Mines and Minerals (Development and Regulation) Amendment Bill, 2021

By Aman|Updated : July 10th, 2021

Recently the Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2021 that regulates the mining sector in India. Read this article to comprehensively cover the bill, the pros and cons and way ahead.

Table of Content

Mines and Minerals (Development and Regulation) Amendment Bill, 2021


  • Recently the Parliament passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2021.
  • The Bill amends the Mines and Minerals (Development and Regulation) Act, 1957 that regulates the mining sector in India.


Captive Mines

    • This Bill provides that no mine will be reserved for particular end-use.
    • captive mines may sell up to 50% of their annual mineral production in the open market after meeting their own needs.

Auction-The Act allows states to conduct the auction of mineral concessions (except coal, lignite, and atomic minerals).

    • Mineral concessions include mining lease and prospecting license-cum-mining lease.
    •  If the state government is unable to complete the auction process within a specified period by the Centre, the auctions may be conducted by the central government itself.

Transfer of statutory clearance

When mines are leased to new persons through auction, earlier statutory clearances issued to the previous lessee were transferred for a period of 2 years to the new leaseholder within which they had to renew the clearances.

    • This Bill now provides that transferred statutory clearances will be valid throughout the lease period of the new lessee. 
  • Mines whose lease has expired (other than coal, lignite, and atomic minerals), , in certain cases, may be allocated to a government company by the State government for a period up to 10 years or until the selection of a new lessee, whichever is earlier.
  •  period of mining leases of government companies may be extended on payment of additional amounts as prescribed in the Bill.
  • Rights of certain existing concession holders: the right to obtain a prospecting license or a mining lease will lapse on the date of commencement of the 2021 Amendment Act. 
  • The original Act provides that a mining lease will lapse if the lessee:

(i) is not able to start mining operations within 2 years of the grant of a lease,

(ii) has discontinued mining operations for a period of 2 years. 

  • the lease will not lapse if a concession is provided by the state government upon an application by the lessee.
  • threshold period for lapse of the lease can be extended by the state government only once and up to one year only.

 The original Act provided for a non-exclusive reconnaissance permit. This bill removes the non-exclusive provision for this permit.


In India mining contributes to only 1.75 percent of the GDP while it has a higher potential to contribute upto 2.5% of the GDP.

    • India heavily imports coal despite being the third-largest storehouse of coal in the world. It also has 22,000 million tonnes of iron ore reserve that is enough to last another 100-150 years for itself.
    • The bureaucracy wields a lot of power as even a small fault can lead to the closure of a mine. Also, a lot of mining takes place illegally and is a great contributor to corruption.
    • This in turn also leaves the environment destroyed without anyone being held accountable, all due to the outdated law.
    • Manganese, which is a byproduct of iron ore production, currently cannot be used by captive mines (not useful to them) nor can they be sold. But India imports tonnes of manganese. This issue has been resolved with this bill.
    • The new law also provides a license for the use of minerals along with the license for exploration, which gives an additional incentive for exploring more.
    • The private mining industry players will also be given incentives out of the National Mineral Exploration Trust (which gets 2 percent of mineral royalties but is largely unused now) fund to explore more minerals in India. This will enhance the production of minerals.

Issues with the Bill

  • States may have objection wherein the Central government is stepping in to auction the mines. This amounts to infringement of states’ powers as auction of mines is under the purview of state governments.
  • The Central government can also direct how to use the funds in the District Mineral Foundation, which again infringes on rights of the state and also is a top-down approach which may not suit the ground realities.
  • The state governments may also object to the fixing of the royalties of the government companies for the extension of their leases as this may lead to lower revenues as compared to a transparent process of auction.
  • The environmental concerns regarding mining have no mention at all in the bill.
  • There is also a need for an independent regulator that will oversee the process so that there can be reduced conflict between various powers.


  • The new Bill is expected to usher in big reforms in the mining sector - enhancing the production and improving ease of doing business, thereby boosting the economy.
  • It also has a huge potential to generate employment especially in rural areas.
  • This bill has a huge impact on the upstream related industries like the automobile sector which will also get a boost.
  • Also we need to develop the related infrastructure to reap the full benefits of this reform like improving the transport and export infrastructure - railways, shipping, ports etc. This will further generate more economy.
  • We also need to focus on value addition to the minerals so that we can reduce our import bills and produce more goods locally.

However due diligence must be followed in granting of permits and leases in order to check the environmental damage to ensure sustainable development

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