As per government think-tank Niti Aayog, India’s mineral imports, estimated at Rs 3,73,662 crore, far outstripped the value of domestic mineral production (excluding coal, atomic and fuel minerals) at Rs 47,432 crore in 2016-17.
Mining in India will get a new lease of life provided the government prunes taxes and other levies to a realistic level of 35-37% from the extant 64%. The pruning of taxes will help in reviving investors’ interest and result in production boost up, which might offset growing imports, industry sources said.
As per government think-tank Niti Aayog, India’s mineral imports, estimated at Rs 3,73,662 crore, far outstripped the value of domestic mineral production (excluding coal, atomic and fuel minerals) at Rs 47,432 crore in 2016-17. Niti also suggested that taxes and levies on the sector should come down to a maximum of 40%.
Miners’ body FIMI said overall effective tax rate (ETR) in India for an existing iron ore miner is 64% and for those who got the mines through the mandatory auction route after 2015, the rate is slightly lower at 60%. Almost highest in the world, the Indian rate is nearly half of Mongolia’s 31%. In Chile and Canada, an iron ore miner pays around 38% taxes.
Apart from paying 15% of sales as royalty for iron ore (this varies from different minerals), a miner pays around 34% corporate tax, 2% of the profits towards CSR, 16.5% dividend distribution tax, District Mineral Foundation (10% of royalty for new mines) and National Mineral Exploration Trust (2% of royalty). As if high taxes are not enough, the miners also have to pay up for getting the lease through the auction route.
As per the provisions of the Mineral (Auction) Rules, 2015, the successful bidder of a mine has to make an upfront payment for mining lease of 0.50% and another 0.50% of the value of estimated resources in the lease area as performance security. The performance security shall be adjusted every five years so that it continues to correspond to 0.50% of the reassessed value of estimated reserves.
“All these stipulations are enough to make mining unviable. This is borne by the fact that out of 116 blocks of various minerals offered through the auction route, successful auctions could be done for only 64 mines,” said a source.