Why are States divided over the mining amendment?

For representative purposes | Photo Credit: Getty Images

In a federal country like India, differences between the Centre and the States over certain issues are not unusual. One such instance recently arose over the Mines and Minerals (Development and Regulation) Amendment Act, 2026, passed by Parliament.

Under the amended Act, the Centre’s regulatory powers over mining have been expanded to cover not only mines and mineral development but also mineral-bearing lands. It bars States from imposing fresh taxes on mineral rights and mineral-bearing lands, except under conditions prescribed by the Union government. It also cancels mineral taxes imposed by States but not fully collected before the Act came into force.

Mines and minerals are a subject over which legislative powers are divided between the Centre and the States. State governments are empowered to regulate mines and minerals under entry 23 of the State List, but this power is subject to central legislation as per entry 54 of the Union List. The latter entry gives Parliament the discretion to determine the extent of authority over mining regulation and development in the public interest. The Constitution also gives States powers to tax mineral rights and land through entries 50 and 49 of the State List. The recent amendment draws on the Centre’s regulatory authority over mineral development to place new limits on these State-level taxing powers. So, the issue widens from mining regulation to the fiscal autonomy of mineral-rich States.

The amended provisions contradict the constitutional position articulated by the Supreme Court in 2024. The court held that States can tax mineral rights, subject to Parliament’s power to limit this in the public interest, while their power to tax mineral-bearing land cannot be curtailed through Parliament’s powers under Entry 54. The Centre has argued that uneven and multiple State-level taxes raise the cost of domestic minerals, prompting industries to turn to imports and placing an additional burden on the exchequer. By invalidating unrecovered past dues, the law hits at the potential source of revenue for States, narrowing the prospective mineral-related revenue for some of the major mineral-bearing States.