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New Delhi: Government ministers will meet in three weeks to consider revamping a five-decade old mining law that tries to balance the needs of investors with those of locals affected by the industry.
India is initiating much-needed reforms to archaic laws that have hampered private and overseas investors in tapping the country’s natural resources, and in particular wants to free up energy to power its booming economy.
Prime Minister Manmohan Singh last week deregulated fuel pricing, brushing aside criticism from opposition political parties. “Policy changes may happen this time around because this government seems more keen on doing the reforms. So chances of these reforms going through are better than they were in the last few years,” said Rakesh Arora, divisional director at Macquarie Group in Mumbai.
Federal mines secretary Santha Sheela Nair said on Friday that a panel of ministers would meet on July 22 to consider the proposed legislation, which seeks to make companies share a quarter of their net profit with local communities.
“We have even proposed 26% equity shareholding for land losers,” she told reporters.
The bill, which has been pending for two years, would have to go to parliament for approval.
For years villagers and tribesmen have opposed projects such as a mine that will supply bauxite to India-focused miner Vedanta Resources Plc’s $2.7 billion alumina refinery and POSCO’s proposed $12 billion steel plant in the eastern state of Orissa.
India’s mineral production, particularly coal, is not growing in tandem with demand as antiquated laws and social problems related to rehabilitation of people in mining areas have bogged down companies.
A higher payout to affected people could be a win-win solution that will ensure faster clearances to companies, mines ministry officials have said. Still, Macquaire’s Arora believes the proposals are too harsh and could put off miners.
“Twenty-six percent is too big a number to really pass through. It will have to be moderated downwards. If they go ahead with this kind of taxation, it is going to discourage investment,” he said.
The spokesman of a large mining company, who did not want to be identified as the company does not want to be seen criticising the government, said the profit-sharing plan was not acceptable even if it meant faster clearances.
The bill that seeks to reform the Mines and Minerals (Development and Regulation) Act, 1957, will have to be seen by the cabinet and two more government panels before it heads to the parliament, Nair said.
“It’s a long process. There could be a lot of changes by then,” Nair said.
The proposed law would also give the government more teeth to curb illegal mining, mines ministry officials have said.
In a meeting with the media last month, mines minister B.K. Handique said he hoped for the new mines bill to get passed by the parliament in its budget session to be held next February.
Last week, the government had deregulated petrol pricing and raised diesel and cooking gas rates, signalling a resolve to push bold reforms despite strong protests from political allies and opposition parties.