A contentious amendment to India’s mining law has ignited a constitutional dispute, pitting the Centre’s effort to standardise levies against mineral-rich states’ demands to retain fiscal control, threatening to reshape the future of mining policy.
The dispute over India’s new mining tax law has turned into a broader fight about federal power, state revenue and the future of mining policy. In Odisha, the issue has paralysed the state assembly for four days, with Opposition lawmakers from the BJD and Congress wearing black scarves and demanding that the amended mines law be scrapped. Their argument is simple: the legislation, they say, strips mineral-rich states of a major source of income at a time when mining still underpins local finances and industrial activity.
Parliament passed the Mines and Minerals (Development and Regulation) Amendment Act, 2026, in August, and the law is designed to create a uniform national framework for levies on major minerals and mineral-bearing land. According to legal explainers published by SCC Online and other specialist outlets, the amendment limits state governments’ ability to impose taxes, cesses and similar charges on mineral rights unless they fall within conditions set by the Centre. It also reaches beyond future taxes by wiping out unpaid or unrecovered dues linked to such levies before the law takes effect, while protecting payments already collected from refund claims.
That retrospective element is what has fuelled most of the anger. The law effectively undercuts the financial gains states expected from a landmark Supreme Court ruling in July 2024, which affirmed that states could tax mineral rights and mineral-bearing lands and allowed them to recover large back payments over time. The 2024 judgment had overturned the long-standing India Cement precedent, which had treated royalty as a tax and restricted states’ taxing power. By contrast, the new statute restores central control over much of the fiscal framework and removes a large chunk of the arrears that states had hoped to collect.
The stakes are especially high in Odisha and Jharkhand. The Indian Express reported that mineral and petroleum receipts made up 23 per cent of Odisha’s own revenue in 2024-25 and 13 per cent in Jharkhand, far above the national average for states. Jharkhand Chief Minister Hemant Soren has said mining revenue accounts for most of the state’s own non-tax income, while the BJD has warned that Odisha could lose about Rs 12,000 crore a year and forfeit arrears worth roughly Rs 1 lakh crore. Analysts quoted by The Indian Express and other reports say the potential exposure across the sector could reach about Rs 2 lakh crore.
The Centre, however, argues that the law is meant to curb overlapping and excessive levies rather than to deprive states of all revenue. A senior Mines Ministry official said there are already around 14 charges in the sector and that the goal is to prevent the total burden from rising beyond a reasonable ceiling, which would be set only after consultation with states. Mining industry experts have also said a more predictable tax structure could help companies plan investment and keep input costs from rising, even as they acknowledge that mineral-rich states face a real fiscal shock. The result is a sharp clash between two policy aims: greater certainty for investors on one side, and the preservation of state autonomy and revenue on the other.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
