Mining is one of the core sectors of the Indian economy and is a lifeline for many industries, which thrive on raw materials. The mining sector’s contribution to the country’s GDP has come down from 3% to 2.2% in the last 5 years. In 2017- 18, the value of domestic production of all major minerals (excluding coal, lignite and minor minerals) was `58,638 crores, while the import value of vital minerals and metals, at `4.34 trillion, almost seven times higher than domestic production, aggravated the current account deficit. The Index of Industrial Production (IIP) of the mining sector has slipped to 3.2% from 5.8% in May 2018.
The mining sector is encountering pressing issues such as depleted output, squeezed margins, high taxation, lack of green clearances, and poor investment in fresh exploration. The sector is also besieged with other issues such as delays in operationalizing mines. It needs to widen the exploration basket through increased reconnaissance and prospecting operations, and requires infusion of funds to achieve this.
Thriving competitiveness and growth in the Indian mining sector is an imperative for the survival and success of not only this industry but the economy as a whole.
CII offers the following suggestions for boosting India’s mining sector.
1. Boosting exploration and addressing auction-related issues
- A high powered inter-ministerial body must be created for addressing the initial teething problems of asset allottees on a single window basis.
- Introduce seamless transition from RP/PL to ML.
- Permit sale of license at any stage (likely to be at the RP/ PL to ML stage).
- Introduce an escalating scale of dead rent to deter the ‘hoarding of mine-able land.’
- Identify ‘no-go areas’ and create exclusive mining zones with prior in-principle statutory clearances for auction.
- Create and share the entire geological and mineral database (digital) of the country in the public domain.
- Encourage junior miners and explorers to invest in mineral blocks of their choice.
- Adopt a cluster approach for small deposits which, individually, may be unviable (i.e. grant a single lease for multiple such deposits).
2. Immediate action on mining leases expiring in 2020
- Time-bound execution of exploration by December 2019 through accelerated utilization of the NMET fund.
- Complete the auction process by March 2020.
- Consider the auction of larger mineral blocks for optimized mining.
- Provide automatic environment clearance (EC) and forest clearance (FC), if all the parameters remain the same.
3. Processes and Clearances
- Declare upfront the restrictions applicable on the areas under concession.
- Reduce duplication in stages between EC and FC.
- Enhance the effectiveness of PAMCAF.
- Reduce ambiguity in regulations.
- Constitute a high-level committee to effectively review and recommend substantial simplification of EC and FC processes by
– eliminating non-value adding stages
– specifying the time limit for each stage
– drastic simplification for diversion of open forests, preferably with provision for ‘deemed approval’ at the end of 180 days.
4. Rationalize levies
- Benchmark mineral royalties/ cess across countries.
- Reduce financial levies to bring them in line with international standards.
Provide incentives for processing by applying a lower rate or charging royalty on the cost of extraction before processing.