Examine the tension between investment predictability and fiscal federalism in India's mining sector regulation.

Mining sits at a constitutional fault line: Entry 54 of the Union List gives Parliament regulatory control, while Entries 49 and 50 of the State List give States the power to tax lands and mineral rights [3]. The MMDR (Amendment) Act, 2026 has sharpened this long-standing contest.

The case for investment predictability

• Mining is long-gestation and capital-intensive; investors price in tax certainty. The Bill's Statement of Objects cites uneven and unlimited State levies as a deterrent [2].
• New Section 9D bars State taxes, cesses or levies on mineral rights or mineral-bearing land — whether based on quantity, value or royalty — except as the Centre prescribes [1][2].
• Unpaid pre-amendment dues are deemed invalid, capping the industry's retrospective liability after the 2024 verdict [1][2].
• A uniform national framework also prevents a race between States to over-tax captive mineral reserves.

The fiscal-federalism counterclaim

• A nine-judge Bench in Mineral Area Development Authority v. SAIL (25 July 2024), by 8:1, held royalty is not a tax and upheld State competence under Entries 49–50 [3]. Section 9D narrows that space by ordinary legislation.
• New Section 13(ta) transfers the decision on permissible levies from elected State legislatures to Central executive rule-making [1].
• Mineral-rich States — Odisha, Jharkhand, Chhattisgarh, Karnataka — absorb displacement, environmental and infrastructure costs, yet lose the autonomous revenue handle to fund them.
• The retrospective clause is asymmetric: dues already collected are not refunded, but pending State claims lapse [1].

Reconciling the two

• Mechanisms for sharing mining wealth already exist: District Mineral Foundations in 646 districts across 23 States have mobilised over ₹1 lakh crore for affected areas [4].
• A consultative ceiling — set through a GST Council-style forum of mining States rather than unilateral central rules — would deliver predictability without eroding autonomy.

Investment certainty and fiscal federalism are complementary, not rival, goals: stable revenues for host States sustain the social licence mining needs. Institutionalising Centre–State consultation on levy ceilings, while strengthening DMF-based benefit-sharing, would secure investor confidence and honour the cooperative federalism that the Constitution's division of taxing powers envisages.