A ministry of mines committee has suggested modifications to revenue and taxation policies to attract private investments in exploration of minerals other than coal and lignite.
The panel chaired by S K Srivastava, additional secretary in the ministry of mines, said regulations do not permit ‘junior exploration companies’ to list on the stock exchanges and consequently raise risk capital from the market.
He said India is deprived of the services and benefits accruing from such entrepreneurs. Globally, the Indian mineral industry is one of the most highly taxed and the committee has emphasised a need to bring it at par with global standards for attracting investments for exploration, including scarce minerals like copper, rock phosphate, nickel, tungsten, molybdenum, strategic minerals, rare earth, PGE, gold, diamond and silver.
The panel, which has submitted its findings to the ministry, has observed that the security of tenure is currently not guaranteed under the existing regulations. It called for an expeditious grant of concessions and simplification of procedures, transparency in transactions, application of e-governance in transactions, building training capacity and strengthening the state directorates for taking up exploration.
According to the panel, states should facilitate mining activity by encouraging investors and entrepreneurs to exploit the mineral wealth by improving infrastructure, easing tax laws wherever possible and by enabling the forest clearance process.
The panel said investments in exploration are grossly inadequate despite the geological potential. Both in terms of data generation by the national survey organisation and in terms of the concession framework and access to capital for exploration, there are huge inadequacies which need to be addressed to provide requisite investor confidence.
Domestic private investment for exploration has remained insignificant in the country before and after liberalisation. The liberalisation process in the mining sector continued because of the FDI cap for all non-atomic and non-fuel minerals.
In February, 2006 it was opened up to 100 per cent through the automatic route including diamonds and precious stones. FDI in mining sector has been $6.62 million in 2006-07, $444.26 million in 2007- 08,$34.22 million in 2008-09 and $86.63 million in the first half of 2009-10."
The panel said the ministry of mines has been interacting with Namibia, Argentina, Prospectors and Developers Association of Canada, Western Australia, Canada, Chile, South Africa, Iran and Thailand through diplomatic channels, entering into MoUs, participating in and organising exhibitions and investors’ meets to hasten up FDI in mining activities.
