The Federation of Indian Mineral Industries in a letter to the Prime Minister also alleged that framers of the draft Mines and Minerals (Development and Regulation) (Amendment) Bill, 2004, which has been placed on the Mines Ministry's website for comments, are "not aware" of the state of affairs in the mining industry.
"The auction route for the future development of mineral resources as proposed in the Amendment Bill will sound death-knell of the mining industry," FIMI said.
The auction route may also lead to selective mining while leaving low grade minerals in the ground, wastage of resources and inflate the cost of final product making it uncompetitive vis-a-vis imports.
Aimed at improving transparency in allocation of mineral resources, government has sought to amend existing Mines and Minerals (Development and Regulation) Act, 1957 to introduce competitive bidding through the auction route for iron ore and other minerals.
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Stating that the framers seem to assume that the country possesses rare minerals not available or produced anywhere in the world, it said ground reality was "entirely different" and what India produced today were abundant throughout the world.
"...What in fact we should have aimed is to search those resources of which there is a scarcity in the country and for which we depend on imports although their geological prospectivity is quite promising," FIMI said.
"We would like to reiterate that if this Amendment Bill is introduced and passed by Parliament in the present form, it will be the end of the development of mineral resource in the country," FIMI said.