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Royalty on 38 minerals hiked

NEW DELHI, April 30: Union Steel and Mines Minister Birendra Prasad Baishya today announced a hike in royalty rates of 38 key minerals ranging between eight per cent and 14 per cent. In a mines ministry notification dated April 11, the Centre also reinstated ad valorem rates for some minerals including gold, silver, copper and […]

By: ENS Economic Bureau |
Updated: September 23, 2020

NEW DELHI, April 30: Union Steel and Mines Minister Birendra Prasad Baishya today announced a hike in royalty rates of 38 key minerals ranging between eight per cent and 14 per cent.

In a mines ministry notification dated April 11, the Centre also reinstated ad valorem rates for some minerals including gold, silver, copper and lead concentrates, after several decades. Flat rates on the tonnage of minerals produced, continue for other major minerals like iron ore and bauxite.

The notification also revised the rate of dead rent payable by mining companies. The revised dead rent is based on the area of the mining lease and would increase with the number of years for the which the lease is held.

The new rate is expected to discourage companies from cornering leases on which they do not intend to start mining in the near future. Ad valorem rates had been recommended by an expert group, set up to revise royalty rates in 1995. The ad valorem system prevalent till 1947, had subsequently been abandoned with some rare exceptions, since it was more complicated than computing royalty on a tonnage basis.

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The new royalty rates are accompanied by new guidelines to ensure that assessment of royalty on ad valorem rates, or on sales realisations of minerals rather than the tonnage of ore produced, does not lead to disputes. The guidelines have been framed in consultation with the Indian Bureau of Mines and the state governments.

The committee, comprising representatives of the Centre, state governments, the mining industry and the Indian Bureau of Mines, had recommended ad valorem rates to bring “buoyancy” in the revenues of mineral rich states.

The new classifications, says a mines ministry release, had provided “buoyancy to revenue accruals of the state governments commensurate with market rates.”

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The mines ministry claims that the revenue of states governments from major minerals would jump by more than Rs 100 crore every year. The panel on royalty rates, set up two years after the liberalisation of the mining policy in 1993, had also attempted to rationalise rates in a manner that would make mining attractive for new investors.

The“multiple rates for multi-grade minerals,” have been eliminated by amalgamating as many as 21 varying rates of royalty in the revised list. Major minerals are now subject to 66 royalty rates, compared to 87 rates before.

The mines ministry claims to have rationalised the classification of minerals and created parity with international standards, to attract investment in mining. The tough task of striking a balance between the interests of the state governments and prospective investors had actually stretched the process of revising the royalty rates of major minerals.

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Royalty rates for these minerals had last been revised in 1992. Royalty rates of major minerals can be revised by the Centre in consultation with the states.

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First published on: 01-05-1997 at 12:00:00 am
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