Overview of the MMDR Act, 1957 and Amendments
The MMDR Act of 1957 is the main rulebook for all mining in India, controlling how we look for minerals, how long companies can mine, and how the overall business is run. Because the government wants more clarity, environmentally friendly mining, and more private money invested, they have amended this law several times, most importantly in 2015, 2021, 2023, and 2025.
The big changes in 2025 focus on making sure India has enough essential minerals (like the ones used in batteries and high-tech devices, such as Lithium and Gold). These changes include letting companies mine extra essential minerals on their current land, allowing big companies with their ‘captive’ mines (mines they own for their own factory) to sell all of their leftover minerals instead of just a little, and setting up online marketplaces (Mineral Exchanges) to make mineral selling prices fair and clear. This entire push is part of a plan to help India find and use its own high-tech minerals so it doesn’t have to buy as many from other countries.
The recent amendments mark a significant shift, facilitating private participation in critical and atomic minerals and streamlining the resource allocation process.
Fundamental Provisions and Recent Declarations
| Section | Provision Title | Key Definition/Impact | Recent Changes (2021–2024) |
| 2 | Declaration of Regulation | Central Government can declare minerals/mining as a regulated activity. | 2023 Amendment: De-reserved 6 Atomic Minerals (Lithium, Beryllium, Niobium, Tantalum, Titanium, Zirconium) from the “atomic” category, opening them for private sector mining via competitive auction. |
| 3 | Key Definitions | Defines Major and Minor Minerals, and introduces terms like Composite Licence (CL) and Critical Minerals. | First Schedule: Lists 34 Major Minerals. Seventh Schedule (New in 2023): Added 24 Critical and Strategic Minerals (like Rare Earth Elements, Cobalt, and Graphite), which must be allocated only through auction. |
| 4 | Prohibition Without Licence | Mandates that no person can undertake mining operations without a valid lease or licence. | Penalty: Imprisonment up to 5 years and fine up to ₹5 lakh per hectare for violations. |
| Section 4A | Premature Termination | Allows termination of a lease if the lessee fails to begin operations within two years or discontinues mining for two consecutive years. | Impact: This clause (introduced in 2015) ensured that inactive leases are cancelled, promoting productive use of mineral blocks. |
Concession Allocation, Duration, and Revenue
1. Duration and Lapse of Leases
| Section | Provision | Details | Changes (2021–2024) |
| 8 | Duration of Lease | The lease period is 50 years for both private and government companies (increased from 30 years). | Auto-renewal was removed post-2015, ensuring all leases are granted through fresh, competitive auctions upon expiry. |
| 8A | Lapse of Leases | Leases where execution or production was pending lapse automatically by a specified deadline. | 2021 Amendment: Extended the lapse deadline for certain captive non-coal leases to March 31, 2035. |
2. Allocation Method (Auctioning)
| Section | Provision | Details | Recent Changes (2021–2024) |
| 11 | Auction-Based Allocation | All mining leases and composite licences must be granted through competitive bidding. | Fourth Schedule: Governs auction rules. 2023 Amendment: Allows Private Exploration Agencies (NPEAs) to auction blocks they have explored, boosting private sector engagement in resource discovery. |
| 10 | Composite Licence (CL) | Replaced the two-stage Prospecting Licence-cum-Mining Lease (PL-cum-ML). | The CL simplifies the transition from exploration to mining, improving ease of doing business. |
| 11B | Auction for Critical Minerals | Allows the Central Government to conduct auctions for critical minerals in areas of national interest. | This led to the successful auction of Lithium blocks in J&K and Chhattisgarh (2023-2024). Seventh Schedule lists these critical minerals. |
3. Special Provisions
- Section 8B (New in 2023): Introduced special provisions for Critical Minerals, allowing 100% FDI and transferability of mining and composite licences, specifically designed to attract global technology and capital.
- Section 12 (Reservation): The government may reserve specific areas for Public Sector Undertakings (PSUs). The 2023 amendment allows up to 50% reservation for critical minerals to maintain strategic control over these resources.
- Section 10A (Saving of Existing Rights): Protected the rights of existing reconnaissance or prospecting licence holders till December 31, 2025 (extended by the 2023 amendment).
Revenue, Social Welfare, and Governance
| Section | Provision Title | Purpose and Calculation | Recent Rules and Amendments |
| 9 | Royalty Calculation | Levies royalty on all minerals extracted, as listed in the Second Schedule. | Second Schedule & 2023 Amendment: Fixed royalty for critical minerals like Lithium and Niobium at 3% of the average sale price (replacing the earlier 12% of LME formula). Glauconite and Potash fixed at 2.5%. |
| 9C | District Mineral Foundation (DMF) | Mandated collection of funds for local area development in mining-affected districts. | Contribution Rates: 10% of royalty (pre-2015 leases) and 30% of royalty (post-2015 auctioned leases). Result: Accumulated over ₹2.5 lakh crore by 2024 for local welfare. |
| 9D | National Mineral Exploration Trust (NMET) | Funds established (up to 2% of royalty) to promote systematic mineral exploration. | NMET remains central to boosting resource discovery and reducing reliance on imports. |
| 13 | Rule-Making Powers | Empowers the Central Government to frame rules for effective implementation. | MMDR Rules 2024 (Feb 2024): Introduced a Block Rating Template for transparency in auctions and the e-Rav Model for efficient regulation of minor minerals. |
Enforcement and Conclusion
- Section 20A (Curbing Illegal Mining): Authorizes District Mining Officers or Station House Officers to stop illegal mining. Penalty: Fine up to ₹10 lakh and imprisonment up to 5 years.
