MMDR Amendment Bill 2026: Aims to solve a problem that does not exist

The central problem with the MMDR Amendment Bill, 2026, is not simply that it increases the role of the Union government. The deeper concern is the absence of a sufficiently demonstrated policy problem to justify such a fundamental shift in fiscal and regulatory authority. In the area of evidence-based policymaking, lack of evidence and ill-conceived policy is a serious threat to the people and nation. Thus, the motive behind the amendment is not policy reform but greater control over mining and its revenue by some colonial-minded ruler in nexus with crony capitalists in Delhi. That is proved by the invalidation of pending tax, cess or royalty claims of various state governments that have not yet been deposited to date.

Introduction

The Mining and Mineral (Regulation and Development) Amendment Bill, 2026, was introduced by the BJP-led government in the Parliament of India, and it was passed without adequate critical discussion and scrutiny. The amendment introduces major changes to the existing Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act).

Among the significant changes are provisions stating that “no tax, cess or other levy shall be imposed by the State Government on mineral rights; or mineral-bearing lands, either based on mineral quantity or mineral value or royalty payable or otherwise.” A second provision seeks to invalidate pending tax, cess or royalty claims of various state governments that have not yet been deposited. A third major change concerns the removal or restriction of the decentralised rule-making powers of states, thereby strengthening the control of the Union government over the mineral sector. These changes have implications for more than 20 mineral-producing states and may significantly affect their revenue and tax collection from mining and mineral resources.

Figure 1 Major changes in MMDR Act 2026

Lack of Evidence and Ill-Conceived Reasons Behind the Amendment

Globally, evidence-based policymaking has increasingly become an important principle of public administration. Behind this amendment, the government has given five justifications. However, the justification lacks concrete evidence, and the assertions are ill-conceived in making a case for fundamental restructuring of the fiscal and regulatory powers of state governments.

1. The Argument of “Sustainable and Uniform Development for larger public interest”

The first reason advanced by the government is that “sustainable and uniform development of minerals across the country is an important pillar to subserve the public interest.” On this basis, the Union government has sought greater control over the sector in the name of larger public interest.

However, the distribution of mineral resources across Indian st

ates is inherently uneven, and this is a geographical and geological reality. Jharkhand and Chhattisgarh, for instance, possess substantial coal resources, while Odisha is particularly rich in minerals such as bauxite and chromite. Mineral resources cannot therefore be expected to be distributed uniformly across states.

The question, consequently, is: what exactly is the “uniformity” that the central government intends to achieve? Uniformity in mineral-resource distribution is impossible because the underlying geological distribution is naturally uneven. If the objective is instead uniformity in regulation, taxation or development, the government should provide evidence demonstrating why the existing arrangements have failed and how centralisation will address those failures.

There is also a deeper conceptual problem with the government’s use of the phrase “larger public interest.” What constitutes the public interest, and who defines it? Does the public interest of mineral-bearing states and communities cease to be part of the national public interest? If mining takes place within particular states and generates both benefits and costs for their people, then the fiscal interests of those states are also a component of the national interest. In other words, the question is not whether there should be a national interest in mineral development. The question is whose interests are considered the national interest.

2. The Argument That Mineral Resources Require Greater Central Control

The second reason given is that “mineral resources are finite and concentrated in a few states, and their management and regulation should be guided by long-term national goals.”

The finite nature of mineral resources is not a new development. Nor is mineral development in India undertaken independently by state governments without national oversight. Mining has historically operated within a framework involving the Union government, including central permissions, legislation, environmental regulations and other bureaucratic procedures. Therefore, it is baseless to say that the management of mining and mineral resources is not done on national goals.

The government further argues that the existing system creates a “heavy, unpredictable” fiscal burden through multiple taxes, non-uniformity among states and, in some cases, retrospective taxation.

If these are genuinely serious problems, the government should provide evidence establishing their scale and consequences. Why should such concerns be addressed by removing the fiscal powers of states over mineral resources altogether rather than by reforming specific problematic provisions?

Moreover, the mining sector is not the only sector in which taxes, prices and regulatory conditions differ across states. Products and services can have different prices and tax structures depending on their location, market conditions, transportation costs, state policies and other factors. Therefore, variation across states cannot automatically be considered evidence of an inefficient or dysfunctional fiscal system.

3. The Claim That the Existing Fiscal Burden Makes Mining Unviable

The government’s third justification is that “excessive fiscal burden makes mining operations commercially unviable, discourages mineral extraction, adversely affects mineral production and, in some cases, leads to closure of mines.”

It further argues that “additional and unpredictable costs may disproportionately lead to adverse impact on small and medium-scale mining operators.” According to the government’s reasoning, “multiple and inconsistent taxes hamper development of the mineral industry and slow down economic growth, resulting in cascading tax effects and high compliance costs.”

The problem with these arguments is that many of the claimed consequences are presented in hypothetical or future-oriented terms. The amendment’s justification does not appear to sufficiently identify the specific mines that were closed because of state-level taxes, cess or levies. Nor does it clearly identify the small and medium-scale mining operators that have suffered such adverse consequences, the magnitude of their losses, or the impact assessment or research study through which these effects were established.

If excessive taxation is the problem, several questions require answers: What constitutes an excessive fiscal burden? On which categories of mining companies has this burden been demonstrated? How many mines have actually become commercially unviable because of state-level taxation? How many have closed for this specific reason? What evidence demonstrates that taxation, rather than market prices, environmental restrictions, declining mineral deposits, operational inefficiency or other factors, was responsible?

