The Mines and Minerals (Development and Regulation) Amendment Bill, 2026 (MMDRA Bill), introduced in the Lok Sabha on Monday, seeks greater government control over mineral-bearing land and tighter rules for state taxes, cesses and other mining-related levies.
What is the MMDR Act?
The Mines and Minerals (Development and Regulation) Act, 1957 is the main law governing the development, conservation and regulation of minerals and the grant of mining rights in India. The existing law gives the central government regulatory control over mines and the development of minerals, while states have important powers relating to mining leases and taxation.
The proposed legislation seeks to redraw part of that balance. “The Union will take under its control the regulation of mineral-bearing lands having the mineral contents in accordance with the parameters prescribed by the Central government under the MMDR Act. This is in addition to the existing provision which declares the Union’s control over the regulation of mines and the development of minerals,” the Bill said.
Bringing mineral-bearing land under Central govt’s ambit
The existing legislation does not bring the land containing minerals within the same regulatory framework as mines. The 2026 Bill proposes to define “mineral-bearing land” as land containing minerals according to parameters that will be prescribed by the central government. It then proposes to include such land within the Union government’s regulatory ambit.
This is significant because the distinction between mineral rights and mineral-bearing land has been central to the case Mineral Area Development Authority v. Steel Authority of India, a long-running legal dispute over the taxation powers of the Union government and states.
The proposed change could have particular relevance for critical minerals such as lithium, cobalt, nickel, rare earth elements and graphite. The Ministry of Mines has identified such minerals as essential for sectors including lithium-ion batteries, electric vehicles, renewable energy and semiconductor technology.
What changes for state taxes?
The Bill proposes to restrict states from imposing a tax, cess or other levy on mineral rights or mineral-bearing land based on the quantity or value of minerals, royalty payable or similar parameters, unless the levy meets conditions or restrictions prescribed by the Union government.
The Union government would lay down the conditions and restrictions through rules. The Bill does not set a specific tax rate or an overall ceiling.
According to the Bill, the government argues that multiple taxes and cesses, differences in rates across states and levies introduced after mining operations have begun can make projects less viable. It says unpredictable and retrospective taxation can also increase costs, discourage investment and ultimately make minerals more expensive for industries that use them.
What happens to existing state levies?
The Bill also proposes to retrospectively invalidate certain pending levies. It says any such tax, cess or other levy that was imposed by a state but has not been collected or recovered before the amended law comes into force would be treated as invalid.
However, money that states had already recovered or received before the amendment takes effect would not have to be refunded.
This provision could have significant financial implications for both state governments and mining companies.
What does this mean for miners and industry?
According to the Bill document, for mining companies, the proposed changes could make the fiscal regime more predictable. The Bill says the amendments seek to address unpredictable taxes and levies introduced even after mining operations have begun, multiple levies on mineral production or dispatch, differences in rates across states and retrospective taxation. It says the changes are aimed at providing “certainty, stability and predictability in the fiscal regime in the mineral sector.”
The government argues this could improve investment confidence and support domestic mineral production.
The proposal also fits into the government’s wider effort to increase domestic exploration and secure supplies of critical minerals.
