Why India wants to rein in state mining taxes — and why mineral-rich states are worried

India’s government has said inconsistent state-level taxes on mineral rights and mineral-bearing land raise domestic costs and fragment the national market, according to a Reuters report.The comments came a day after Parliament passed legislation restricting states from imposing new mining-related levies, despite opposition from mineral-rich states.The Centre said unchecked and differing state taxes could make Indian minerals less competitive and increase the country’s reliance on imports.Parliament on Thursday passed the Mines and Minerals (Development and Regulation) Amendment Bill, which bars state governments from imposing new taxes, cesses or other levies on mineral rights and mineral-bearing land except under conditions permitted by the central government.The legislation has drawn opposition from mineral-rich states, which argue that the restrictions could weaken an important source of revenue.Jharkhand raises concerns over mining revenueJharkhand Chief Minister Hemant Soren late Thursday urged Prime Minister Narendra Modi to reconsider the legislation.In a letter posted on X, Soren said mining revenue accounted for 84.9% of Jharkhand’s non-tax revenue in fiscal year 2024-25 and warned that any significant reduction in such receipts could directly affect the state’s ability to fund development, welfare and social-security programmes.The Centre, however, said the legislation does not curtail states’ rights over land, minerals or mineral taxation.It said states would continue to receive about 90% of mining-related taxes and payments.Centre says differing state taxes raise costsAccording to the Reuters report, the government’s case for restricting additional state levies rests partly on concerns that a patchwork of taxes across mineral-producing states could raise costs for domestic industries.Differing levies could make domestically produced minerals less competitive and potentially encourage imports, according to the government.The disagreement consequently pits the Centre’s argument for a more uniform national framework against concerns among mineral-rich states about protecting their ability to raise revenue from natural resources.

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