Union Budget 2025: Mining sector reforms key to drive growth, sustainability and self-reliance

India’s mining sector is an integral engine of the nation’s economic growth. The sector is a major contributor to the gross domestic product, employs many lakhs of individuals, and acts as a catalyst for growth in other vital industries (power, steel and cement being just a few) that are, in turn, critical for overall economic growth. As appositely articulated in India’s National Mineral Policy, 2019 (NMP): “[m]inerals are a valuable natural resource being the vital raw material for the core sectors of the economy. Exploration, extraction and management of minerals have to be guided by national goals and perspectives, to be integrated into the overall strategy of the country’s economic development.”

After a period of legal and regulatory uncertainty that negatively impacted growth and mood in the mining sector, the sector has grown from strength to strength since the ushering in of the auction regime in 2015. Hundreds of blocks across states and minerals having been auctioned so far, with the legal and regulatory framework consistently evolving and responding to needs and demands of the industry. Indeed, the Centre aims to double the production of important minerals in coming years, with a view to reducing import dependency. In this regard, with the upcoming budget 2025, the Centre’s focus on critical minerals (and the new regime to auction mineral concessions) is welcome from the perspective of increasing mining of sustainable minerals that are vital to ushering in the green transition and national security.

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Now, as the dispensation matures and evolves, it is time to consider various interventions in order to sustain and energise growth. In particular, unincorporated consortiums may be expressly permitted to participate in auctions in order to enable synergistic partnerships amongst players and to get access to new or improved technologies that would ensure complementarity of respective strengths and capabilities. As well, a more conducive regime for allowing foreign companies to more readily participate in auctions may be in order.

Another area that merits active consideration is enhancing and sustaining monetary support schemes for mineral exploration (in tandem with and to complement the new exploration licence regime for identified critical minerals), given that India remains relatively under-explored, and with recent years having witnessed a downtick in private participation. For example, zinc production, while amongst the largest in the world, needs to be significantly ramped up to meet demand and to sustain energy transition.

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Moreover, exploration and mining of rare earth resources in India, which are reported to be the fifth largest in the world, should be prioritised, possibly by through a dedicated agency (or suitably equipping, by means of adequate budgetary grants, existing agencies such as IREL). This assumes significance given renewed focus on SMRs and the US Government’s recent announcement to delist certain Indian entities from the sanction list.

Recent years have seen a number of amendments to the mineral laws, reflecting a regulatory intent to speedily and responsively address issues as and when they are encountered. A similar level of engagement should continue. To this end, the introduction and passage of the new mineral law amendment bill may be fast-tracked in this budget, particularly having regard to the long-gestating issue of mining deep-seated minerals in contiguous blocks by existing lessees. The effort may also be dove-tailed into a larger exercise aimed at overhauling the mining laws into a comprehensive mining law code that covers issues such as ownership of mineral resources, land and right-of-way acquisition, freedom to choose blocks, and relaxation of area limits.

Considering the abundant wealth of mineral resources in India, the mining sector has enormous economic potential and has potential to play a crucial role in realising India’s trillion dollar economic ambitions a reality, both in terms of its own economic output and also in responding to the demands of other allied/ dependent industries. The sector’s employment generation prospects, across skilled, semi-skilled and unskilled levels, will assume special significance in light of India’s growing population. As the economy expands and as the demand for mineral resources grows, the challenge of balancing economic growth with environmental sustainability will be ever more pressing. It is imperative that India charts the course of its economic development and mineral exploitation in a manner that is responsive to the dire and pressing demands for climate action, both present and future.

Vishnu Sudarsan and Kartikeya GS, Partners at JSA Advocates & Solicitors. Views expressed in the above piece are personal and solely those of the author. They do not necessarily reflect Firstpost’s views.