Parliament on 4 August 2025 passed amendments to the Mines and Minerals (Development and Regulation) Act, 1957, marking a significant shift in India's mineral governance framework. The Mines and Minerals Amendment Act, 2025 enhances the regulatory powers of state governments over minor minerals and introduces an auction-based mechanism for the allocation of critical and strategic minerals.
Background
The MMDR Act, 1957 has been the principal legislation governing the regulation of mines and mineral development in India. While subsequent amendments — notably in 2015 and 2021 — introduced auction-based allocation for major minerals and established the concept of critical minerals, the framework for minor mineral regulation remained largely unchanged, with states seeking greater autonomy in managing locally significant mineral resources.
India's push to secure supply chains for critical minerals — essential for electric vehicle batteries, semiconductor manufacturing, and renewable energy infrastructure — necessitated a statutory framework that could attract private investment through transparent allocation processes. The Amendment Act addresses both these dimensions: empowering states on minor minerals while centralising the auction framework for nationally strategic mineral resources.
Key Provisions
The Mines and Minerals Amendment Act, 2025 introduces the following changes:
Enhanced state powers for minor minerals: State governments receive expanded authority to frame rules for the grant, renewal, and regulation of minor mineral concessions within their territories. This includes the power to prescribe rates of royalty for minor minerals without requiring prior central government approval.
Auction-based allocation for critical minerals: The Amendment introduces a mandatory auction mechanism for the allocation of mining leases and composite licences for minerals designated as critical or strategic under the Act. The auction parameters will be determined by the Central Government in consultation with affected state governments.
Expedited clearance mechanism: A single-window clearance process is established for mining operations in respect of critical minerals, intended to reduce the time between auction and commencement of mining operations.
District Mineral Foundation amendments: The Act revises the contribution framework for District Mineral Foundations, requiring enhanced contributions from critical mineral concession holders to support affected communities.
Exploration licence reforms: New provisions permit exploration licences for critical minerals to be granted on a non-exclusive basis in the reconnaissance stage, encouraging geological survey activity by multiple entities simultaneously.
Implications for Practitioners
The expanded state powers over minor minerals will require practitioners advising mining companies to closely track individual state notifications, as regulatory requirements may now diverge significantly across jurisdictions. Companies operating minor mineral concessions in multiple states face a more complex compliance landscape.
For entities in the critical minerals sector, the mandatory auction framework provides certainty of process but also introduces competitive pressure on acquisition costs. Legal advisors should note that the auction mechanism differs from the existing coal block auction model in several respects, including the provision for non-exclusive reconnaissance licences.
The single-window clearance mechanism, while welcome, will need to be tested in practice. Practitioners should monitor the rules and notifications that give operational effect to these provisions, as the statutory framework leaves considerable implementation detail to delegated legislation.