The story so far: The Rajya Sabha on Wednesday (August 12, 2026) passed an amendment to the Mines and Minerals (Development and Regulation) Act, which, among other things, specifies that States do not levy any tax or cess on mineral, mineral bearing lands and overall operations. The now-ratified legislation has drawn immense opposition from several mineral-rich States, including Odisha and Jharkhand – accusing the Union Govt of encroaching upon their constitutional powers.
What does the law primarily entail?
With an objective to impart “stability, certainty and predictability” into the fiscal regime of the mineral sector, the ratified legislation, among other things, seeks that State governments do not impose any tax, cess or similar levies centred around mineral rights.
This primarily seeks to avert instances of price arbitrage for the same mineral across States and bring about equitable price regime. For context, Tamil Nadu and Jharkhand had instituted mineral-bearing land (MBL) tax on various mineral in 2024 and 2025 respectively. In Tamil Nadu, the tax was fixed at ₹160 per metric tonne.
Jharkhand had introduced the tax at ₹100 per metric tonne although it was hiked across multiple tranches.
The introduction of the taxation in Tamil Nadu cast apprehensions among cement producers in the State. They indicated that the elevated price of the primary raw material, that is, limestone, would have to be ultimately passed on to the consumers, thus elevating the retail prices of cement.
Similar concerns erupted in Jharkhand for coal and bauxite.
According to the Federation of Indian Mineral Industries (FIMI), the amendment would provide greater certainty and stability in the fiscal framework for mining.
“This should help improve investor confidence and encourage investment in exploration, mine development and expansion of existing mines, which can support higher domestic production and better availability of minerals,” the industry group told The Hindu.
The now-ratified law takes retrospective effect, in other words, any such levy liable but not collected before the legislation is formally enforced would be deemed invalid.
What has been the opposition to the proposed legislation?
The opposition to the proposed act primarily centres on a potential subversion to the federal structure of how revenue from mining resources is taxed, especially in resource-rich and States which particularly depend on taxing the resources for revenue.
According to a report of the Comptroller and Auditor General of India (CGI), about 41.4% of a State’s non-tax revenues came from mineral and petroleum related receipts combined.
Naveen Patnaik, former Chief Minister of Odisha and president of the Biju Janata Dal (BJD) said the Bill impinges upon the State’s fiscal autonomy and threatened its constitutional rights over its resources.
In a letter to the incumbent Chief Minister, he said the provisions would “disproportionately impact” mineral-rich States such as Odisha, leading to “massive revenue losses” and stifling the State’s developmental agenda.
Hemant Soren, Chief Minister of Jharkhand, termed the provisions of the law to be according “stepmotherly treatment”.
“In Jharkhand, schemes providing social security to millions – such as the Maiya Samman Yojana, Abua Awas Yojana, pensions, education, health, and others – will be on the verge of closure,” he pointed out.
Further, V.D. Satheesan, Chief Minister of Kerala has sought to mount a strong political opposition, and if required, legal opposition to the Act.
What has been the Union Govt’s response?
Speaking to the press on Thursday (August 13), G. Kishan Reddy, Union Minister for Coal and Mines refuted assertions about the ratified law seeking to impinge upon the right of States over their resources.
He argued the legislation is primarily aimed at ensuring growth and equitability in the overall ecosystem.
“The government’s primary objective is to ensure identical [taxation] rates across the board to ensure [effective prices] do not spike. We are neither seeking to impinge upon any State’s rights nor acquire any control [over States’ resources],” he stated.
Further, the Minister said the amendment encompasses only certain major minerals and does not extend to minor minerals over which the States retain absolute control.
He put forth the minerals are critical to infrastructure, manufacturing, energy security and overall economic development.
Thus, the focus on ensuring price equitability and better economics.
According to a memo circulated by the government, the list of major minerals includes coal, lignite, iron ore, graphite, cobalt, lithium and nickel among others.
Moreover, the legislative regime would encompass across eleven states only, including Andhra Pradesh, Chhattisgarh, Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Gujarat, Uttar Pradesh and Goa.
Furthermore, Mr. Reddy, arguing the Centre also ensured flow of revenue to States, reported that States’ share in overall mineral revenues have accelerated from 65% to 88% between fiscal year 2014-15 and 2024-25, while the share from coal rose to 96% from 55% during the same period.
Published – August 15, 2026 02:59 pm IST
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