The delay in enacting India’s new mineral policy will cost the nation dear. It is understood that the proposed policy draft has not reached its logical end due to differences in many circles on several points. The points are well known as also the reasons behind such differences.
More important are the consequences of continuing with an outdated and irrelevant policy regime for this sector that has enormous growth prospects. The exploration efforts for new mineral resources have been far from satisfactory. One needs new technology, a lot of money and huge experience and expertise for it. No one will put money if there is policy uncertainty, lack of transparency in business, lack of security of tenure, and economies of scale and, importantly, flexibility in operation and in doing business. The current policy regime does not really guarantee any such supporting conditions. Even if more experienced Indian companies can operate in such adverse conditions, forget getting multi-national entities who would like to operate in a transparent, stable, and predictable policy regime.
If exploration and subsequent mining activities are not taken up today, it will be too late tomorrow. It will be increasingly difficult to relocate and rehabilitate the displaced people and construct necessary infrastructure for the same reason. It will be a huge problem to plan and work big. As a result, mining operations will have to be fragmented, expensive, and wasteful. Small operations do not lead to full exploitation of resources. If the current policy regime and practices are to continue for another few years, even a new progressive mineral policy will not have much to deliver to any large investor. The ground reality rather than the policy will be the constraint.
There is excessive academic debate on a few well-known issues. Each debate revolves around absolutely well-known points. Solutions are rare to find. There are inter-governmental and inter-industry conflicts (or differences of opinion, if you say so). How long will these go on? Whether iron ore will last twenty years or two hundred years is a matter to be studied properly. The government, if it has a doubt over any matter, can work to collect the necessary statistics and see for itself. How does it matter to a society desperately waiting for development, who finally calls the shot in awarding a mining license? How does it matter to the nation if the mineral user is located in the east or the west?
There will not be any end to the debates on many issues. The end result can be well predicted. The growth of the industries dependent on these minerals will be stunted. Neither the east nor the west will win. The buried resources will not bring in wealth. If the Middle East or Russia is getting richer with oil, if Australia and Brazil are taking full advantage of their mineral resources , why should Indian entrepreneurship lag behind? It would have been better for the nation if the country’s rich business houses were engaged in hunting for resources here within this country than in Africa or South America.
The change for the better can come only if the new mineral policy comes into force soon. You will get enough time and opportunities to bring in legislations to change any provision if found bad later.
The author is independent strategy consultant, Steel and Natural Resources