Industrial Sector Updates – Industrial Policy, Ease of Doing Business, etc.

Suggestions for New National Mineral Policy


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Mains Paper 2: Governance | Government policies & interventions for development in various sectors & issues arising out of their design & implementation

From UPSC perspective, the following things are important:

Prelims level: New national mineral policy, National Mineral Policy, 2008, District Mineral Foundation, National Mineral Exploration Trust, Compensatory Afforestation, Make in India, Mines and Minerals (Development and Regulation) Amendment Act (MMDRA), 2015, Atomic Minerals Directorate (AMD)

Mains level: Various policies of government that need to be revamped in order to provide ease of doing business


Niti Aayog’s suggested steps to the mines ministry

  1. Mines ministry is currently in the process of formulating a new national mineral policy
  2. Niti Aayog has given following suggestions to ministry regarding policy
  • Revamp the taxation structure applicable to the mining sector in India
  • Reduce the “widespread instances of corruption prevailing in the administration” of mining rules and regulations through “technology-based monitoring approach”
  • Avoid the tendency to incorporate financial conditions while granting the environment clearance
  • Involve mining sector consultants to evaluate mineral blocks before they are put up for auction

Effect of Supreme Court judgment

  1. On August 2, 2017, the Supreme Court had passed a judgment, wherein it directed the Central government to revisit the National Mineral Policy, 2008
  2. It also asked government to announce a “fresh and more effective, meaningful and implementable policy” before the end of this year

High taxation burden

  1. In its comments, the Niti Aayog has listed a number of taxes and charges that miners pay, which ultimately take their taxation burden to around 65 percent of the revenue
  2. The global average taxation applicable for mining is 40 percent
  3. India is constantly adding to the taxation burden for mining industry with royalty, DMF (District Mineral Foundation), NMET (National Mineral Exploration Trust) and host of other statutory levies implemented by the states
  4. Adding to this are the one-time regulatory costs related to ECs (environment clearances) and FCs (forest clearances) mostly on account of NPV (net present value) for forest land, CA (compensatory afforestation) charges, CA land procurement, etc

Ideal tax system desired

  1. According to the Niti Aayog, it is “necessary to define an ideal tax system for the industry to make it more lucrative
  2. This is especially for the foreign investors, under the Make in India initiative of the Central government
  3. Several regulatory payments like DMF, NMET, etc., have not been subsumed into GST (goods and services tax)
  4. The bidding price quoted by the bidder during auction is subject to GST and the interpretation is that the act of auction by the government is a form of service being provided and hence the tax

Mines and Minerals (Development and Regulation) Amendment Act (MMDRA), 2015

  1. According to this new mining law, non-coal mines have to be auctioned by the respective state governments
  2. Under the old mining law, the states had the powers to grant the mining lease to any company as per their discretion
  3. The Niti Aayog has suggested that the mining blocks that are being placed for auction should be evaluated by agencies having expertise in mineral commodity and as per international codes

Exploration of all the rare-earth and nuclear minerals

  1. Currently, China is dominating this sector with over 90 percent of the world market share
  2. Immediate necessary actions should be taken for the exploration of all the rare-earth and nuclear minerals
  3. It should be carried out under the umbrella of the Atomic Minerals Directorate (AMD) under a subset of the MMDRA Act, 2015
  4. This will reduce India’s dependence on external sources that may not be reliable due to socio-political reasons
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