribution raised to 3 percent of royalty; half of direct exploration costs reimbursed, capped at ₹20 crore for exploration licence holders and ₹8 crore for composite licence holders; 777 projects sanctioned worth ₹3,828.52 crore, of which 255 relate to critical minerals.
Build research capacity in critical mineral processing and technology.
Key: Nine institutes named as Centres of Excellence with ₹210 crore.
Track a mineral block through its whole life cycle, from auction to operationalisation.
Key: Built jointly with the States; complemented by Coal and Mineral Exchanges for price discovery.
Reduce friction in running an existing concession.
Key: One-time area extension of up to 10 percent for mining leases and up to 30 percent for composite licences; the cap on mineral sales from captive mines removed; no extra payment for adding critical, strategic or deep-seated minerals to a lease; basic customs duty removed on critical minerals, lithium-ion battery scrap and processing capital goods across three successive Budgets.
Administers the MMDR Act, 1957 for non-fuel and non-atomic minerals and runs the National Critical Mineral Mission; coal is handled by the Ministry of Coal.
The national geoscientific agency, responsible for baseline geoscience data and mineral resource assessment; set up in 1851 primarily to find coal for the railways and now an attached office of the Ministry of Mines.
Statutory trust created as the National Mineral Exploration Trust by Section 9C of the MMDR Act through the 2015 amendment and renamed in 2025; funds exploration, and since 2025 may fund exploration in offshore areas and outside India.
A non-profit statutory trust in every district affected by mining, created by Section 9B of the MMDR Act through the 2015 amendment, spending on local welfare under PMKKKY.
Acquires and develops critical mineral assets abroad for supply to the Indian market; has secured exclusive lithium exploration rights in Argentina.
Royalty under the MMDR Act is paid by a lessee to the owner of the mineral — the State — as the price of taking the mineral away. The Supreme Court in 2024 held that this is contractual consideration flowing from the mining lease, not a compulsory exaction imposed by sovereign power, so it is not a tax. That mattered because a State's power to tax mineral rights comes from Entry 50 of the State List, which Parliament may limit through a mineral development law, while its power to tax land comes from Entry 49, which Parliament cannot limit that way. Section 9D of the 2026 Act uses the Entry 50 route: it does not touch royalty, auction premium or DMF contributions, and it does not touch minor minerals, but it stops States from stacking additional taxes and cesses on mineral rights and mineral-bearing lands unless the Centre's rules allow it.
Simple Analogy: Rent paid to a landlord is not the same thing as property tax paid to a municipality. Royalty is the rent for the mineral; the levies Section 9D blocks are the extra taxes a State was adding on top of that rent.
| Aspect | Before the 2026 Act | After the 2026 Act |
|---|---|---|
| State levies on mineral rights | Taxed differently in every State, on quantity, value, royalty or land | Barred by Section 9D except on conditions prescribed by the Central Government |
| Fresh levies mid-project | Could be introduced even after mining operations had begun | Cannot be imposed outside the Centre's prescribed conditions |
| Retrospective demands | Could be raised at any time, and the 2024 judgment allowed recovery back to 1 April 2005 | Pending levies not paid or collected before commencement are invalid; amounts already collected are not refunded |
| Royalty, auction premium, DMF | Principal State revenue streams from mining | Unchanged — States continue to receive nearly 90 percent of mining revenue |
| Minor minerals (about 50, including sand and granite) | Entirely under State control | Entirely under State control; the Act has no bearing on them |
Geological Survey of India set up at Calcutta, initially to locate coal for the railways.
Mines and Minerals (Development and Regulation) Act enacted under Entry 54 of the Union List.
MMDR Amendment Act replaces discretionary allocation with auctions and inserts Section 9B (District Mineral Foundation) and Section 9C (National Mineral Exploration Trust); PMKKKY launched on 16 September 2015.
Khanij Bidesh India Limited incorporated as a NALCO-HCL-MECL joint venture to acquire mineral assets abroad.
MMDR Amendment Act creates the Exploration Licence for 29 critical, strategic and deep-seated minerals and moves six minerals out of the atomic minerals list in Part B of the First Schedule.
Nine-judge Supreme Court bench in Mineral Area Development Authority v. SAIL holds 8:1 that royalty is not a tax and upholds States' power to tax mineral rights, overruling India Cement (1989); a later order permits recovery of past dues from 1 April 2005.
National Critical Mineral Mission approved with a ₹16,300 crore outlay up to FY 2030-31.
MMDR Amendment Act renames the exploration trust as NMEDT, allows it to fund exploration abroad and offshore, and raises the lessee contribution from 2 percent to 3 percent of royalty; a ₹1,500 crore critical mineral recycling incentive scheme is launched on 2 October 2025.
MMDR Amendment Bill, 2026 passed by the Lok Sabha and the Rajya Sabha; it receives Presidential assent, inserting Section 9D.
Section 9D is a rare instance of Parliament using an express constitutional permission to curtail a State taxing power, which is why the Act is discussed alongside GST and the Finance Commission in debates on the shrinking of State fiscal autonomy.
Lithium, cobalt, graphite and rare earths feed batteries, electric vehicles, electronics, defence and renewable energy; NCMM, the recycling incentive scheme, CMPPs and KABIL's Argentina lithium rights are India's answer to concentrated global supply.
The sequence — India Cement (1989), MADA v. SAIL (2024), then the 2026 amendment — is a textbook example of Parliament legislating within the space a constitutional bench left open, rather than overriding a judgment.
DMF and PMKKKY money is the main channel through which mineral wealth reaches mining-affected and largely tribal districts, which is why the Backgrounder stresses that DMF collections are untouched.
Mineral imports of ₹10,12,529 crore in FY 2025-26 against iron ore exports of ₹15,136 crore explain why cost competitiveness of domestic minerals is framed as a foreign-exchange question.
GS Paper 2 > Polity > Functions and responsibilities of the Union and the States, issues and challenges of the federal structure; GS Paper 3 > Indian Economy > Infrastructure and resource mobilisation
General Awareness > Indian Polity and Economy > Acts and Amendments
General Awareness > Government schemes, Acts and economic policy
General Awareness > Current events of national importance
Mineral governance has featured repeatedly in UPSC Prelims and Mains through critical minerals, DMF and auction reform; the fiscal-federalism angle makes 2026 an unusually strong year for it.
The provision inserted by the MMDR Amendment Act, 2026 barring State taxes, cesses and levies on mineral rights and mineral-bearing lands except as the Central Government prescribes.
Payment by a mining lessee to the State for the mineral extracted; held by the Supreme Court in 2024 to be contractual consideration and not a tax.
A fixed charge payable on a leased mining area whether or not the mineral is actually produced, one of the roughly 14 levies on mining cited in the Backgrounder.
Concession created by the MMDR Amendment Act, 2023 for 29 critical, strategic and deep-seated minerals listed in the Seventh Schedule of the Act.
A prospecting licence cum mining lease, granted together so a single holder may prospect and then mine the same block.
About 50 minerals, including sand, gravel, clay, silica, granite, marble, gypsum and laterite, whose regulation the MMDR Act leaves to State Governments.