Who Regulates India’s Non-Coal Mining Auctions

Minerals lie under State land. But they matter to the whole country. So the Constitution splits the job between the Centre and the States.

Who holds which power?

• Parliament can control mines and minerals when it declares this to be in the public interest.
• Section 2 of the MMDR Act, 1957 is that declaration.
• States control mining in their own area, but only within the limits that Parliament has set by law.
• The Constitution lists the subject in two places. Entry 54 of the Union List covers mines and minerals under Union control. Entry 23 of the State List covers mine regulation, subject to Entry 54.
• Minerals are split into major minerals and minor minerals.

What counts as a minor mineral?

• Section 3(e) names building stone, gravel, ordinary clay and ordinary sand as minor minerals.
• The Centre can notify any other mineral as minor, because the States do not decide this list.
• Under Section 15, States make the rules for minor mineral leases.
• The Ministry of Mines said in August 2026 that nearly 50 minor minerals sit wholly under State control.
• Examples are sand, gravel, clay, silica, granite, marble, gypsum and laterite.

What is royalty?

• A miner pays royalty at the rate in the Second Schedule of the Act. Section 9 sets this rule.
• The Schedule gives rates mineral by mineral, and apatite, for example, pays five per cent of the average sale price.
• So royalty is not always a fixed sum per tonne, because many minerals pay a percentage of their price.
• A mining lease is legal permission to mine a set area for a set time.

The answer depends on the mineral. It also changed several times between 2015 and 2025.

What changed in 2015?

• Before 2015, concessions were often granted at the officials’ discretion. The Ministry of Mines calls this “discretionary and non-transparent”.
• The MMDR Amendment Act, 2015 ended that, and auctions became the rule for major minerals.
• Now the best fair bid wins, so the process is open and the State earns an auction premium on top of royalty.
• Since 2015, 723 major mineral blocks have been auctioned across 17 States, says the Ministry in August 2026.
• Rajasthan leads with 140 blocks, while Madhya Pradesh has 127 and Odisha has 76.

So who runs which auction?

• States auction major minerals other than coal in their own area. Iron ore, bauxite and limestone are examples.
• The Centre auctions coal and lignite under Section 11A.
• Since the 2023 amendment, the Centre also auctions the minerals in Part D of the First Schedule. Section 11D says so.
• Part D lists 24 critical and strategic minerals. Lithium is one.
• The 2023 Act also cut the atomic minerals list in Part B from 12 items to 6. Lithium-bearing minerals left that list. They now sit in Part D, which the Centre auctions.
• The 2023 Act also created exploration licences, granted by the States.

How have captive mine rules moved?

• Captive mines feed the owner’s own plant, so they once could not sell freely.
• A 2021 amendment let them sell up to 50% of their yearly output in the open market, after meeting their plant’s need.
• The 2025 amendment removed that limit. Miners now sell after meeting their plant’s need, and they pay an extra amount set in the Act.
• The 2025 amendment also lets the Centre set up mineral exchanges.
• In October 2025 the Centre classed limestone as a major mineral.

Mining brings money. But the people near the mines bear the dust, the noise and the loss of land. The 2015 reform tried to share some money with them.

What is a District Mineral Foundation?

• Section 9B tells the State to set up a District Mineral Foundation (DMF) in every district affected by mining.
• A DMF is a non-profit trust.
• Its job is to work for people and areas hit by mining.
• Lease holders pay into it, and the amount is a percentage of the royalty they already pay.

How much do miners pay?

• For leases granted after 12 January 2015, the Act caps the DMF share at one-third of the royalty. The Centre fixes the actual percentage.
• For coal, lignite and sand for stowing, the Centre’s 2015 rules set 10% of royalty for leases granted on or after 12 January 2015.
• Older leases pay 30%.
• Do not confuse the cap with the rate. One-third is the ceiling. 10% and 30% are the notified rates.

Where does the money go?

• The money is spent under the Pradhan Mantri Khanij Kshetra Kalyan Yojana (PMKKKY).
• It goes to local needs like drinking water, health and schools.
• The Ministry of Mines says 656 DMFs now exist. Of these, 106 are in aspirational districts.

The 2018 UPSC question tested this map. So learn the states, not just the law.

Where is the gold?

• Karnataka is India’s main gold producer. The Indian Bureau of Mines says it made 99% of the gold in 2021-22.
• The rest came from Jharkhand.
• The Hutti mine in Raichur district still works. Hutti Gold Mines is the only public sector gold producer.
• The Kolar Gold Fields closed on 1 March 2001. Bharat Gold Mines Limited was shut under the Industrial Disputes Act.
• Andhra Pradesh has gold too. It holds 3.03% of India’s primary gold ore resources.
• Bharat Gold Mines once worked the Chigargunta reef in Chittoor and the Yeppamana mine in Anantapur. Both are in Andhra Pradesh.
• By resources, Bihar leads with 43%. Rajasthan has 24.92% and Karnataka 20%.

Where is the iron ore?

• Odisha made 136.67 million tonnes in 2021-22. That was 53.82% of the country’s output.
• Chhattisgarh came second with 16.27%. Karnataka had 15.88% and Jharkhand 9.74%.
• The remaining 4.29% came from Andhra Pradesh, Madhya Pradesh, Maharashtra and Rajasthan.
• Mine locations in Odisha include the Keonjhar and Sundargarh districts.
• NMDC runs the large Bailadila mines in Chhattisgarh.
• Haematite is the better ore, because of its higher grade. Odisha holds 39% of India’s haematite resources.
• Rajasthan’s iron ore listings include the Bhilwara district.

