Discuss how the MMDR Amendment Bill, 2026 recalibrates the Union-State balance of power over mineral taxation. Does it undermine fiscal federalism?

In Mineral Area Development Authority v. Steel Authority of India (2024), a nine-judge Supreme Court bench held by 8:1 that royalty is not a tax and affirmed States' power to tax mineral rights and mineral-bearing lands [1]. The MMDR (Amendment) Bill, 2026 — passed by both Houses in August 2026 — is Parliament's legislative response, shifting the fiscal centre of gravity toward the Union [2].

How the recalibration works

• New Section 9D bars a State from levying any tax, cess or levy on mineral rights or mineral-bearing lands — whether on quantity, value or royalty payable — except as prescribed by the Centre [2].
• It invokes the "subject to limitations imposed by Parliament" clause of Entry 50, List II, using Entry 54, List I (regulation of mines in public interest) as the anchor.
• Central regulatory reach extends beyond leases to mineral-bearing land itself, defined by prescribed mineral-content parameters [2].
• Unpaid State levies predating commencement are declared invalid, though amounts already collected are not refundable [2].

Assessment: dilution, not destruction, of fiscal federalism

• Concerns: mineral-rich States (Odisha, Jharkhand, Chhattisgarh) lose an autonomous revenue handle won in court; wide delegation of rule-making to the executive and the retrospective invalidation of dues raise Article 14 and excessive-delegation questions [2].
• Justification: overlapping, unpredictable and retrospective State levies raised project costs and deterred investment; uniformity supports the National Critical Mineral Mission (₹34,300 crore outlay) and lithium–cobalt–graphite security [3].
• Crucially, royalty, DMF contributions and auction premiums to States survive — the constitutional taxing power is curtailed in exercise, not extinguished [4].

Fiscal federalism is therefore constrained rather than undermined, yet legitimacy demands process. Prescribing Section 9D conditions through consultation in a GST Council-like forum, with compensatory devolution to mining States, would reconcile investor certainty with cooperative federalism — securing both India's mineral transition and the States' rightful share in their own resources.