By Jayajit Dash
India’s latest changes to mining law are being presented as an effort to bring greater certainty and investment to the mineral sector. But beneath the discussion about mines, auctions and revenue lies a bigger question: how much financial and decision-making space should States have over the mineral resources found within their own territory?
The Mines and Minerals (Development and Regulation) Amendment Act, 2026 comes with a clear economic argument. The Centre says the reform is aimed at making the mining sector more predictable and attractive for investment, particularly because minerals are crucial for steel, cement, power, infrastructure, defence and the clean-energy transition.
According to the figures cited by the government, nearly 90% of mining-sector revenue continues to accrue to States. Their share reached ₹1.145 lakh crore in 2025-26, while State mineral revenues have increased substantially since 2014.
The controversy, however, begins with the new Section 9D. The provision places restrictions on States imposing taxes, cesses or other levies on mineral rights and mineral-bearing land, except under conditions prescribed by the Centre. It also addresses certain past unpaid or unrecovered levies.
The timing makes the issue even more significant.
In July 2024, the Supreme Court’s nine-judge Constitution Bench, in the Mineral Area Development Authority case, held by an 8:1 majority that States have constitutional authority to tax mineral rights and mineral-bearing land. The Court also made it clear that royalty is not a tax. It later permitted the recovery of certain past dues from April 1, 2005, with staggered payments and waiver of interest and penalty for the period before July 25, 2024.
The 2026 amendment now enters this same constitutional space.
This is why the debate cannot simply be reduced to a Centre-versus-State political argument. There are legitimate concerns on both sides.
For mineral-rich States such as Odisha and Jharkhand, mining revenue is not merely a figure in a government budget. It supports public infrastructure, welfare programmes, employment and local development. Odisha, for instance, operationalised 35 of its 79 auctioned mineral blocks and earned around ₹87,000 crore in auction premiums between 2020-21 and 2025-26.
At the same time, the Centre has a strong case when it argues that an unpredictable tax environment can discourage investment and eventually increase costs for industries and consumers. Minerals extracted from the ground eventually become part of roads, houses, vehicles, factories and power projects. Higher costs at the mining stage can travel through the entire economy.
India’s mining sector has also expanded significantly since the auction reforms introduced in 2015. The government says 723 major mineral blocks have been auctioned across 17 States, while major mineral production value increased by 26.8% in FY2025-26. Iron ore production reached a record 313 million tonnes and limestone production 484 million tonnes.
The challenge, therefore, is finding a balance between certainty for industry and fiscal autonomy for States.
Uniform rules may make the sector easier to operate, but uniformity cannot automatically mean centralisation. India’s federal structure was created precisely because economic decisions also have political and local consequences.
The amendment now needs to be followed by transparency and meaningful consultation. If States are expected to give up or limit a taxing avenue that the Supreme Court had recently recognised, they will need confidence that their legitimate fiscal interests will not simply disappear. Clear rules, predictable revenue arrangements and an effective mechanism for resolving Centre-State disputes could become crucial.
The larger picture is also hard to ignore. India’s ambitions for manufacturing, clean energy and becoming a developed economy by 2047 will require a steady supply of minerals, including critical minerals. The country cannot afford uncertainty in a sector that is increasingly tied to national economic and strategic security.
But mineral resources do not lose their local significance simply because the industries using them may be located hundreds of kilometres away.
The MMDR Amendment, therefore, is about more than how quickly India can extract its minerals. It is also a test of how the country manages the balance between national economic priorities and the constitutional space of its States.
The Centre wants certainty. The States want fiscal autonomy. Both concerns are legitimate.
The real test will be whether India can pursue mineral security and economic growth without creating a deeper fault line in its federal structure.
Because mineral resources can be extracted again and again. Trust between the Union and the States is much harder to rebuild once it has been exhausted.
