India’s Mining Sector Reforms | 25 Jun 2025

Source: PIB 

Why in News?

In May 2025, India auctioned its first potash block, marking a milestone in mining sector reforms aimed at transforming India’s mining sector and driving economic growth.

What Reforms Have Been Taken to Transform India’s Mining Sector?

• Legal Reforms: Mines and Minerals (Development and Regulation) Amendment Acts, 2015 introduced auction-based allocation to replace the discretionary system, ensured automatic extensions for captive mines, and created the District Mineral Foundation (DMF) for local area development.
  • The 2021 Amendment removed end-use restrictions to enable commercial coal mining, increased lease terms to 50 years, and introduced a Composite License for Exploration-Cum-Mining (CEMP) to attract private investment.
• National Mineral Policy (NMP) 2019: The National Mineral Policy (NMP) 2019 focuses on sustainable mining, private sector participation, ease of doing business, adoption of AI, drones, blockchain for transparency, and promotion of downstream industries for value addition.
• Coal Sector Reforms: Coal sector reforms allowed commercial coal mining (2020) by private players, promoted coal gasification and liquefaction for cleaner coal technologies, and ensured faster environmental approvals through the single-window clearance (PARIVESH Portal).
• Technological Advancements: Satellite imagery monitors illegal mining and ensures compliance, while the Khanan Prahari App lets citizens report such activities.
  • The National Geoscience Data Repository (NGDR) offers 12,000+ geological reports for public access, while drone surveys, Mining Tenement System (MTS), and faceless filings improve efficiency and transparency.
• Exploration Reforms: The National Mineral Exploration Trust (NMET) funds exploration projects, with private sector participation and the Exploration Licence (EL) regime creating opportunities for MSMEs and startups.
  • The National Critical Minerals Mission (NCMM) was launched to secure lithium, cobalt, nickel, and rare earth elements vital for the energy and tech sectors.
  • Offshore mineral mining initiated, expanding India’s role in the global resource supply chain.
• Sustainable Mining Initiatives: The Star Rating System rates mines on sustainable practices, mine closure plans are mandatory for environmental rehabilitation, and use of M-Sand (manufactured sand) is promoted to reduce river sand mining.

What is the Significance of India's Mining Sector?

• Economic Growth Driver: India’s mining sector contributed 1.97% to GVA in 2023-24, generating Rs 4 lakh crore for states through auctions and royalties that fund infrastructure and welfare schemes.
  • Odisha led with a 44.9% share, followed by Chhattisgarh (13.9%), Jharkhand (4.1%), and Maharashtra (3.9%).
• Industrial & Infrastructure Foundation: India produces 95 minerals including fuel, metallic, non-metallic, atomic, and minor minerals.
  • Metallic minerals (90.3%) like iron ore, bauxite, and copper support steel, aluminum, and electronics, while non-metallic minerals (9.7%) like limestone and phosphates aid cement, fertilizers, and chemicals.
• Employment & Rural Development: DMF Trusts use mining revenues to support healthcare, education, and livelihoods in mining-affected regions, while exploration licenses for MSMEs and startups create jobs in mineral-rich states.
• Energy Transition: Critical minerals (lithium, cobalt, rare earths) exploration reduces import dependence for EV batteries, renewables, and defense technology.
  • Potash mining boosts fertilizer self-sufficiency, enhancing food security.
• Global Competitiveness: Auction reforms and offshore mining attract private investment, positioning India in the global critical minerals supply chain.
  • KABIL's overseas acquisitions (e.g., Argentina for lithium) secure strategic resources.

What are the challenges in India's Mining Sector?

• Regulatory & Bureaucratic Hurdles: Delays in clearances for environmental, forest, and wildlife approvals, along with land acquisition issues involving tribal rights under the Forest Rights Act, 2006 and local resistance, slow down projects.
  • Frequent policy changes like iron ore export bans and shifts in royalty rates create regulatory uncertainty for investors.
• Illegal & Unsustainable Mining: Rampant illegal mining due to weak enforcement, especially in Jharkhand, Rajasthan, and Goa, along with unregulated mining like rat hole mining, causes deforestation, water pollution, and soil erosion.
  • A nexus of politicians, bureaucrats, and mining mafias fuels corruption and disrupts legal operations.
• Low Exploration: Only 10% of India’s Obvious Geological Potential (OGP) has been explored, with under 1% of the global exploration budget spent in India, while reliance on obsolete mining techniques over automation, AI, and drone surveys lowers efficiency.
• Logistics Bottlenecks: Poor transport connectivity in mining belts (e.g., Odisha, Chhattisgarh), port constraints, and power shortages raise costs, cause delays, and disrupt mining operations.
• Dependence on Imports for Critical Minerals: In 2020, India imported 100% of its lithium, cobalt, nickel, and 60% of its graphite, all crucial for EVs and renewables, with heavy reliance on Chinese processed minerals.
  • In 2025, China’s export controls on rare earth elements (REEs) and magnets hampered Indian industries dependent on these imports.
• Social & Environmental Conflicts: Mining in forest areas like Niyamgiri Hills faces tribal displacement protests, causes water scarcity and conflicts with farmers, and suffers from poor DMF fund implementation for community rehabilitation.
  • Poor working conditions with frequent accidents (e.g., Meghalaya rat-hole mining deaths) and a skilled labour shortage hinder adoption of modern mining technology.

What Steps are Needed to Strengthen India's Mining Sector?

• Boost Exploration & Geological Data: Increase budget for exploration by raising funds for Geological Survey of India (GSI) and National Mineral Exploration Trust (NMET), and promote private sector participation through incentives like tax breaks and revenue-sharing.
• Infrastructure & Logistics Development: Strengthen mine-to-plant connectivity with improved railways, roads, and pipelines in clusters like Odisha and Jharkhand, and expand port capacity at Vizag, Paradip, and Mormugao for mineral exports.
  • Develop dedicated mineral corridors and freight corridors for efficient coal and iron ore transport.
• Technology & Automation Adoption: Adopt AI, drones, satellite imaging, and geospatial mapping for better surveys, and create an open data portal with a national mineral database for investors.
  • Promote remote-controlled drilling, zero-waste mining, and invest in R&D for clean mining like coal gasification, hydrogen-based steel, and lithium extraction from brine.
• Sustainable & Responsible Mining: Enforce Environmental, Social, and Governance (ESG) norms with water recycling, carbon-neutral mining, and bio-reclamation, ensure mine closure funds for land restoration, and promote community-centric mining through effective DMF spending on healthcare, education, and livelihoods.
• Tackling Illegal Mining & Corruption: Strengthen surveillance with expanded satellite monitoring (Mining Surveillance System) and the Khanan Prahari App, impose harsh penalties on illegal miners and corrupt officials, and ensure whistleblower protection to expose mafia activities.
• Focus on Critical & Strategic Minerals: Secure global partnerships for lithium, cobalt, and rare earth assets in Africa, Australia, and South America, establish domestic refining plants for lithium and graphite, and implement a National Critical Minerals Policy to ensure supply for EVs, solar panels, and defense tech.

Conclusion

India's mining sector, revitalized by reforms like auctions, tech adoption, and critical mineral security, drives economic growth and self-reliance. However, challenges like illegal mining, import dependence, and environmental concerns persist. Strategic investments in exploration, infrastructure, and sustainability can transform mining into a pillar of Viksit Bharat while balancing ecological and social equity.