Challenges Persist in India's Mining Sector Despite Reforms

02 Aug 2024 CW Team

The Minister of Mines and Coal, G Kishan Reddy, reported to Parliament on Monday that the central government?s reforms have led to the auctioning of 385 mineral blocks since 2015. "Of these, 50 mines are already in production," Reddy noted, emphasizing efforts towards achieving ?Aatmanirbhar Bharat? (self-reliant India) in the mining sector.

The MMDR Act amendments aimed to ensure transparency in mineral resource allocation through auctions. These changes have facilitated increased production of key minerals. For instance, iron-ore production surged from 129 million tonnes in 2014-15 to 258 million tonnes in 2022-23, while limestone production rose from 295 million tonnes to 406 million tonnes over the same period.

Despite these gains, the sector?s gross value added remains at 2% of the country's GDP. The value contribution of mining and quarrying has increased from Rs 2904.11 bilion in 2014-15 to Rs 3183.02 billion in 2022-23.

The International Energy Agency's (IEA) 2021 report, "The Role of Critical Minerals in Clean Energy Transition," highlighted the prolonged timeline for major global mining projects, averaging 16.5 years from discovery to production. This indicates the challenges faced by India's mining sector are not unique but part of a broader global trend.

Recent amendments to the MMDR Act in 2021 and 2023 aimed to accelerate mineral production, increase employment, and boost investment in the sector. Key amendments include removing end-use restrictions, allowing captive mines to sell surplus minerals, and lifting transfer restrictions on mineral concessions.

The government remains committed to enhancing domestic mining's share in total mineral consumption, with the latest amendments focusing on increasing exploration and production of critical and deep-seated minerals essential for sectors like high-tech electronics, telecommunications, transport, and defense.

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Despite significant reforms in the Mines and Minerals (Development and Regulation) Act (MMDR Act) in 2015, India?s mining sector faces ongoing challenges. Of the 385 mines auctioned since the introduction of the auction regime, only 50 have commenced operations, underscoring the sector's struggles. The Minister of Mines and Coal, G Kishan Reddy, reported to Parliament on Monday that the central government?s reforms have led to the auctioning of 385 mineral blocks since 2015. Of these, 50 mines are already in production, Reddy noted, emphasizing efforts towards achieving ?Aatmanirbhar Bharat? (self-reliant India) in the mining sector. The MMDR Act amendments aimed to ensure transparency in mineral resource allocation through auctions. These changes have facilitated increased production of key minerals. For instance, iron-ore production surged from 129 million tonnes in 2014-15 to 258 million tonnes in 2022-23, while limestone production rose from 295 million tonnes to 406 million tonnes over the same period. Despite these gains, the sector?s gross value added remains at 2% of the country's GDP. The value contribution of mining and quarrying has increased from Rs 2904.11 bilion in 2014-15 to Rs 3183.02 billion in 2022-23. The International Energy Agency's (IEA) 2021 report, The Role of Critical Minerals in Clean Energy Transition, highlighted the prolonged timeline for major global mining projects, averaging 16.5 years from discovery to production. This indicates the challenges faced by India's mining sector are not unique but part of a broader global trend. Recent amendments to the MMDR Act in 2021 and 2023 aimed to accelerate mineral production, increase employment, and boost investment in the sector. Key amendments include removing end-use restrictions, allowing captive mines to sell surplus minerals, and lifting transfer restrictions on mineral concessions. The government remains committed to enhancing domestic mining's share in total mineral consumption, with the latest amendments focusing on increasing exploration and production of critical and deep-seated minerals essential for sectors like high-tech electronics, telecommunications, transport, and defense.

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