India total land area 3.2875 million sq. km out of which, GSI has identified 0.571 million sq. km. as Obvious Geological Potential (OGP) area for minerals.

Obvious Geological Potential (OGP) Area
Mineral Area (sq. km.)
Gold 1,02,809
Diamond and Precious Stones 3,00,000
Base Metals 1,81,150
Platinum Group of Elements 8,130
Iron ore 5,135
Manganese ore 4,600
Chromite 2,690
Manganese 6,000
Tin and Tungsten 1,300
Bauxite 32,520

India has a liberalized FDI up to 100% in mining under automatic route

Transferability of captive leases, allowed by recent amendment in MMDR Act in 2016.

  • Ease of doing business
    • Mineral concessions (Mining Lease & Prospecting License cum Mining Lease) grant to be done through auctions for the companies interested in mining or for the raw material for their downstream industry
    • An Inter-Ministerial Group facilitator constituted for expediting the clearances and approvals
    • Exploration companies can venture into the revenue share model being formulated for exploration of blocks identified by GSI. This has been enabled by the National Mineral Exploration Policy, 2016 announced in July 2016. About 100 blocks have already been identified by GSI for auctioning
  • India has vast mineral potential with mining leases granted for longer and stable tenure of 50 years
  • The demand for various metals and minerals will grow substantially over the next 15 years
  • India’s strategic location enables convenient exports
  • India’s per capita steel consumption is four times lower than the global average

India produces as many as 88 minerals which include 4 fuels minerals, 3 atomic minerals, 26 metallic & non-metallic minerals and 55 minor minerals (including building and other materials).


Mineral India’s Production India’s rank India’s Reserves India’s Rank
Iron Ore 6 % 4th 4 % 6th
Manganese 5 % 6th 8 % 5th
Bauxite 5 % 6th 3 % 8th
Chromite 14 % 3rd 12 % 3rd
Barytes 19 % 2nd 13 % 2nd
Zinc 6 % 6th 5 % 5th
Talc 15 % 2nd 8% 6th


FDI upto 100% under automatic route is allowed in:

  • Mining and Exploration of metal and non-metal ores including diamond, gold, silver and precious ores but excluding titanium bearing minerals and its ores; subject to the Mines and Minerals (Development & Regulation) Act, 1957.
  • Coal & Lignite
    • Coal & Lignite mining for captive consumption by power projects, iron & steel and cement units and other eligible activities permitted under and subject to the provisions of Coal Mines (Nationalization) Act, 1973
    • Setting up coal processing plants like washeries subject to the condition that the company shall not do coal mining and shall not sell washed coal or sized coal from its coal processing plants in the open market and shall supply the washed or sized coal to those parties who are supplying raw coal to coal processing plants for washing or sizing

FDI upto 100% under Government route is allowed in:

  • Mining and mineral separation of titanium bearing minerals and ores, its value addition and integrated activities subject to sectoral regulations and the Mines and Minerals (Development and Regulation Act 1957).


  • The MMDR Act, which governs the mineral sector, has been amended recently by the Government. The amendment removed discretion by instituting auction to be sole method of grant of major mineral concessions, thereby bringing in greater transparency. It also provided the much-needed impetus to the mining sector by deemed extension of mining leases.
  • The Salient features of the recent amendments are:
    • Mineral Concessions Grant Through Auctions to bring transparency and remove discretion
    • DMF: District Mineral Foundation (DMF) to address the long time grievance of the people affected by mining and in turn improve the image of the mining sector
    • NMET: National Mineral Exploration Trust (NMET) for incentivizing regional and detailed exploration to fill the gaps in exploration in the country
    • Mining Leases given for 50 years and extension of existing leases, eliminating any renewals for security of tenure
    • To promote conducive environment for trade, stronger penal provisions for checking illegal mining with higher penalties up to USD 7692.30 per hectare of the area and jail term up to 5 years
  • National Mineral Exploration policy, 2016 announced in July, 2016. About 100 blocks have been identified by GSI for auctioning on revenue sharing mechanism for regional exploration to encourage private participation in exploration. The bidders would be protected by way of entitlement for a normative cost in the event unsuccessful outcome after exploration. The mechanism is being formulated in consultation with the stakeholders.


Key Provisions of the Union Budget 2015-2016:

  • The export duty on Iron ore finds with Fe content below 58% has been reduced from 10% to nil
  • Iron ore lumps with Fe content below 58% reduced from 30% to nil
  • Export duty on Bauxite has been reduced from 20% to Nil
  • Custom Duty on Primary Aluminium increased from 5% to 7.5%
  • Other Aluminium Product import duty increased from 5% to 7.5%
  • Bauxite export duty reduced from 20% to 10%
  • Zinc alloys import duty increased from 5% to 7.5%
  • In addition to the above, with respect to Chromium ores, concentrate export duty has been reduced from 30% to nil
  • Basic Customs Duty (BCD) on steel grade limestone and steel grade dolomite is being reduced from 5% to 2.5%
  • The variation level and the parameter of measurement with respect to re-import of cut and polished diamonds after certification/grading from a foreign laboratory/agency are being increased as a trade facilitation measure
  • Under the existing provisions of Section 35 AD of the Act, an investment-linked tax incentive is available by way of allowing deduction of the whole of any expenditure of capital nature (other than expenditure on land, goodwill and financial investment) incurred wholly and exclusively for purpose of the “specified business” during the previous year in which such expenditure was incurred
  • In order to promote investment in new sectors, few more businesses have been added under the above section. Those related to the mining sector are:
    • Laying and operating a slurry pipeline for the transportation of iron ore
    • The above business shall begin operations on or after 01.04.2014. It also has the condition of lock-in period of 8 years for use of assets

Fiscal Incentives:

  • One-tenth of the expenditure on prospecting, extraction and production of certain minerals during five years ending with the first year of commercial production is allowed as a deduction from the total income
  • Export profits from specified minerals and ores are eligible for certain concessions
  • Minerals in their finished form are exempt from excise duty
  • There is low customs duty on capital equipment used for minerals on nickel, tin, pig iron and unwrought aluminium
  • Capital goods imported for mining under the Export Promotion Capital Goods (EPCG) scheme qualify for concessional customs duty subject to certain export obligations.

State Incentives:

  • Each state in India offers additional incentives for industrial projects, related to specific sector. Incentives have been provided in areas such as subsidised land cost, the relaxation of stamp duty on the sale or lease of land, power tariff incentives, a concessional rate of interest on loans, investment subsidies and tax incentives, backward areas subsidies and special incentive packages for mega projects.