Centre Seeks Uniform Mineral Taxation Across States, Pushes Domestic Processing and Recycling of Critical Minerals
The Union Mines Secretary said the Centre's changes to the Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act) aim to create parity (equal, uniform treatment) in mineral taxation across states, and that the rights of states will remain intact.
The MMDR (Amendment) Act, 2026 added a new Section 9D. It says states cannot put any tax, cess or similar levy on mineral rights or mineral-bearing land except under conditions or limits set by the Centre. The Centre has not yet notified those conditions.
Mineral-rich states see this as cutting down the taxing power the Supreme Court upheld in the 2024 MADA judgment, which said royalty is not a tax and that states can tax mineral rights and mineral land.
The Centre links the change to its plan to reduce imports of critical minerals (like lithium, cobalt and nickel) by producing and processing them in India. It is offering subsidies to companies that set up lithium and nickel processing plants.
About 58 companies have been approved under the government's critical mineral recycling scheme, which recovers these minerals from e-waste and old batteries.
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 leases are actually given by state governments, but they must follow the rules laid down by this central law.
The "parity" the Mines Secretary speaks of comes from Section 9D: instead of each state choosing its own mineral tax, the Centre will set common conditions. States worry this takes away the taxing power the Supreme Court gave them in 2024.
Mineral Area Development Authority v. Steel Authority of India (2024)
Mineral Area Development Authority v. Steel Authority of India (often called the MADA case) is a 2024 judgment of a nine-judge Constitution Bench of the Supreme Court. It answered two big questions. First, is the royalty paid by miners a tax? The Court said no. Second, can states tax mineral rights and mineral-bearing land? The Court said yes.
Section 9D was written as Parliament's answer to this judgment. The MADA ruling itself said Parliament may limit state taxes on mineral rights under Entry 50, which the Centre relies on; but critics question whether Parliament can also limit taxes on land under Entry 49.
Critical Mineral Recycling Incentive Scheme (2025)
The Critical Mineral Recycling Incentive Scheme is a Government of India programme that pays part of the cost for companies that recover critical minerals from waste. Critical minerals are minerals like lithium, cobalt, nickel and rare earths that are needed for phones, electric vehicle batteries, solar panels and defence equipment, but whose supply is risky. The scheme gives money to recyclers who take these minerals out of old electronics (e-waste), used lithium-ion batteries and other scrap. It was approved by the Union Cabinet on 3 September 2025 with an outlay of ₹1,500 crore, as part of the National Critical Mineral Mission (NCMM).
The roughly 58 entities the Mines Secretary refers to are the companies approved under this scheme. Along with new subsidies for lithium and nickel processing and the push for uniform mineral taxation, the scheme is part of the Centre's plan to cut India's dependence on imported critical minerals.
- MMDR Act, 1957: made under Entry 54 of the Union List
- MMDR (Amendment) Act, 2026: President's assent 17 August 2026; new Section 9D limits state taxes on mineral rights and mineral-bearing land to conditions set by the Centre
- 2026 amendment covers major minerals; states keep powers over minor minerals
- MADA v. SAIL: 25 July 2024, nine-judge bench, 8:1; royalty is not a tax; states can tax mineral rights (Entry 50, State List) and mineral land (Entry 49, State List)
- MADA follow-up order (14 August 2024): past dues only from 1 April 2005, payable over 12 years from 1 April 2026, interest and penalty waived
- Critical Mineral Recycling Incentive Scheme: ₹1,500 crore, approved 3 September 2025, runs till FY 2030-31
- 58 companies approved under the recycling scheme, pledging about 850 kt a year of capacity against a 270 kt target
- National Critical Mineral Mission: approved 29 January 2025, ₹16,300 crore government spending plus ₹18,000 crore expected PSU investment