- Section 23A (Cognizance of Offences): Courts can take cognizance only on a complaint filed by an authorized officer, ensuring procedural control (Revised in 2023).
- Eleventh Schedule (Compensation): Provides ₹50,000 compensation per affected family along with employment or rehabilitation benefits (Added in 2015).
- Twelfth Schedule (Legacy Cases): Introduced a one-time settlement mechanism for violations or pending cases predating 2009 (Added in 2021), ensuring legal closure and promoting operational continuity.
The MMDR Act has successfully transformed into a transparent, technology-driven, and investment-friendly legal framework. The 2021 and 2023 amendments are critical in aligning India’s mineral sector with global best practices, supporting the goals of the National Mineral Policy 2019 and the Atmanirbhar Bharat (Self-Reliant India) vision.
The MMDR Act, 1957 – Reforms (2021–2025) and Judicial Rulings
The Mines and Minerals (Development and Regulation) Act, 1957 (MMDR Act), forms the legal backbone of India’s mining sector. Driven by the National Mineral Policy 2019 and the Atmanirbhar Bharat vision, transformative amendments in 2021 and 2023 focused on transparency, investment, and strategic resource security.
Legislative Reforms (2021–2024) – Key Provisions
The reforms successfully shifted the sector toward a competitive, investment-friendly framework:
| Area of Reform | Key Provision | Primary Impact |
| Allocation & Transparency | Expanded Auction Mandate: Mandatory auctions for all Mining Leases (MLs) and Composite Licences (CLs); removed distinction between captive and merchant mines. | Enhanced Revenue: Reduced administrative discretion and increased state revenue through competitive bidding. |
| Strategic Minerals | Critical & Atomic Boost (2023): Introduced auctions for 24 Critical Minerals and de-reserved 6 Atomic Minerals (e.g., Lithium, Titanium) for private sector mining. | Resource Security: Prioritized domestic supply chains for key components (EVs, renewables). |
| Exploration & Licensing | New Framework: Introduced the Composite Licence (CL) and the Exploration Licence (EL) for critical minerals. Allowed Private Exploration Agencies (NPEAs) to auction blocks. | Ease of Business: Simplified the prospecting-to-mining transition; incentivized private exploration. |
| Investment & Duration | Incentives: Extended all lease durations to 50 years; allowed 100% FDI and transferability for critical mineral concessions (Sec. 8B). | Attracted Capital: Facilitated M&A activity and long-term investment. |
| Fiscal Policy | Royalty Rationalization: Slashed royalty rates for critical minerals (e.g., Lithium royalty reduced to 3%). Maintained mandatory DMF (30% of royalty for auctioned leases) and NMET contributions. | Pricing Advantage: Lowered operational costs for strategic minerals. |
Judicial Interpretation – Supreme Court Landmark Rulings
The Supreme Court played a crucial role in harmonizing these economic reforms with India’s constitutional federal structure, notably concerning states’ fiscal powers and procedural safeguards.
| Case Name & Citation | Date | Key Holding & Impact | Reforms Linkage |
| MADA v. SAIL (9-judge bench) | July 25, 2024 | Royalty is NOT a Tax: Declared that royalty (Sec. 9) is a contractual payment, overturning the 1989 India Cements precedent. Affirmed states’ exclusive power to levy additional taxes/cess on mineral-bearing lands (State List, Entry 50). | Expanded State Fiscal Autonomy: Enabled mineral-rich states to claim estimated ₹1–2 lakh crore retrospectively (from April 1, 2005). Follow-up order allowed recovery in staggered instalments, easing industry impact. |
| Indian Charge Chrome Ltd. | Nov 29, 2021 | Illegal Mining Procedure: Mandated that MMDR special courts require prior magistrate commitment (CrPC Sec. 209) before prosecuting illegal mining offences (Sec. 22). | Procedural Safeguard: Reinforced procedural rigour in enforcement, curbing arbitrary prosecutions post-2015/2021 amendments. |
| State of Rajasthan v. Sharwan Kumar Kumawat | Aug 1, 2023 | No Fundamental Right to Mining: Held that states must strictly adhere to auction mandates and public interest norms for mineral concessions. | Validated Auction Mandate: Rejected claims seeking to bypass the competitive bidding framework introduced by the 2015/2021 amendments. |
| Kirloskar Ferrous Industries Ltd. v. UOI | Nov 2024 (Directive) | Royalty-on-Royalty: Directed the Centre to amend the royalty calculation formula (Sec. 9) to eliminate the cascading effect of “royalty-on-royalty” under the 2016 MCR Rules. | Fiscal Rationalization: Targeted a technical flaw in the existing royalty calculation, promoting fairer pricing for extracted minerals. |
Conclusion – Strategic Modernization of India’s Mining Sector
The MMDR Act, 1957, has undergone a profound transformation through decisive amendments in 2021, 2023, and 2025, successfully reshaping India’s mining sector. This legislative drive replaced discretion with mandatory competitive auctions, streamlined the resource allocation process, and critically, prioritized national security by actively promoting the domestic exploration and mining of Critical and Atomic Minerals. Complemented by landmark Supreme Court rulings—which validated the auction mandate and significantly enhanced state fiscal autonomy (as seen in the MADA v. SAIL case)—the Act now stands as a robust, transparent, and investment-friendly framework. It effectively attracts global capital, ensures social welfare through the DMF, and firmly aligns India’s mineral resource governance with the strategic objectives of the Atmanirbhar Bharat vision and the global clean energy transition.
