Mines and Minerals (Development and Regulation) Act, 1957

The Mines and Minerals (Development and Regulation) Act, 1957, or MMDR Act, is India's main law on mining. It sets the rules for who can search for minerals, who can mine them, for how long, how mining rights are given, and what payments miners must make to the government. Most mining rights are actually given by state governments, but they must follow the rules of this central law. Think of it as the national rulebook that every state referee must follow.

Why does it exist?

Minerals like iron ore, coal, bauxite and limestone are needed for steel, power, cement and almost every industry. If every state made totally different mining rules, investors would face confusion, and the country could waste or misuse minerals. Mining also damages land, forests and the lives of nearby people. A single national law helps develop minerals in a planned way, keep allocation fair and protect the people affected.

Where does the Centre get the power?

The Constitution divides mining powers between the Union and the states:

• Entry 54 of the Union List (List I): Parliament can regulate mines and mineral development "to the extent" it declares by law that this control is in the public interest.
• Entry 23 of the State List (List II): States can regulate mines and mineral development, but subject to the Union's law under Entry 54.
• Section 2 of the MMDR Act is that declaration: Parliament declares that it is in the public interest for the Union to take control of regulating mines and mineral development to the extent provided in the Act.

So once Parliament makes such a law, the states can act only within the space it leaves for them.

How has it changed over time?

The Act has been amended many times:

• 2015 (in force from 12 January 2015): Mining leases for major minerals are now given mainly through auction, to make allocation transparent. Lease period fixed at 50 years. It created the District Mineral Foundation (DMF) (Section 9B) and the National Mineral Exploration Trust (NMET) (Section 9C).
• 2021: Removed the difference between captive mines (mines that feed a company's own plant) and merchant mines. Captive mines can sell up to 50% of their yearly output in the open market after meeting their own needs, on paying an extra amount.
• 2023: Created a list of 24 critical and strategic minerals (Part D of the First Schedule), such as lithium, cobalt and rare earths, which the Centre auctions. Six minerals, including lithium, beryllium and titanium, were removed from the reserved "atomic minerals" list so private firms can mine them. It also introduced an exploration licence for deep-seated and critical minerals.
• 2025: Renamed NMET as the National Mineral Exploration and Development Trust (NMEDT), raised miners' contribution to it from 2% to 3% of royalty, and allowed it to fund exploration abroad.
• 2026: Added mineral-bearing lands to the Centre's control and inserted Section 9D, limiting state taxes on mineral rights and mineral-bearing lands.

The key parts and facts

• Royalty (Section 9): A miner must pay royalty on minerals removed, at rates in the Second Schedule. The Centre fixes the rates and can change them not more than once in three years. The royalty goes to the state where the mine is.
• District Mineral Foundation (Section 9B): A trust in every mining-affected district, run by the state, to spend money on the welfare of affected people. Miners pay 30% of royalty for leases given before 12 January 2015 and 10% for later leases.
• Exploration trust (Section 9C): Funds exploration of new mineral deposits.
• Minor minerals (Section 3(e) and Section 15): Building stone, gravel, ordinary clay and ordinary sand are "minor minerals". States make the rules for them and fix their royalty.
• Major minerals: All other minerals, such as iron ore, bauxite and limestone. Their main rules are made by the Centre.
• Coal: Coal blocks are mainly allocated under a separate law, the Coal Mines (Special Provisions) Act, 2015, while the MMDR Act provides the base rules.

India's position and examples

India produces large amounts of coal, iron ore, bauxite and limestone. Most major mineral reserves are in a few states: Odisha, Jharkhand, Chhattisgarh, Karnataka, Madhya Pradesh and Rajasthan. For these states, royalty, auction premiums and mineral taxes are a big part of their own revenue. That is why any change in the MMDR Act directly affects their budgets.

Commonly confused concepts

• Royalty vs tax: Royalty is a payment to the owner of the mineral for the right to take it out, like rent paid to a landlord. A tax is a compulsory payment to the government using its sovereign power. In 2024, the Supreme Court held that royalty is not a tax.
• Major vs minor minerals: The difference is set by law, not by size or value alone. The Centre controls the main rules for major minerals; states control minor minerals.
• Entry 54 (List I) vs Entry 23 (List II): Entry 54 gives Parliament the power to take control of mining regulation by law. Entry 23 gives states power over mining only to the extent Parliament has not taken it.
• DMF vs NMEDT: DMF money stays in the district for the welfare of people affected by mining. NMEDT money is used nationally (and now abroad) to find new mineral deposits.

Issues, criticism and the way forward

• Centre-state tension: Mineral-rich states say the Centre keeps taking more control over a resource found in their land. The Centre says uniform rules are needed for a national mineral market.
• Slow exploration: India has explored only a small part of its potential mineral areas, and many auctioned blocks are slow to start production.
• Illegal mining and environmental damage: Weak checks on the ground and harm to forests and tribal lands remain serious concerns.
• DMF use: Audits have found DMF money often spent on things not directly linked to mining-affected people.
• Way forward: Experts suggest faster clearances, better exploration data, strong DMF monitoring and regular consultation with states before major changes.

Concepts to Know

• Union List / State List: Two of the three lists in the Seventh Schedule of the Constitution. Parliament makes laws on Union List subjects; states make laws on State List subjects.
• Mining lease: Permission from the government to dig and remove minerals from an area for a fixed period.
• Auction premium: The extra amount, above royalty, that a winning bidder agrees to pay the state, usually as a share of the value of minerals produced.
• Critical minerals: Minerals vital for modern technology and security, such as lithium for batteries, whose supply is at risk.
• Cess: A tax raised for a specific purpose.