Mines and Minerals Sector in India and Its Regulatory Regime

Abstract

India is a country endowed with rich mineral resources, producing as many as 87 mineral commodities (including energy-producing minerals). The country is self-sufficient in bauxite, chromite, iron and manganese ores, ilmenite, rutile, coal (except coking coal) and lignite, and almost all industrial minerals. Along with barite and limestone, these are among the ten largest mineral reserves of the world. The structure of the Indian M & M sector has evolved considerably in the last two and half decades, since the liberalization of the economy and opening up of the sector to private domestic and foreign investment. The mineral commodities are thus extracted through large and small mines, which belong to either public or private sector enterprises. There is also a large informal sector of artisanal and small-scale mining (ASM), whose status remains rather ambiguous in the present regulatory regime. ASM operations need to be regularized by the government, acknowledging their livelihood and poverty alleviation potential. Mining, thus, is an important sector in Indian economy and contributed about 2.6% to the GDP in 2011. Since then the sector is, however, in a negative growth path with a substantial reduction in the number of operating mines. Various reasons have been ascribed to this decline. They include: regulatory issues, environmental activism and court cases, social unrest due to land acquisition problems and displacement, and Naxalite violence along the “Red corridor” in east-central India. The M & M sector is currently struggling to recover its earlier growth rate by streamlining regulatory and administrative procedures, developing the required infrastructure and taking care of the issues of sustainability. The framework of various regulatory provisions and policies governing this sector need to be understood to appreciate the issues in this regard. The 7th schedule of the Constitution includes Article 246 which categorizes the Union, State and Concurrent lists of responsibilities under which regulations of mines and mineral development fall. Thus, the proprietary control of onshore mineral resources is with the state government while the regulatory powers are with the central government. All mining activities in the country are controlled by the National Mineral Policy while the basic laws governing the mining sector come under the purview of the Mines & Minerals Development and Regulations (MMDR) Act. The other Acts concerned with mining are: Environment Protection Act, Environmental Impact Assessment Act, Forest Conservation Act, Land Acquisition, and related Acts and Panchayats Act (PESA). The regulatory regime is thus quite wide and complex, with duality of control exercised by the state and central governments. This consequently leads to divided accountability and poor implementation of the laws. The marine mineral resources are exploited keeping the “UN convention on the Law of the Sea” (UNCLOS) in view. It divides the sea into three parts: the territorial sea, the exclusive economic zone (EEZ), and the international area of the seabed. The coastal nations have exclusive rights to exploit marine resources up to their respective EEZs.