Mining is one of the core sectors of the Indian economy and is a lifeline for many industries, which thrive on raw materials. The mining sector’s contribution to the country’s GDP has come down from 3% to 2.2% in the last 5 years. In 2017- 18, the value of domestic production of all major minerals (excluding coal, lignite and minor minerals) was `58,638 crores, while the import value of vital minerals and metals, at `4.34 trillion, almost seven times higher than domestic production, aggravated the current account deficit. The Index of Industrial Production (IIP) of the mining sector has slipped to 3.2% from 5.8% in May 2018.
The mining sector is encountering pressing issues such as depleted output, squeezed margins, high taxation, lack of green clearances, and poor investment in fresh exploration. The sector is also besieged with other issues such as delays in operationalizing mines. It needs to widen the exploration basket through increased reconnaissance and prospecting operations, and requires infusion of funds to achieve this.
Thriving competitiveness and growth in the Indian mining sector is an imperative for the survival and success of not only this industry but the economy as a whole.
CII offers the following suggestions for boosting India’s mining sector.
1. Boosting exploration and addressing auction-related issues
2. Immediate action on mining leases expiring in 2020
3. Processes and Clearances
– eliminating non-value adding stages
– specifying the time limit for each stage
– drastic simplification for diversion of open forests, preferably with provision for ‘deemed approval’ at the end of 180 days.
4. Rationalize levies
Provide incentives for processing by applying a lower rate or charging royalty on the cost of extraction before processing.