Federal row: Why are states unhappy with Mines and Minerals Amendment Bill?

The Parliament on Thursday (August 13) passed the Mines and Minerals (Development and Regulation) Amendment Bill, 2026, which seeks to change the way mineral rights and mineral-bearing lands are taxed. The Bill, passed by both Houses, is now waiting for the President’s assent to become law.

What is the MMDR Amendment Bill, 2026?

The Bill amends the Mines and Minerals (Development and Regulation) Act, 1957, to restrict states from imposing additional, retrospective or unpredictable taxes and cesses on mineral rights and mineral-bearing lands.

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The Centre says the move is aimed at creating a more uniform fiscal framework for the mining sector, reducing uncertainty for investors and strengthening the supply of critical minerals.

Why has the Centre brought the Bill?

The government argues that mining companies currently face multiple taxes, cesses and levies at different stages, from extraction to the dispatch of minerals, leading to heavy tax burden on the companies. It says varying tax rates across states create uncertainty and increase the cost of mining.

The Centre says a predictable and uniform tax regime will help attract domestic and foreign investment, particularly in critical minerals such as lithium, copper and cobalt.

What does the Bill seek to change?

The key change is to limit the power of state governments to impose additional taxes or cesses on mineral rights and mineral-bearing lands.

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The move comes after a July 2024 Supreme Court ruling that held that states have the power to tax mineral rights. The Bill seeks to alter the legal framework following that judgment and prevent states from imposing such additional levies.

Why are mineral-rich states protesting?

Odisha, Jharkhand and Chhattisgarh are expected to be among the worst affected because of their large mineral reserves and dependence on mining revenue.

States argue that the Bill takes away an important source of their revenue and undermines their constitutional powers over natural resources.

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The biggest concern is over past dues. Following the 2024 Supreme Court ruling, mineral-rich states had been preparing to recover retrospective levies from mining companies. The Bill could prevent states from collecting an estimated Rs 1.5 lakh crore to Rs 2 lakh crore in such arrears.

What are the states saying?

Kerala has argued that the Bill violates the Constitution's federal principles by ‘encroaching’ on states’ rights over mineral resources.

CPI(M) leader Pinarayi Vijayan said the move would weaken the public sector and benefit private corporations by opening up strategic mineral resources to private mining. He also pointed to Entry 18 of the State List, which covers land, and argued that greater central control over mineral-bearing land undermines the states’ constitutional powers.

In Odisha, the Biju Janata Dal said the state would suffer significant revenue losses. The party argued that mineral resources belong to the people of the state and that revenues generated from them should be used for their welfare.

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Jharkhand Chief Minister Hemant Soren has also opposed the restrictions, saying they could significantly reduce the state’s fiscal space and its ability to meet the social and environmental costs of mining.

In a letter to Prime Minister Narendra Modi, Soren said mining revenue accounted for 84.9 per cent of Jharkhand’s own non-tax revenue in 2024-25, according to the State Economic Survey for 2025-26.

How is the Centre defending the Bill?

Mines Minister G Kishan Reddy has rejected the argument that the legislation undermines states’ financial or constitutional rights. He said the objective was to ensure uniformity and predictability in mineral taxation.

Reddy said the Centre would regulate major minerals such as coal, limestone, iron ore, copper and manganese, while states would continue to exercise powers over 49 minor minerals.

He also argued that states continue to receive the bulk of mineral revenue. According to him, the states’ share of mineral revenue has risen from 65 per cent in 2014-15 to 85 per cent currently, while their share of coal revenue has increased from 51 per cent to 96 per cent.

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Reddy said the Centre receives only around 11 per cent of mineral revenue, with about 88 per cent going to states, and maintained that no state would lose revenue because of the amendment.

What is the constitutional argument?

The Centre has invoked Entry 54 of the Union List, which gives Parliament the power to regulate mines and mineral development in the public interest.

States, however, point to Entry 18 of the State List, which covers land, and argue that mineral-bearing land falls within their constitutional domain.