India has overhauled parts of its mining framework through the Mines and Minerals (Development and Regulation) Amendment Act, 2026. The legislation amends the MMDR Act, 1957, with the government saying the objective is to create a more predictable fiscal regime, encourage mining investment and simplify certain mining operations. Parliament passed the Bill in August 2026.

At the centre of the reform is a major question: how much freedom should states have to impose additional taxes and levies on mineral rights and mineral-bearing land?

Here is the change in simple terms.

What is the MMDR Act?

The Mines and Minerals (Development and Regulation) Act, 1957 is India’s principal law governing mining and the development and conservation of minerals.

It provides the framework for mining leases, mineral concessions, exploration and regulation of major minerals. States continue to have important responsibilities in administering mining operations, while the Centre has significant regulatory powers under the Act.

The 2026 amendment changes several parts of this framework.

1. States face new restrictions on mineral-related levies

This is arguably the most significant change.

A new Section 9D restricts state governments from imposing taxes, cesses or other levies on:

• Mineral rights
• Mineral-bearing land
• Mineral quantity or value
• Royalty or mineral production

Such levies can now be imposed only subject to conditions or restrictions prescribed by the Central Government.

In simple words

Earlier, states had greater scope to impose their own additional mineral-related levies.

Under the amended framework, states cannot simply introduce such new levies on their own. Any permitted levy will have to operate within the framework prescribed by the Centre.

The government argues this will make the mining tax environment more predictable.

2. What happens to old or retrospective demands?

The amendment also addresses outstanding state levies from the past.

According to the government, unpaid or unrecovered levies covered by the new provision are treated as invalid.

However, money that had already been deposited or recovered before the amendment is not required to be refunded.

This provision is particularly important because it comes after the Supreme Court’s 2024 ruling concerning states’ powers to tax mineral rights and mineral-bearing land. PRS notes that the amendment raises legal questions about how the new restrictions interact with that judgment.

3. Mineral-bearing land gets greater central regulatory attention

The amendment expands the Central Government’s regulatory role to include mineral-bearing lands.

The term refers to land containing mineral resources according to parameters that the Centre will prescribe.

This is broader than simply regulating mining and mineral development.

Why does this matter?

Mining involves not only the mineral itself but also the land containing it.

The change potentially gives the Centre a larger role in establishing the regulatory framework around such land, although states retain important powers concerning land and mining administration.

4. Captive mines can sell more of their output

Another important change concerns captive mines.

Previously, captive mines were generally allowed to sell up to 50% of the minerals produced, after meeting their specified end-use requirements.

The 2026 reforms remove that statutory 50% ceiling.

What does “captive mine” mean?

A captive mine is essentially a mine operated to supply minerals to a particular industrial operation—for example, a company producing steel, power or another mineral-intensive product.

Removing the sales ceiling gives such operators greater flexibility in dealing with surplus production.

5. Mining areas can be expanded in certain circumstances

The amendment permits a one-time extension of the area covered by certain mining concessions.

The limits include:

• Up to 10% additional area for a mining lease
• Up to 30% additional area for a composite licence

The provision is particularly relevant to deep-seated minerals, where deposits can extend into adjoining areas and may not be economically viable to develop through a completely separate concession.

6. Mineral exchanges get a formal framework

The amendment also provides for the establishment of an authority to register and regulate mineral exchanges.

The idea is to improve mechanisms for mineral trading and price discovery. The government has also highlighted digital monitoring through the Unified Mining Portal as part of the broader effort to modernise mining administration.

What does NOT change?

This is where some confusion around MMDR 2026 needs to be cleared up.

States do not lose all their mining powers

The government has specifically said the amendment does not take away states’ rights over land and minerals or their existing share of mining-related revenues.

According to the Ministry of Mines, around 90% of taxes and statutory payments from mining currently accrue to states, and the government says this overall arrangement will continue.

Minor minerals remain largely under state taxation powers

The amendment does not affect the power of states to regulate and tax minor minerals.

That category includes materials such as building stone, gravel and sand, subject to the legal classification of individual minerals.

DMF collections continue

The District Mineral Foundation (DMF) system continues.

DMFs are intended to use mining-related funds for the benefit of people and areas affected by mining, including projects involving roads, healthcare, schools, drinking water and other local infrastructure.

MMDR 2026: Before vs After

Why was the law changed?

The government’s argument is that multiple and unpredictable state-level levies can increase the cost of mining.

The Ministry says different tax and levy structures across states can make investment decisions more difficult and can affect the commercial viability of mines. The stated goal of the amendment is therefore greater certainty, stability and predictability for the major-minerals sector.

There is also a broader strategic reason.

Minerals are critical inputs for sectors such as:

• Steel
• Construction
• Power
• Electronics
• Transport
• Defence
• Renewable energy

A more predictable mining regime could therefore have implications beyond the mining industry itself.

But there is a constitutional question too

The reform is not simply an administrative change.

The Supreme Court’s 2024 judgment held that states have legislative power to tax mineral rights and that mineral-bearing land can also fall within states’ land-taxing powers. Parliament can place limitations on states’ taxation of mineral rights under the constitutional framework, but questions arise regarding the extent to which it can restrict taxation of land itself.

PRS has therefore identified constitutional and retrospective-application issues that could potentially become subjects of legal scrutiny.

That distinction is important: the government says the amendment provides a uniform framework, while legal analysis has raised questions about the constitutional limits of some of its provisions.

The simplest way to understand MMDR 2026

Think of the reform as having three broad objectives:

1. More predictable mining taxes
The Centre is putting tighter limits around additional state levies on mineral rights and mineral-bearing land.

2. More flexibility for miners
Captive mines get greater freedom to sell output, while certain mining concessions can be expanded.

3. Greater central coordination
The Centre gets additional regulatory responsibilities, while digital monitoring and mineral-trading mechanisms are strengthened.

At the same time, states continue to have significant roles in mining administration, minor minerals and mining-related revenue, and DMF mechanisms remain in place.

Bottom line

MMDR 2026 does not replace India’s mining system. It changes the balance within it. The biggest shift is the new framework restricting state-level levies on mineral rights and mineral-bearing land, alongside measures intended to make mining operations more flexible and investment more predictable.

The eventual practical impact will depend partly on the rules issued by the Central Government, particularly because the new law leaves important conditions and restrictions to be prescribed through rules.