Without answers to these questions, the argument remains largely an assertion rather than an evidence-based diagnosis of a policy problem.

The government also argues that “an excessive tax burden at the extraction stage or otherwise may ultimately increase the cost of goods and services and, consequently, the cost of living for the common citizen in the country.”

This raises another fundamental question: will the amendment guarantee uniform prices for steel and other mineral-based products across India? The answer is clearly not necessarily. The price of a product is determined by numerous factors, including production costs, transportation, demand and supply, market competition, company-specific pricing strategies and local conditions.

The price of steel products, for example, can vary between companies such as Tata Steel and JSW Steel. Prices may also vary between cities and markets. Therefore, attributing differences in the final price of goods primarily to state-level taxation on mineral extraction is an oversimplification of a much more complex market process.

Thus, the claim that state-level taxes and levies are making mining commercially unviable requires stronger empirical evidence. Without identifying affected mines, companies, closures and measurable economic impacts, the argument remains largely hypothetical. Similarly, linking state-level mineral taxation directly to the cost of living overlooks the many other factors that determine the final price of goods and services.

4. The Argument for a “Uniform and Balanced Fiscal Framework”

The fourth reason given is that “any fiscal burden should be guided by a uniform and balanced fiscal framework across the country.”

This argument appears ideological in the absence of detailed empirical findings demonstrating that differences in state-level taxation have created a serious distortion in the mining sector. A federal system does not necessarily require every state to have identical fiscal policies. Differences in taxation and regulation can reflect different economic, social, environmental and developmental circumstances.

Indeed, competition among states can also be a feature of a market economy. States may compete to attract investment, improve infrastructure and create favourable business environments. Such competition is not automatically a weakness of the system.

The government also emphasises the need to ensure “certainty, stability and predictability of the fiscal regime.” These are legitimate objectives in any economic system. However, the existence of these objectives does not establish that the current regime lacks certainty, stability or predictability to such an extent that state fiscal powers must be substantially curtailed.

To justify such a major institutional change, the government should establish the specific areas of uncertainty, the extent of instability, the economic costs associated with them, and the evidence that centralisation would produce better outcomes.

5. The Contradiction in the Idea of “National Interest”

Perhaps the most fundamental concern lies in the government’s stated objective of “ensuring harmonised mineral development across the nation, rather than creating localised pockets of mineral-resource-driven growth with national interest.”

This raises a basic question: are mineral-bearing states outside the nation?

If Jharkhand, Chhattisgarh, Odisha and other mineral-producing states constitute an integral part of India, then their economic development, fiscal capacity and welfare are necessarily part of the national interest. Mining does not occur in an abstract national space. It takes place in specific territories, affecting specific communities, local environments and state economies.

The mineral-bearing states therefore bear many of the immediate consequences of mining—environmental degradation, displacement, pressure on local infrastructure and social changes—while also receiving revenue through taxation, royalties and other fiscal mechanisms. Weakening their fiscal authority without adequately addressing these costs could create an imbalance between the location of mineral extraction and the distribution of fiscal benefits.

The concern is therefore not whether minerals should contribute to national development. They should. The concern is whether national development should be pursued by weakening the fiscal and regulatory position of the very states and communities where those resources are located.

If mineral-rich states lose substantial revenue from mining while continuing to bear the environmental and social consequences of extraction, the proposed framework could deepen rather than resolve existing regional inequalities.

Thus, the concept of “harmonised national development” should not be equated with centralised control. Mineral-bearing states are not separate from the nation; they are constituent parts of it. A genuinely national mineral policy should therefore balance national objectives with the fiscal rights, developmental needs and environmental burdens of the states and communities where mineral extraction actually takes place.

Conclusion

The central problem with the MMDR Amendment Bill, 2026, is therefore not simply that it increases the role of the Union government. The deeper concern is the absence of a sufficiently demonstrated policy problem to justify such a fundamental shift in fiscal and regulatory authority. In the area of evidence-based policymaking, lack of evidence and ill-conceived policy is a serious threat to the people and nation. Thus, the motive behind the amendment is not policy reform but greater control over mining and its revenue by some colonial-minded ruler in nexus with crony capitalists in Delhi. That is proved by the invalidation of pending tax, cess or royalty claims of various state governments that have not yet been deposited to date.

If the existing system has resulted in excessive taxation, mine closures, declining mineral production, high compliance costs or significant barriers to investment, these claims should be supported by empirical evidence, impact assessments and transparent data. Specific cases should be identified, the magnitude of the problem should be established, and alternative policy solutions should be considered before removing or substantially weakening the fiscal powers of states.

The amendment’s stated objectives—public interest, sustainable development, national goals, fiscal certainty and harmonised development—are all legitimate policy aspirations. However, legitimate objectives do not automatically validate the means adopted to achieve them.

A federal republic requires a balance between national priorities and the legitimate interests of its constituent states. Mineral-rich states should not be treated merely as sources of national resources while their fiscal autonomy is weakened and their people continue to bear the social and environmental costs of mining.

The fundamental question, therefore, remains: does the MMDR Amendment Bill, 2026, solve a clearly demonstrated problem, or does it create a new institutional problem by centralising control over mineral resources and weakening the fiscal position of mineral-bearing states?