The government has introduced the Mines and Minerals (Development and Regulation) Amendment Bill, 2021 in Lok Sabha in order to renew the auction process for minerals and coal mining rights.
The amendment will allow miners of both coal and other minerals to sell up to 50 per cent of produced coal after meeting the requirements of the end-use and paying additional royalty to the state government.
Mining firms are currently allowed only to use coal and minerals extracted from captive mines for their own industrial use.
The new provisions will allow miners to increase output from captive mines as they can sell additional output in excess of their own requirements.
The amendment also aims to provide additional royalty payments to states for the extension of mining leases for Central Public Sector Enterprises.
The state governments may object to the new royalty to be paid by CPSEs for such extensions because it will reduce the revenue that may be obtained through transparent auction process.
The bill gives power to the central government to conduct auctions or re-auction for granting mining lease if a state government does not do complete the auction process in a specified period.
Industry may welcome the new move as it may likely lead to greater transparency in the auction process in comparison to the bidding process.
The amendment may face legal challenges particularly from state government where the ruling party of centre is not in the power as states may lose revenue.