These are 2021-22 figures from the Indian Minerals Yearbook. Newer production figures exist, but this is the latest district-level source used here.

A miner pays royalty. Can a State also tax the same mineral land? For years the answer was unclear. The Supreme Court settled it in 2024.

What did the nine judges decide?

• On 25 July 2024 a nine-judge bench decided Mineral Area Development Authority v. Steel Authority of India. The vote was 8 to 1.
• Royalty is not a tax, because it is a contractual payment by the lessee to the lessor for mineral rights.
• Entry 50 of the State List gives States the power to tax mineral rights.
• But Entry 50 is “subject to any limitations imposed by Parliament by law relating to mineral development”.
• The court found the MMDR Act, as it stood, had imposed no such limit.
• Entry 49 lets States tax lands, including lands with mines and quarries, and the yield of the land can be the measure of the tax.
• Justice B.V. Nagarathna dissented. She held that royalty is in the nature of a tax.

What about the past dues?

• On 14 August 2024 the court ruled on dues from the past.
• States may demand the tax, but not for transactions before 1 April 2005.
• Payment is staggered in instalments over twelve years, starting 1 April 2026.
• Interest and penalty on demands for the period before 25 July 2024 stand waived for all assessees.

What is the exam trap?

• Students say “royalty is a tax”. The court said the opposite.
• Another trap is quoting Entry 50 for land. That land power sits in Entry 49. Mineral rights are Entry 50.

The Supreme Court said Parliament could limit State taxes on mineral rights. Parliament has now used that power.

What did Parliament pass?

• The MMDR Amendment Bill, 2026 passed the Lok Sabha on 12 August 2026. All India Radio reported that it passed without discussion amid opposition uproar.
• The Rajya Sabha took it up on 13 August 2026. The Ministry’s note of that date says both Houses had passed it.
• The President gave assent on 17 August 2026. It is Act No. 20 of 2026.
• The Act starts on a date the Centre will fix by Gazette notification. Check the Gazette for that date.

What does the Act do?

• Section 2 now covers “regulation of mines and mineral bearing lands”. Union control reaches the land too.
• A new definition, mineral bearing land, is added to Section 3.
• New Section 9D(1) bars States from imposing any tax, cess or levy on mineral rights or mineral bearing lands. This holds whether it is based on quantity, value or royalty.
• The only exception is a levy made under conditions the Centre prescribes.
• Section 13 gets a new power. The Centre can frame rules for those conditions.

What happens to past levies?

• Section 9D(2) covers levies not yet paid or recovered before the Act starts.
• These are “deemed to be invalid at all material times”. This applies despite any court judgment or order.
• Amounts already deposited or recovered are not refundable.
• Compare this with the 2024 order. That order let States collect dues in instalments from 1 April 2026.

Are minor minerals affected?

• No. The Ministry says nearly 50 minor minerals stay wholly under State control.
• The Act text amends only Sections 2, 3, 9D and 13.

The Centre says States will still get most of it. Here are the official figures from the Ministry’s note of 18 August 2026. These are the Centre’s claims, so read them as such.

What do the coal numbers show?

• States got Rs 11,947.97 crore from coal in 2014-15. That was 55.6% of the total.
• In 2025-26 they got Rs 32,183.09 crore, or 89.5%.
• The Centre’s share fell from 22.97% to 10.5% over the same years.

What about other major minerals?

• Major mineral States got Rs 13,586.16 crore in 2013-14.
• That rose to Rs 82,366.19 crore in 2025-26.
• The Ministry says nearly 90% of mining revenue now goes to States.
• Since 2015, States have collected Rs 2.32 lakh crore as royalty from 1,200 working mines.
• From about 100 auctioned mines, they have collected Rs 96,000 crore as auction premium.

Why does the Centre want limits?

• The Ministry says States impose around 14 taxes, charges and fees on mining.
• Some States tax mineral-bearing land at rates as high as 20 percent.
• It argues that high levies raise costs for steel, cement and power. It also says they push industry towards imports.
• The 2024 judgment had recognised the States’ power to tax mineral rights and land. The 2026 Act now limits that power.

The Civil Services Preliminary Examination 2018 (General Studies Paper I, Series A, Q27) asked this question:

“Consider the following statements:”

1. “In India, State Governments do not have the power to auction non-coal mines.” 2. “Andhra Pradesh and Jharkhand do not have gold mines.” 3. “Rajasthan has iron ore mines.”

“Which of the statements given above is/are correct?”

The options were:

• (a) “1 and 2”
• (b) “2 only”
• (c) “1 and 3”
• (d) “3 only”

The answer is (d) 3 only.

How do you check each statement?

• Statement 1 is wrong. States auction non-coal major minerals in their area. Section 10B and the 2015 Act say so.
• Statement 2 is wrong. Andhra Pradesh has gold resources. Jharkhand produced the rest of India’s gold in 2021-22.
• Statement 3 is right. Rajasthan has iron ore mines, listed in the Indian Minerals Yearbook.

What should you take away?

• Coal and lignite go to the Centre. Other major minerals go to the States.
• Kolar is closed. Hutti is the main working gold mine.
• Remember the 2024 ruling: royalty is no tax, land tax falls under Entry 49, and Entry 50 covers mineral rights.